Market recap and outlook for week 37

Where to Monitor:

• Key economic indicators from major economies, particularly the US and China.
• Statements and policy decisions from the Federal Reserve, the European Central Bank, and the Bank of Japan.
• Monitor any developments in ongoing conflicts or trade disputes that could impact market sentiment.
• Keep an eye on oil, gold, and silver prices, as they can influence various sectors and the broader market.
• Stay updated on regulatory developments, institutional adoption, and overall market sentiment in the cryptocurrency space.

USD and global markets

The US dollar saw mixed performance, with initial losses against the Indian Rupee (INR) and the Euro (EUR) but a subsequent rebound following the release of mixed US jobs data. Market sentiment leaned towards risk aversion, limiting the downside for the USD/INR pair. Meanwhile, expectations of further interest rate cuts by the Federal Reserve weighed on the dollar, offsetting gains made after the August US payrolls report.

Impact on currencies:

USDINR: The pair may remain range-bound in the near term due to conflicting forces of risk aversion and potential RBI intervention.

USDJPY: The pair is likely to be influenced by Japanese GDP data and speculations around a Bank of Japan rate hike.

EURUSD: The pair faces downward pressure as the market considers the possibility of an ECB rate cut. Volatility is expected in the coming week.

GBP/USD: The pair's performance will likely hinge on upcoming US CPI and UK activity data.

Precious metals

Gold prices remained subdued, hovering near daily lows, influenced by a cautious market mood and a modest strengthening of the USD. Traders are awaiting cues on the Fed's rate outlook, which will be crucial in determining gold's future direction. Bearish momentum is building, and a break below the $2,500 resistance level could lead to further declines.

Silver prices also saw a pullback, losing recent gains. The outlook for silver remains tied to expectations of Fed rate cuts and upcoming US CPI data.

Cryptocurrencies

Bitcoin ETFs experienced significant outflows in the past week, signaling a potential shift in investor sentiment. However, some analysts remain bullish on Bitcoin's long-term prospects, especially if the US dollar weakens further.

Ethereum (ETH) is facing challenges, with analysts warning of a potential significant price drop. Multiple factors, including decreased institutional interest and a weakening investment case, are contributing to its underperformance compared to Bitcoin.

Other notable developments

US stocks started the week with a modest rebound, but anxiety remains high in the run-up to the US jobs report. Concerns about a potential recession have eased somewhat, but the market remains sensitive to economic data and Fed policy signals.

Crude oil prices initially slumped due to concerns about energy demand but saw a partial recovery later in the week, driven by a Gulf Coast storm.

Chinese stocks are near a five-year low as hopes for a swift economic recovery fade.