Stock Market Today
Futures in Europe and US are struggling to maintain any direction today as investors react to the economic readings released today. The UK is getting chocked by higher inflation data and today’s data has marked another dark day in British history as inflation seems to know to move in one direction only. There are fears that we are near the end of summer, demand is likely to increase for energy and there isn’t enough supply of gas, the winter may actually fuel the inflation situation.
There is also the EU GDP data which is likely to show a more dire situation unfolding for the Eurozone.
In terms of the US stock market, the tone will be set by the US retail sales data and the FOMC minutes, both are due later today. It is highly important for traders that they do not see another terrible set of economic readings, especially not from the US retail sales data. A weak number is likely to crush the price action of the Dow Jones and other indices.
Gold
Gold traders are likely to be on edge today, and they will be watching one particular event today, and that is the release of the FOMC Minutes later today. They will be dissecting every part of the minutes to find out clues what the Fed thinks of the current economic situation, given that the economic numbers which have been released this week have been terrible. If the tone of the minutes shows that the Fed is being ignorant of the economic weakness and they still like to adopt a hawkish monetary policy, markets may not like it, and gold price may see some punishment. However, any acknowledgement of economic weakness along with being less aggressive in terms of interest rate hikes could potentially push the price of gold.
In terms of technical price analysis, the prices are at a critical stage as they are trading near the 50-day SMA on the daily time frame, and if the price falls back this average and remains below it, it will provide a clear indication that the path of the least resistance is skewed to the downside.
Oil
Oil prices are experiencing a dead cat bounce after a strong sell-off that has been taking place on the back of fear that there may be excessive supple building up while the global economy displays economic weakness. Yesterday, oil prices fell to six months low, and today the prices are bouncing for two reasons. Firstly, we see some bargain hunters stepping into the market who believe that prices are too cheap to be true. Secondly, the larger-than-expected decline in US oil and gasoline stocks is supporting the bull case for oil prices. Crude stocks fell by about 448,000 barrels for the week ended Aug. 12. Gasoline inventories fell by about 4.5 million barrels, while distillate stocks fell by about 759,000 barrels.
Later today, we do have the US crude inventory data, which will be coming out at 15:30, and that is likely to provide higher volatility for prices.
Having said that, there is one particular event that is driving the price of oil the most, and that is the progress made on the Iranian nuclear deal. Yesterday, the EU called the dialogue highly constructive, and that is sending a signal to the market that it may be only a matter of time before Iranian oil returns to the market.
Bitcoin
The Bitcoin price, like gold, is also going to be highly sensitive to the FOMC minutes event for two reasons. Firstly, if the Fed continues with its hawkish narrative, that will confirm that they are serious about controlling inflation, and the era of the money supply may be coming to an end or at least going on a short break. Secondly, the dollar index’s on weakness or strength. If there is a hawkish tint in the FOMC Minutes, we are likely to see Bitcoin prices suffer more losses, but if there is any shift in the tone towards a less hawkish tone, we could see the dollar index losing steam which could be positive for the bitcoin price.