A number of high impact data will determine the next value of gold and the US dollar

Market Summary

The Federal Reserve has expressed its stance that the war on inflation is far from over, signaling that the US central bank's monetary policy is expected to stay restrictive for a longer duration than previously anticipated. Such a policy has the capacity to elevate credit expenses, potentially exerting a slowdown on the economy.

Indicative of the deceleration in economic growth resulting from high interest rates, the US Composite PMI index data released by S&P Global has demonstrated that business activity in the United States came to a halt in September, with the services sector registering its slowest pace since February.

The S&P US Services PMI fell to 50.2 in September 2023 from 50.5 in August, below market expectations of 50.6, according to preliminary estimates. The increase was the slowest increase in business activity in the current eight-month growth streak.

The S&P US Manufacturing PMI increased to 48.9 in September 2023 from 47.9 in August, beating estimates of 48, according to preliminary estimates. The figures continued to show another albeit smaller decline in manufacturing performance, due to output contraction and weakening new orders.

The yield on the 10-year U.S. Treasury bond fell below 4.45% after hitting 4.5% for the first time since 2007 on Thursday, as weakness in the services sector halted this week's bond selloff.

The dollar index pared some gains to 105.4 on Friday, after PMI data for September showed broad stagnation in total activity for the second month in a row. However, the dollar index is still on track to strengthen for ten consecutive weeks,

The euro continued its weakness in trading on Friday and hit its lowest point since mid-March, following the release of disappointing PMI data and indications that the European Central Bank may halt its interest rate hikes. The euro ended trading in the 1.06413 price area after reaching the lowest price in the 1.06145 area

The British pound fell by hitting a low of 1.22301 and touching its lowest point since March 24. Investors digested the weaker-than-expected PMI data and evaluated its potential impact on the direction of the Bank of England's monetary policy.

The PMI report revealed that UK business activity contracted at the most significant rate in two and a half years in September, mainly due to weaker demand stemming from cost of living pressures and higher borrowing costs.

The Japanese yen weakened, sliding back to one-year lows after the Bank of Japan maintained its ultra-loose monetary policy. Meanwhile, Japanese Finance Minister Shinichi Suzuki said he would not rule out any options on the currency, warning against a sharp yen depreciation that could hurt the economy. The Japanese Yen ended trading on Friday in the 148.397 price area after reaching a high of 148.409/dollar

WTI crude oil futures rose to hit a high of $91.30/barrel on Friday, approaching a ten-month high on concerns that Russia's ban on fuel exports could further tighten global oil supplies.

Official data also showed that US crude inventories fell by 2.135 million barrels last week, and stockpiles at Cushing were at their lowest level since July 2022. For the week, the US oil benchmark rose nearly 1%

The gold market did not see much reaction to the mixed economic data as prices hovered just below $1,930. The main focal point is the idea that the Fed will keep interest rates higher for a longer period of time and this has pushed the dollar, yields higher and has put pressure on not only gold, but also the commodity markets as a whole.

Gold Ended trading on Friday at 1,924.59 after hitting a low of 1,919.17

US stocks also slumped. The Dow Jones Industrial Average (.DJI) fell 1.08%, the S&P 500 (.SPX) lost 1.64% and the Nasdaq Composite (.IXIC) fell 1.82%.

NEXT WEEK'S HIGH IMPACT ECONOMIC DATA AGENDA

25 – 29 September 2023

1. US Market

Next week, all market participants' attention will be focused on the US personal spending and income report, with particular anticipation surrounding the release of the PCE (Personal Consumption Expenditure) price index. It expects core PCE prices to increase by 0.2% in August, matching the pace in July; while the annual inflation rate, considered the Federal Reserve's preferred measure of inflation, is expected to fall to 3.8%, marking the lowest point since June 2021.

Another report revealed an increase in consumer spending of 0.5% and an increase of 0.4%. % revenue gain in the same period. Additionally, investors will be closely monitoring durable goods orders in August, as well as final readings of second-quarter GDP growth and Michigan consumer sentiment (UoM Consumer Sentiment) in September. Additionally, the housing market will be under scrutiny, with a focus on Case-Shiller home prices, new and pending home sales figures .In addition, market observers will continue to pay close attention to preliminary estimates of wholesale inventories, goods trade balance, consumer confidence ( CB Consumer Confidence ), Chicago Fed National Activity Index, and Dallas Fed Manufacturing Index

2. European Market

Market focus will be on the preliminary CPI (Consumer price Index) reports from the Eurozone, Germany, France, Italy and Spain. The annual inflation rate in the Euro Area is expected to slow for the fifth consecutive month to 4.5% in September, the lowest since October 2021 but still well above the ECB's target of 2%.

In Germany, the sharp decline in headline inflation to 4.6% is expected to be mainly due to a decrease in external costs. On the other hand, in France, inflation is expected to increase slightly to 5%. Additionally, in Germany, the Ifo Business Climate indicator is expected to decline for the fifth consecutive month to its lowest level since October 2022.

The GfK Consumer Climate Indicator is unlikely to change from its four-month low in September. On the bright side, German retail sales may recover slightly after two consecutive months of decline. Other data to follow include the Euro Area business survey, German unemployment rate,

3. United Kingdom Market

The UK will publish its final estimate of second-quarter GDP growth, along with the current account, Bank of England monetary indicators, CBI distributive trade and national house price index.

4. Asia Pacific Market

The Bank of Japan's latest policy meeting minutes, offering insight into the timeframe for the central bank to move away from ultra-loose monetary policy, in addition to potential support for the yen. Other data from Japan includes industrial production, retail sales and the unemployment rate for August. In Australia, the monthly inflation rate is expected to rise for the first time since April, putting pressure on the recently restrained RBA. Retail sales and credit data