Daily Analysis 01/09/2025

• GBP/USD Price: The Pound Sterling regained ground against the US Dollar, with GBP/USD climbing back above the 1.3500 level. However, the pair remains confined within the broader August 22 trading range, suggesting consolidation rather than a clear breakout.
• UK Fiscal Policy: Bloomberg reported that UK Chancellor Rachel Reeves is considering a windfall tax on commercial lenders, aiming to capture profits made from deposits at the Bank of England. Such a move could have fiscal benefits but may raise concerns over the banking sector’s profitability.
• US Inflation: The July PCE Price Index, the Fed’s preferred inflation gauge, held steady at 2.6% YoY, with the core figure rising to 2.9%, in line with forecasts. The data confirmed persistent inflation pressures, reinforcing the Fed’s cautious stance on monetary policy.
• US Consumer Sentiment: The Michigan Consumer Sentiment Index was revised down to 58.2 in August, weakening the US Dollar. This contributed to EUR/USD’s push toward 1.1700 and indirectly supported GBP/USD.
• Upcoming Events: The UK economic calendar remains light until Friday, leaving GBP/USD direction largely dependent on US data and Dollar dynamics in the near term.

Closing statement: GBP/USD has stabilized above 1.3500, benefiting from Dollar softness and UK fiscal headlines, but the pair’s trajectory hinges on upcoming US economic data in the absence of domestic catalysts.

• XAU/USD Price: Gold extends its winning streak for the fourth straight day, climbing toward $3,500 per ounce, near record highs. Momentum remains strongly bullish as safe-haven demand combines with policy and geopolitical uncertainties.
• US Trade: A US court ruled Trump’s global tariffs largely illegal, but the administration signaled it will continue trade negotiations. The legal challenge creates near-term uncertainty but does not fully eliminate tariff risks.
• Fed Autonomy: US Vice President JD Vance confirmed the end of the Fed’s autonomy, raising concerns about political influence on monetary policy. This shift undermines confidence in the Fed’s independence and strengthens gold’s appeal as a hedge.
• China PMI: The Chinese Caixin Manufacturing PMI jumped to 50.5 in August from 49.5 in July, beating forecasts and signaling expansion. Stronger Chinese data boosts demand outlook for commodities, adding upside pressure to gold.
• Upcoming Catalysts: Gold traders will focus on Fed speeches (Musalem, Kashkari, Williams, Goolsbee) and fresh trade headlines, both of which could inject volatility and shape short-term direction.

Closing statement: XAU/USD is powering higher toward all-time peaks, supported by Fed credibility risks, trade disputes, and stronger China data, with Fed commentary likely to dictate whether the rally extends past $3,500.

• Crude Oil Price: WTI trades at $63.75 per barrel, slipping in early European trading on Monday. Sentiment remains cautious as supply trends and seasonal demand shifts weigh on prices.
• OPEC+ Supply: OPEC+ is quietly lifting production, gradually adding barrels without triggering sharp price swings. Traders are preparing for the September 7 meeting, with early signals pointing to no major quota changes.
• Russian Exports: Russian crude flows have resumed through the Druzhba pipeline to Hungary and Slovakia after disruptions from a Ukrainian drone strike. Moscow also increased August exports by 200,000 bpd, easing some geopolitical risk premiums.
• US Inventories: The latest EIA report showed a 2.4M barrel draw, beating expectations of 1.9M. However, gasoline demand remains weak as the US summer driving season winds down, limiting the bullish impact.
• Key Data: This week brings a heavy US labor market calendar: JOLTs, ADP employment, jobless claims, and the Jobs Report, all of which could influence Fed expectations and indirectly impact oil demand sentiment.

Closing statement: WTI is under mild pressure as rising supply offsets inventory draws, while US labor data could inject fresh volatility. Traders will watch OPEC+’s stance next week for clarity on production policy.

• DAX Price: The DAX slipped just below 24,000 last week, with the mid-July record of 24,639 points still within reach. Price action remains broadly rangebound, with upside momentum capped by mixed economic signals.
• Inflation Data: German CPI inflation rose to 2.2% YoY in August from 2% in July, topping expectations of 2.1%. On a monthly basis, prices inched 0.1% higher, reinforcing concerns that inflationary pressures remain sticky.
• Investor Sentiment: JPMorgan strategists noted that the six-month consolidation in European stocks may soon end, suggesting a potential re-entry point for investors in the eurozone equity market.
• Corporate Earnings: Analysts stress that Germany’s new fiscal stimulus measures must translate into stronger corporate earnings if the DAX is to break past record highs and sustain a new rally.
• Data Calendar: This week’s trading activity may be subdued due to the US holiday, but European manufacturing PMIs will be closely watched for fresh signals on growth momentum.

Closing statement: The DAX remains near historic highs, with inflation data and fiscal stimulus shaping sentiment. Whether the index breaks higher likely hinges on corporate earnings and stronger macro signals from upcoming PMI data.