US and European futures are on the move, and they have spent most of the time in the positive territory as traders try their best to maintain the positive momentum from the last week. However, there is no doubt that there is a sense of caution among traders and investors as it is this week that we are going to get the most important economic data and that is the US NFP data. In addition to this, Jerome Powell, the Fed Chairman, will also be releasing his comments about the Fed’s view of the interest rate and which is also going to keep traders on edge.
In terms of economic data, traders will need to keep an eye on the US factory order data, which will be coming out at 3 PM GMT, and the forecast is for -1.8%, which is the same as the previous meeting. The fact that there hasn’t been any improvement in the forecast and the number is still in the negative is somewhat worrying. However, on the flip side, the bar is certainly set low this time, and this means any number which is going to be better than the forecast is more than likely to stimulate optimism among traders, and we could potentially see a rally in the US stock indices. Although, the upside is more than likely to be limited as the US factory order isn’t one of the most important economic readings that traders keep on top of their list.
In Europe, we are going to see the Sentix Investor Confidence number coming today at 09:30 AM GMT. The number is certainly is expected to come off its lows, and the forecast is for the number to print the reading of -5.6 while the previous number was at -8.0. The reading is going to matter among currency traders who are focused on the next potential move for the Euro. The European central bank still has very hawkish tone, and there are no signs of the bank taking its foot off the gas paddle, which means higher rates are certainly in the pipeline.
Staying in the currency lane, the RBA’s next potential move is also of high interest among the Aussie trader. The currency has been lacking momentum and bulls are likely to find their prayers answered tomorrow as the RBA could increase the interest rate by 25 basis interest rate in order to tame inflation. Speculators believed that the RBA was pretty much done with the interest rate hike cycle. However, we think there are still more bullets left in the RBA’s gun. The interest rate is expected to increase to 3.6%, which is going to be the highest level going back since 2012, when it was 3.75%
In the commodity space, we are focused on oil prices which are struggling to impress investors today, and this is primarily because most investors have been betting big on Chinese demand. The fact that the second biggest economy in the world is expected to grow only around 5% has put cold water on the expectations of a strong rally taking place in the black gold. Remember, traders were thinking that the fact China has dismantled its covid related policies, we are going to see robust demand, but those expectations are hut today with a dose of reality. In simple terms, bulls are going to struggle to push the price today. Moreover, on the technical side, the 100-day MA on the daily time frame is also causing a problem for the price action to continue to move over, and that is likely to be a resistance for now.
As for the precious metal, traders are hoping that the bullishness in the dollar index remains in check this week as the two events highlighted above are going to be the most important ones. So far, the dollar index has been taking the shine away from the precious metal. Although last week, we did see bulls coming back in the market, and we saw the gold prices close in the positive territory, the real test of this positive optimism is based on the US NFP data, and if the number takes the gas out of the dollar index, gold prices are likely to shine. Gold traders mostly trade with tomorrow’s worry on their shoulders, which means that they carry twice the load on their shoulders.
