Insights and Analysis for Today's Markets

Market Overview

The markets have turned very eventful as several fronts are influencing prices. Notable events from the past week include: Israel ceasefire talks with Hamas, Ukraine‘s efforts for peace with Russia by hosting the ’peace summit‘, a global cyber outage with Windows, and Trump’s dominance in US election polls and the expectations of his potential win.

This week, we'll delve into these topics and explore their potential implications on trading and the markets. Today, let's focus on the Israel-Hamas conflict, which has seen multiple failed peace talk attempts.

Just last week, peace talks were seemingly close to success as the US proposed a deal that Hamas appeared to agree on until Israel bombed a safe zone, causing Hamas to withdraw from the negotiations. This raises questions about whether Netanyahu genuinely desires a peace treaty. Several attempts at peace talks have failed due to Israel escalating the situation each time a resolution seemed near. This could be Netanyahus strategy to maintain power as he nears the end of his regime. His cabinet appears to support this strategy, as they are unwilling to surrender or accept any negotiations.

However, public sentiment differs as rallies demand Netanyahu to accept the negotiations and “not fly back” until a treaty is signed. This movement is also pushing for the immediate release of hostages held by Hamas. India has also called for peace.

The global reaction has been somewhat muted.

What can these following events mean for the economy and the prices？ For starters, we look into the demand this creates.

Further use of military assets increases demand for armaments, bullets, explosives, etc. This may impact prices for metals related to the creation of said necessities. This can range into silver, palladium, gold, etc.

Rising unrest and tensions at war will also increase demand for safe-haven assets like gold and silver to secure individual wealth. This can be proven by rising gold prices—but that, too, is influenced by more factors than one, and this is only one of the contributing factors.

Oil prices may rise due to disruptions in oil supply. This disruption will increase demand for oil, affecting global markets and trade. This may either slow the economy globally or cause a fall in several assets. This also puts our attention on oil companies as their stocks may produce increased sales and growth.

As this demand increases, several investors will put more attention into the growth of alternative energies and technologies.

Increased demand in the medical field will provide sufficient growth in that sector.

A rise in military technologies will also be seen. This is proven by Kyiv rushing to create AI-enabled war drones in Ukraine. The application of AI to military equipment, and more.

There are many more that can be said and discussed here other than the ones already mentioned. Not to mention, the decreased demand for several things this implies.

Further research is suggested as we also can look into the implications of what will happen if Iran comes into the picture, which they stated before—they will. How will the U.S. react and how will the new presidency of Donald Trump control said damage and rising tensions were he to rise to the presidency？ Whether or not it will deescalate until then. And what will further escalations in said war do to its neighboring countries？ When will the world pay more attention to it and when does Netanyahu plan to stop？

Deliberately, he did not specify whether their goal was the complete annihilation of Hamas, its leaders, or both. This analysis hopefully has put that in your watchlist as we explore further in the next one what we expect.

Financial news this week comes from the U.S., Europe, and the U.K. Manufacturing and Services PMI on Wednesday, along with the BOC rate statement. The U.S. will release Advance GDP q/q on Thursday, accompanied by unemployment claims. Finally, the week ends with the U.S. reporting on the Core PCE Index m/m.

GOLD - Gold rose to new highs last week after traders bet on a FED rate cut happening this September. FEDWATCH shows a 91.7% probability of easing at the September 17-18 meeting. The start of the 3rd quarter has shown nothing but growth for gold, and this fall in price towards the end of the week is considered a technical correction. This new high is only the beginning, and we may see record highs again before and after rate cuts. Currently, gold is at 2401.779. The metal may show a deeper discount for better buying opportunities as firms take profit to reposition themselves better before the data release in the next two weeks.

SILVER - Silver prices declined after last weeks trading, showing a deep retraction from the high beyond the range at 29.900. Currently, the price is at 29.018, testing price boundaries to find comfort within the range again. However, we analyze that silver prices may rise significantly as Israel continues its attacks on Gaza. The demand for armaments may rise, and the possibility of a Trump win could increase the price of silver. With that said, we see this fall as a technical correction before a big rise. Analysts and investors may confirm this as we near the September meetings.

DXY - The dollar is consolidated between 104.607 and 104.084, favoring the bears. From a technical point of view, we see the dollar dropping further after spending time within this range, possibly within the next two weeks or this week.

GBPUSD -The pound is finding strength from the start of the 3rd quarter, gaining beyond 1.28508. A deep discount is found in the chart after last weeks trading. This may reach 1.28508 before finding demand again as a technical correction before a bigger rise—this is in anticipation of a weaker dollar. We are watching for price changes and expect possible changes midway through the week as trades are repositioned. In the near term, expect further bearish runs, allowing traders to buy at a premium.

AUDUSD -The Aussie dollar is well-supported against the greenback as the price continues to move further down. Currently, the price may be held up by 0.66541 before falling back into the previous quarters consolidation zone. We may see the price fall further or consolidate until the FED rate cut announcement. However, it is clear that firms are taking profits to reposition. We still see this currency as bullish.

NZDUSD -The Kiwi fell apart after last weeks trading, found to be trading below 0.60455 and may test 0.59796 and into 0.59400 as RBNZ rate cut expectations in November rose after dovish comments in the July meetings, following unchanged rates. We may see further consolidation or a weaker NZD in the coming days. Although there is a possibility of a bullish run as we near September cuts, our best advice for this currency is to see how the price moves and react accordingly.

EURUSD -EUR strength comes into play as the currency holds better than the GBP after last week's trading. The fall after the rise beyond 1.08950 can be ruled as a technical correction before a continuation up. However, we must watch this price carefully as the price discount may reach 1.08541 or lower before continuing the rise. Other unexpected events may also impact EUR strength.

USDJPY - The Yen may have reached its peak high for the quarter. Currently, we see the price rise through multiple structures but is starting to slow down its ascent. We may expect further wins for the Yen soon and the price to drop further. However, we keep this on intervention watch as the BoJ continues to monitor currency movement.

USDCHF -The CHF is showing an increase in strength for the entirety of the quarter. We may see further growth for the CHF in this market and the price drop further. Currently, the price is respecting bearish structures and testing 0.88868. We will discuss the bearish structures further after the price prints a clearer direction.

USDCAD -The CAD is moving sideways and has not shown a decided move during this quarter. However, the low at 1.35762 may be a potential low for this month. We may find a new high before August ends. We will react accordingly to how the price reacts to 1.37435. We anticipate further weakness for the Canadian Dollar as the data, along with cooler-than-expected Canadian inflation data on Tuesday, supports bets that the Bank of Canada will ease interest rates further. The central bank is expected to cut its benchmark rate for the second straight meeting on Wednesday by 25 basis points to 4.50%, according to a large majority of economists in a Reuters poll.

COT Reports Analysis

CAD - Weak (5/5)

CHF - WEAK (5/5)

GBP - STRONG (5/5)

JPY - STRONG (2/5)

EUR - STRONG (5/5)

AUD - STRONG (5/5)

USD - STRONG (4/5)

SILVER - STRONG (3/5)

GOLD - STRONG (5/5)