Daily market analysis

Nasdaq Records Fifth Consecutive Gain Amidst Worst Monthly Performance in 2023

September 1, 2023

The Nasdaq Composite displayed resilience with its fifth successive day of gains, despite encountering its most substantial monthly decline in 2023. Closing at 14,034.97, the tech-centric index rose by 0.11% on Thursday. In contrast, the Dow Jones Industrial Average stumbled by 0.48%, finishing at 34,721.91, and the S&P 500 experienced a minor setback of 0.16%, concluding at 4,507.66.

Stock Market Updates

Although a series of positive sessions managed to alleviate some of the monthly losses for the S&P 500 and the Dow, the broader market index reported a 1.77% decrease, while the Nasdaq endured a 2.17% loss during August. The Dow, composed of 30 stocks, encountered a significant drop of 2.36%. Traders also diligently examined fresh U.S. inflation data, particularly the core personal consumption expenditures index, which matched economists’ projections by increasing 0.2% month over month in July and 4.2% year over year. This index holds particular importance as a gauge of inflation for the Federal Reserve.

Some analysts highlighted the interplay between equities and bonds, noting that declining U.S. Treasury yields remain pivotal for potential near-term stock market growth. Looking ahead, investors are eyeing the upcoming non-farm payroll data release, hoping for signs of a meaningful economic slowdown that could influence the central bank’s stance on benchmark interest rate hikes.

Data by Bloomberg

On Thursday, most sectors experienced a slight decline, with the overall market showing a decrease of 0.16%. However, there were a few areas of growth, notably Consumer Discretionary, which saw a rise of 0.51%, and Information Technology, which increased by 0.37%. Energy and Communication Services also recorded modest gains of 0.15% and 0.11% respectively. On the other hand, sectors like Health Care, Utilities, and Real Estate faced notable losses, with Health Care declining the most at 1.21%.

Currency Market Updates

The dollar index rose 0.45% on Thursday, supported by better US data and one ECB hawk taking notice of the region’s economic headwinds. US consumer spending surged 8% in July, up from 6% in June, and June was revised higher. Jobless claims remained in their recent range, and the August Chicago PMI rebounded to 48.7.

The euro fell 0.7% against the dollar after Wednesday and Thursday’s recovery highs were rejected by the 30-day moving average (DMA) and other resistance levels. Sterling also fell 0.4% after it ran into sellers at its 30-DMA and cloud base. USD/JPY fell 0.57%, putting EUR/JPY down a whopping 1.26%, as relatively static Japanese government bond (JGB) yields contrasted with the 7.8 basis point (bp) drop in German bund yields.

The main event on Friday is the US employment report. Non-farm payrolls are forecast to be 170,000, down from 187,000 in July. Average hourly earnings are forecast to rise 0.3% from July, and the jobless rate is forecast to remain near 50-year lows at 3.5%. August ISM manufacturing is forecast at 47.0, down from July’s 46.4. More important will be ISM services due out on September 6.

Picks of the Day Analysis
EUR/USD (4 Hours)

EUR/USD Declines as Euro Underperforms and US Dollar Posts Mixed Results

The EUR/USD currency pair declined on Thursday as the Euro underperformed against the US Dollar. The failure of the EUR/USD to hold above the 1.0900 level indicates a loss of bullish momentum for the pair. The next direction of the move is likely to depend on the outcome of the US Nonfarm Payrolls (NFP) report, which is due to be released on Friday.

The Euro weakened on Thursday after ECB policymaker Robert Holzmann said that interest rates are not yet at their highest level and that another one or two rate hikes are possible. However, market expectations regarding tightening from the ECB weakened, contributing to the Euro’s slide. Eurozone inflation data did not offer any surprises, but German retail sales showed an unexpected decline in July.

The US Dollar rose against its main European rivals, but the Dollar Index (DXY) lost ground. US consumer inflation figures did not have a significant impact on the US Dollar. Now, the focus turns to Friday’s NFP report, which is expected to show strong job growth. The ISM Manufacturing PMI is also due to be released on Friday.

Chart EURUSD by TradingView

Based on technical analysis, the EUR/USD moves lower on Thursday, reaching below the middle band of the Bollinger Bands. Currently, the price is moving just below the middle band, showing that there’s potential for another lower movement to reach the lower band. The Relative Strength Index (RSI) is currently at 45, signaling that the EUR/USD is moving lower and trying to start the bearish trend.

Resistance: 1.0865, 1.0935

Support: 1.0833, 1.0780

XAU/USD (4 Hours)

XAU/USD Ends August Lower as US Dollar Rebounds

Gold price ended August lower, as the US Dollar staged an impressive rebound, despite the persistent weakness in the US Treasury bond yields. Risk sentiment turned tepid in American trading, as traders resorted to the end-of-the-month settlement while repositioning ahead of Friday’s high-impact US labor market report.

Earlier in the day, the US Dollar maintained its corrective downside, as the mixed set of economic data from the United States bolstered expectations that the Fed could likely end its tightening cycle. However, the US Dollar rebounded in the afternoon, as traders turned risk-off ahead of the US jobs report.

Gold price initially jumped to challenge the monthly high of $1,949, but failed to sustain at higher levels on the US Dollar comeback. The next major support for gold is seen at $1,880, followed by $1,850.

The main event risk of the week is the US Nonfarm Payrolls and the Average Hourly Earnings data, which will likely hint at the Fed’s policy path for the rest of this year. The US economy is expected to add 170K jobs in August, compared with the 187K previous job gain. Average Hourly Earnings are seen steady at 4.4% YoY in August.

Chart XAUUSD by TradingView

Based on technical analysis, the XAU/USD moves lower on Thursday and able to reach the middle band of the Bollinger Bands. Currently, the price is moving near the middle band showing there’s potential for Gold to move in consolidating mode. The Relative Strength Index (RSI) is at 58 currently, showing that the XAU/USD pair is still in a positive mode but might have some correction lower.

Resistance: $1,954, $1,965

Support: $1,936, $1,926

Economic Data
CurrencyDataTime (GMT + 8)Forecast
CHFConsumer Price Index m/m14:300.2%
CADGross Domestic Product m/m20:30-0.2%
USDAverage Hourly Earnings m/m20:300.3%
USDNon-Farm Employment Change20:30169K
USDUnemployment Rate20:303.5%
USDISM Manufacturing PMI22:0046.9

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