European and US Futures are trading mildly higher on the first trading day of the week. We also had some disappointing numbers out of China which confirmed growth unexpectedly slowed in July, but it is the US data (released on Friday) that is on traders’ minds.
Wall Street had its biggest surprise for this month on Friday when the US NFP data blew pass all the expectations and traders were left with their jaws dropped. The data has now confirmed that the US economy is standing on solid footing and there is nothing that is going to derail the robust recovery, which was put in motion with the help of excessively loose monetary policy.
The big question for investors and traders is what the Fed is going to make out of this data; will the next meeting be live, and will the Fed bring some fireworks to that meeting? Looking at the market’s price action on Friday, it is pretty clear that market players are concerned about taper tantrum. But the important point to note is that as long as US economic numbers continue to show more strength, there is very little to worry about.
Gold price action is also going to be intriguing for investors as we saw a serious sell off on Friday on the back of the strong US NFP data, and now the question is if we have seen a bottom for the gold price? Looking at the price action on the daily time frame, there is no doubt that the price is oversold, and a strong rebound is surely on the cards.
For gold investors, the most important reading will be released on Wednesday, the US CPI number. It is likely to bring higher volatility for the gold price again. In addition to that, we also have some members of the Fed speaking today as well. Their comments and view of the US NFP number are going to give us some clues about the next month’s meeting. Gold traders will be watching these events very closely and it is highly likely that bargain hunters will seize this opportunity to bag some bargain
Bitcoin and Ethereum
In the crypto world, crypto traders certainly had a lot to celebrate as Bitcoin and Ethereum prices continued to move higher over the weekend. It certainly seems like that Bitcoin has formed a higher low and the support at 30K is firmly in place as the price has gone now above the 40K level. Having said that, traders also need to be slightly cautious as the RSI, for both Ethereum and Bitcoin, is in the overbought territory. This means that we could see some retracement for the top two crypto assets. But, at the same time, that could be a great opportunity to bag some bargains as it is clear now that both Ethereum and Bitcoin have formed a higher low.
As for commodities, Aramco’s stock price is going to remain in focus among investors and traders after it posted a stellar quarter due to higher oil prices. Overall, oil prices are retracing from recent highs, and last week we saw oil prices posting their largest weekly decline in four weeks.
Demand is certainly a concern among oil traders as Delta cases continue to rise in the US. However, there are some early signs that we may be close enough to see the peak in delta cases in the US according to several reports which could bring some bids back in the market this week.
In terms of technical analysis, the crude oil price is in battle with the 100-day SMA on the daily time frame and if the price fails to move above this average, we could see the crude oil price moving further lower.