The financial markets started the week with muted activity in the Asian session as markets in China and Japan were closed for public holidays.
Despite the quiet environment, significant movements were seen, particularly in gold, which reached a record high of $2,589/oz, and the U.S. Dollar Index (DXY), which fell to 100.80. With the Eurozone trade balance and U.S. Empire State Manufacturing Index set for release later today, the European and U.S. sessions are expected to bring more volatility, especially in the forex and commodities markets.
Key Highlights:
Dollar Index (DXY) drops to 100.80 amid quiet trading.
Gold reaches an intraday all-time high of $2,589.00/oz.
Markets in China and Japan closed for respective bank holidays, limiting trading volumes.
Market Overview:
In the Asian session, markets in China and Japan were closed, leading to subdued activity across major financial assets. Spot gold soared to a new record, driven by weaker U.S. dollar momentum, while the Dollar Index slipped to a low of 100.80, reflecting continued downward pressure.
Despite the muted trading, other regions showed notable activity:
AUD/USD edged higher following a gap lower at market open, stabilising around 0.6710.
EUR/USD briefly touched 1.1100 before pulling back slightly, supported by expectations of a larger trade surplus in the Euro Area.
Equity markets across the region saw limited volatility due to holiday closures in major economies, with Australian and Taiwanese stocks recording modest gains. However, Hong Kong experienced its largest weekly drop in a month, reflecting continued concerns over China's economic weakness.
Asian Session Recap:
The Asia-Pacific session witnessed light trading with no significant news or economic releases, primarily due to public holidays in Japan and China. While the USD/JPY continued its downward momentum, falling towards 140.40, Australian and New Zealand Dollars showed resilience with slight recoveries after a softer start.
Gold surged to a record high amid declining demand for the dollar.
The Japanese Yen strengthened, with USD/JPY declining over 3.6% in recent weeks, indicating stronger demand for the yen.
AUD/USD and NZD/USD rose despite the quiet session, trading around 0.6710 and 0.6155, respectively.
Europe & U.S. Sessions Outlook:
As European markets open, the focus will be on the Eurozone’s trade balance, which is expected at 9:00 am GMT. Another month of surplus could support further upside in the
EUR/USD, which remains elevated above 1.1090.
In the U.S. session, the Empire State Manufacturing Index at 12:30 pm GMT will provide insight into manufacturing conditions. The index has been in contraction since late 2023, and a weak reading could add further pressure on the dollar, potentially lifting gold and risk-sensitive assets like EUR/USD higher.
Key Instruments:
Dollar Index (DXY)
The DXY saw its momentum fade as it dropped to a new low of 100.80 during the Asian session. Given that manufacturing activity in New York has remained weak, another sluggish Empire Index result could further push the dollar lower today.
Bias: Medium Bearish
Gold (XAU/USD)
Gold is riding a bullish wave, reaching an intraday all-time high of $2,589.00/oz. Should the U.S. dollar continue its decline post-Empire Index release, we could see gold further extending its gains.
Bias: Medium Bullish
EUR/USD
The Euro continues to benefit from the potential for another positive trade surplus, with early signs of strength in the Asian session pushing the pair above 1.1100. Market participants will look towards the Eurozone's trade data for further direction.
Bias: Medium Bullish
AUD/USD
AUD/USD recovered after a softer open, stabilising around 0.6710. Resistance at 0.6750 could be tested if the U.S. dollar weakness persists throughout the day.
Bias: Weak Bullish
USD/JPY
The Yen continues to strengthen, with USD/JPY dropping towards 140.40. The support level remains at 139.40, while resistance is at 143.70.
Bias: Weak Bearish
Crypto Watch:
Bitcoin (BTC/USD)
Bitcoin has remained relatively stable around $26,000, consolidating after a volatile summer. Investors are awaiting key U.S. data and further Fed commentary later this week, which could act as a trigger for its next significant move.
Bias: Neutral
Ethereum (ETH/USD)
Ethereum is consolidating near the $1,600 level after a slight pullback last week. The broader crypto market remains in a wait-and-see mode ahead of key central bank announcements later this week.
Bias: Neutral
Economic Calendar Highlights:
Euro Area Trade Balance (9:00 am GMT) – Expected to show another surplus, supporting EUR.
U.S. Empire State Manufacturing Index (12:30 pm GMT) – A contraction is expected, which could further weaken the U.S. dollar.
ECB speakers including Vice President Luis de Guindos and Chief Economist Philip Lane are also scheduled to speak later today.
Sentiment Snapshot:
EUR/USD: Bullish (Expected Eurozone trade surplus)
Gold: Bullish (Weakening USD, high inflation concerns)
DXY: Bearish (Expected weak Empire State Index data)
Bitcoin: Neutral (Lack of short-term catalysts)
Conclusion:
With light trading in the Asian session due to holidays, the focus now shifts to the European and U.S. markets. Key events such as the Eurozone trade balance and the Empire State Manufacturing Index will likely set the tone for today’s market movements, especially for the EUR/USD and DXY. Expect continued stren
Disclaimer:
Trading forex, CFDs, and cryptocurrencies involves substantial risk and is not suitable for every investor. Leverage can work against you, magnifying losses as well as gains. Ensure you fully understand the risks and consider your financial situation carefully before making any trades.
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