The Week Ahead 11th – 15th September: The EU towards recession?

<p>Welcome to Key to Markets preview of the Week Ahead.</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of <strong>September 7, 2023. 11:00 GMT.</strong></p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-25483 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-1-1.png" alt="" width="602" height="289" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-1-1.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-1-1-300×144.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: finviz.com</p>
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<h2>10 Big Stories Last Week</h2>
<p>In case you missed it…</p>
<p><strong>US ISM services PMI unexpectedly rose.</strong> The stronger than expected dominant sector, rising new orders, and higher prices paid point to rising inflationary pressures.</p>
<p><strong>Oil hit a 10-month high.</strong> Saudi Arabia and Russia extended oil output cuts until the end of the year. Tight supply lifted oil despite concerns over the demand outlook.</p>
<p><strong>The Eurozone&#8217;s August downturn was deeper thought.</strong> The composite PMI was downwardly revised to 46.7, contracting for a third month and indicating that a recession in H2 was looking likely.</p>
<p><strong>USD/JPY hit a fresh 10-month high.</strong> The pair rose to 147.80 after dovish comments from the BoJ &amp; weak household spending. The USD rose after upbeat data and hawkish comments from Fed officials.</p>
<p><strong>Eurozone GDP downwardly revised.</strong> The eurozone economy grew slightly slower by 0.1% QoQ in the April to June quarter, revised lower from 0.3%.</p>
<p><strong>RBA kept rates on hold.</strong> The central bank left rates at 4.1% for a third straight month in Philip Lowe’s final meeting at the helm. AUD/USD fell to a 10-month low.</p>
<p><strong>China banned the use of iPhones by government officials.</strong> Apple’s share price dropped 3.4% on the reports, marking its biggest daily decline in a month.</p>
<p><strong>China’s Country Garden avoided default.</strong> The group made payments on two-dollar bonds within their grace period, ending a month-long saga, and bringing relief to the property sector.</p>
<p><strong>ARM priced its IPO.</strong> The chip stock plans to float between $47-$52 per share, valuing the company at $52 billion. This is down slightly from the $64 billion valuation implied by a transaction in July.</p>
<p><strong>Noro Nordisk became Europe’s most valuable company.</strong> The Danish pharmaceutical weight loss drug manufacturer pushed LVMH off the top spot as demand for its drugs surged.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" class="alignnone wp-image-25486 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-2-1.png" alt="" width="602" height="297" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-2-1.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-2-1-300×148.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>At the time of writing, oil prices have risen for 9 straight sessions, marking the longest run of daily gains in over 4 years.</p>
<p>Both oil benchmarks rose to 2023 highs boosted by supply concerns as Saudi Arabia and Russia extended oil production cuts totalling 1.3 million barrels per day to the end of the year. The nations are showing a willingness to forfeit volume to keep prices higher.</p>
<p>Bob McNally, a former energy adviser to the White House said “Barring a sharp economic downturn, these supply cuts will drive deep deficits into global oil balances and should propel oil prices well above $90 per barrel”.</p>
<p>However, the artificially suppressed supply side is also battling demand outlook weakness from China and the US, should the Fed keep rates higher for longer.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. ECB rate decision</strong><br />
The ECB will deliver its interest rate decision on Thursday, September 14. The announcement comes as data points to a deteriorating economic outlook and the increased likelihood of a recession. Inflation is still over 2 times the ECB’s target, but with the risk of a prolonged economic downturn, another rate hike is less clear-cut.</p>
<p><strong>2. US CPI</strong><br />
US inflation unexpectedly ticked higher in August to 3.2% YoY from 3%, and core inflation is also proving to be sticky. Investors will be watching closely on Wednesday September 13 to see whether consumer prices continue along the cooling trajectory. Hotter-than-forecast inflation could fuel bets of a November rate hike. A September hike looks unlikely at this stage.</p>
<p><strong>3. China retail sales, industrial production</strong><br />
Concerns over the health of the Chinese economy have been gaining traction in recent weeks as data worsens and as the property sector shows more signs of weakness. This week sees the release of Chinese PMI data, trade data, and inflation figures at the end of the week. More signs of a faltering economic recovery could drag on risk sentiment, particularly if Chinese authorities hold back from releasing aggressive stimulus measures.</p>
<p><strong>4. UK jobs data</strong><br />
Wage growth hit a record high of 8.2% in the three months to July, creating a headache for the BoE as it continues hiking interest rates to tame inflation. However, there have been some signs of weakness seeping into the labour market, which could mean that wage growth will start to slow. Stronger-than-expected wage growth could fuel further rate hike expectations. GBP/USD has fallen to a 3-month low.</p>
<p><strong>5. German ZEW economic sentiment</strong><br />
The German ZEW economic sentiment is due on Tuesday, September 13, and comes as the outlook for the economy is deteriorating amid weak purchasing power, tumbling factory orders, and high-interest rates. The data comes as EUR/USD trades at a 6-month low.</p>
<p><strong>Economic Calendar Highlights</strong></p>
<p><img decoding="async" class="alignnone wp-image-25489 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-3-1.png" alt="" width="602" height="433" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-3-1.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-3-1-300×216.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: FXStreet.com</p>
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<h2>Technical Analysis:</h2>
<p>TA of the major asset classes (Forex &#8211; Commodities &#8211; Indices…).</p>
<p><strong>EUR/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25492 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-12-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>EUR/USD is in a downtrend, making lower highs and lows below the 50 SMA. RSI is in a bearish position and is oversold. The bias is for the bearish trend and momentum to carry price to test 1.06 with rebounds likely capped at 1.083 and then 1.09.</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25495 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-12-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>GBP/USD is in a downtrend, forming lower lows and lower highs beneath the 50 SMA. After failing to break 50, RSI is testing the low from August, the lowest it&#8217;s been this year but not oversold. The price just broke down below major support at 1.25.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25498 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-12-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>USD/JPY is in an uptrend, making higher highs and lows above the 50 SMA. RSI has twice been rejected at the 65 level. Price just broke out above a small bull flag, suggesting possible continuation higher.</p>
<p><strong>Gold (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25501 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-12-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XAU/USD is in a downtrend, making lower lows and highs below the 50 SMA. RSI is neutral. The second rebound off 1900 did not go as high, suggesting a possible break lower on the next test.</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25504 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-12-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XBRENT is in an uptrend, making higher highs and lows above the 50 SMA. RSI is in bullish overbought territory. Price has broken out above the August high (87.6) to make new a YTD high, seemingly breaking above a 9-month-old 70-90 trading range.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25507 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-12-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XUS500 is in an uptrend, making higher highs and lows but below the 50 SMA. RSI is neutral. Price pulled back for 3 days after a strong 4-day rally in a sign that the market has turned more rangebound.</p>
<p>Thank you very much for reading – and have a great week trading!</p>
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<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/the-week-ahead-11th-15th-september-the-eu-towards-recession-25482/">The Week Ahead 11th &#8211; 15th September: The EU towards recession?</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>