Daily Analysis 04/09/2025

• GBP/USD Price: GBP/USD retreated to 1.3430 on Thursday during European trading, extending weakness after recent gains.
• Fiscal Outlook: UK Finance Minister Rachel Reeves pledged tighter spending controls to help curb inflation and borrowing costs. Her remarks eased some concerns over fiscal stability following the recent sharp selloff in UK bonds.
• US Economic Data: US Factory Orders contracted 1.3% MoM in July, slightly better than the -1.4% forecast, but still signaling a downturn. Combined with the sixth straight month of PMI contraction, it highlighted ongoing factory sector weakness.
• Fed Expectations: Markets raised odds of a September Fed rate cut to 97%, up from 91% the prior week, according to CME FedWatch, weighing further on the Dollar.
• Data Ahead: Traders await the UK Construction PMI, which could provide fresh directional cues during the session.

Closing statement: GBP/USD’s move lower reflects near-term selling pressure, though fiscal reassurance from Reeves and rising Fed cut expectations provide underlying support. The upcoming UK Construction PMI may decide whether the pair stabilizes or extends losses.

• XAU/USD Price: Gold remained elevated on Wednesday, holding near record levels above $3,560 before easing slightly to $3,540 per ounce.
• Geopolitics: President Donald Trump signaled optimism on brokering a Russia-Ukraine peace deal, though uncertainty lingers over a potential Putin-Zelensky meeting. Markets continue to monitor geopolitical risks closely.
• China Market: Chinese regulators are considering loosening short-selling curbs and introducing options to cool speculation in equity markets, a move that could affect global risk sentiment and indirectly gold flows.
• US Data: Traders await ADP employment data for August, forecast at 74K versus July’s 104K. A softer figure could reinforce expectations of Fed easing, supporting gold.
• Fed Outlook: Fed officials Williams and Goolsbee are scheduled to speak Thursday before the pre-FOMC media blackout begins this weekend. Their remarks may influence rate cut expectations ahead of the September 16–17 meeting.

Closing statement: Gold holds firm near all-time highs, underpinned by geopolitical tensions and dovish Fed bets. The ADP jobs data and Fed commentary will be pivotal in shaping short-term momentum.

• Crude Oil Price: WTI crude slipped early Thursday, trading at $63.00 per barrel, down from Wednesday’s close of $63.55, extending the recent bearish momentum.
• OPEC+ Outlook: Eight OPEC+ members are weighing a potential production increase for October, with a final decision due at the September 7 meeting. Expectations of higher supply are weighing on sentiment.
• US Fundamentals: EIA data showed a surprise inventory build of 622K barrels, pointing to weaker demand and slowing refinery activity. The unexpected rise in stockpiles reinforced downside pressure on prices.
• Energy Policy: UK Conservative Party leader Kemi Badenoch vowed to make North Sea oil central to Britain’s economy, while criticizing Labour for underutilizing existing oil and gas fields. The comments highlight ongoing political tension in UK energy policy.
• Iraq Developments: BP engineers began initial work on four major oilfields in Kirkuk as part of a $25B redevelopment deal with Iraq. The project underscores Iraq’s ambition to boost long-term capacity despite current market challenges.

Closing statement: Crude oil remains pressured by inventory builds and looming OPEC+ supply decisions, while geopolitical and policy shifts in the UK and Iraq provide longer-term industry signals. Near-term direction hinges on the September 7 OPEC+ meeting outcome.

• DAX Price: The DAX opened slightly higher on Thursday, trading near 23,620, but remains short of reclaiming the key 24,000-point level, suggesting limited upside momentum.
• Fiscal Policy: Berlin plans to accelerate public investment while cutting taxes and boosting transfers, measures expected to provide a faster-than-anticipated lift to growth in Europe’s largest economy.
• Corporate Influence: Salesforce’s weak quarterly outlook pressured global tech sentiment and could spill over to SAP, a heavyweight in the DAX, weighing on index performance.
• Index Reshuffle: Porsche and Sartorius are set to be removed from the DAX, making way for Scout24 and Gea. The reshuffle underscores ongoing shifts in Germany’s corporate landscape.
• Porsche Outlook: Despite its removal, CEO Oliver Blume voiced optimism about Porsche’s long-term valuation and emphasized ambitions for a swift return to the DAX after the reshuffle.

Closing statement: The DAX remains range-bound below 24,000, with sentiment shaped by fiscal stimulus hopes, tech weakness, and the upcoming index reshuffle. A clear break above resistance is needed for renewed upside momentum.