Asset Summary – Wednesday, 1 October
GBPUSD is currently demonstrating positive momentum, having appreciated to a rate of 1.3460. This reflects a daily gain of 0.13%, indicating a slight upward trend in the short term. Looking at a broader perspective, the Pound has exhibited strengthening over the past month and year, with gains of 0.59% and 1.49% respectively. This suggests a potentially bullish outlook for the currency pair, as the British Pound seems to be holding its value and gaining ground against the US Dollar over both the short and long term.
EURUSD is poised to potentially increase in value. Rising inflation figures across major Eurozone economies are bolstering the euro as they suggest the European Central Bank (ECB) is less likely to cut interest rates in the near term. Stronger inflation in Germany, France, and Spain, coupled with consistent inflation in Italy, is expected to drive Eurozone inflation to a five-month high. This inflationary pressure, while partly attributed to factors the ECB may disregard, could still prompt them to hold steady on current interest rates. Simultaneously, a weakening dollar, spurred by anxieties regarding a potential US government shutdown, further supports the euro’s upward trajectory against the dollar.
DOW JONES is facing potential headwinds as US stock futures indicate a slight dip, influenced by anxieties surrounding a possible government shutdown. The political impasse in Congress introduces uncertainty, potentially delaying important economic data releases like the nonfarm payrolls report, which could impact Federal Reserve policy decisions. While the Dow, along with the S&P 500 and Nasdaq, demonstrated positive performance in September and the third quarter, the looming shutdown and its consequences could dampen investor enthusiasm. Positive corporate news, such as Nike’s strong earnings, might offer some support, but the overall sentiment suggests a cautious approach for the Dow in the short term.
FTSE 100 is displaying positive momentum, evidenced by recent gains fueled by a strong performance in mining stocks. This upward trend coincides with encouraging Q2 GDP figures and upward revisions to annual growth, signaling a potentially strengthening UK economy. However, rising shop price inflation and potential cost pressures from upcoming packaging taxes present challenges. Divergent performance among major constituents, with gains in HSBC, AstraZeneca, Unilever and Relx contrasting with declines in Shell and BP due to fluctuating crude prices, suggests a market navigating mixed signals. The potential for higher OPEC+ output and geopolitical developments could further influence trading activity.
GOLD is experiencing upward pressure, propelled by the increased appeal of safe-haven assets amidst fears of a potential US government shutdown. The failure of the Senate to approve funding extensions, coupled with anticipated workforce reductions, is fueling uncertainty. The duration of any shutdown is a key concern, as delays in economic data releases like the nonfarm payrolls report could complicate the Federal Reserve’s upcoming policy decisions. Simultaneously, signs of a cooling US labor market, such as slightly increased job openings but slower hiring, are reinforcing expectations of a rate cut by the Federal Reserve, further bolstering the price of gold as investors seek alternative stores of value. Traders are currently anticipating a high likelihood of rate reductions, contributing to the bullish sentiment surrounding gold.