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A few days ago, talks between Israel and Gaza regarding ceasefire and hostage negotiations began, with Qatar, the United States, and Egypt acting as mediators. The White House was confident that the ceasefire talks would proceed smoothly and without issues. Hamas initially stated that they were willing to accept the original deal that President Biden had proposed.

President Biden himself remarked, “We‘re not there yet, but we’re much, much closer than we were three days ago. So, keep your fingers crossed.”

As the negotiations entered the second day on August 16th, there was a notable silence, with no apparent results reported by news outlets. Apart from some claims that Netanyahu had reportedly added four new conditions that Hamas could not agree to and that they were asking negotiators to pressure Israel into agreeing to Bidens original plan, there were no specific updates on the developments.

However, just a few hours ago, Hamas responded—the ceasefire and hostage negotiations had fallen apart. They claimed that the U.S. had sided with Israel and that the deal was something they could never accept. Some of the conditions included Israel maintaining its military presence inside the Gaza Strip, retaining control of the border with Egypt, and not agreeing to a permanent ceasefire.

I do not wish for an escalation of the war, but even I can see that this deal is unjust and does not adequately consider the people of Gaza—seemingly favoring Israel's interests. As I understand it, Hamas is being forced to relinquish land they hold, allowing enemy militant groups to move in unchallenged and potentially attack at any moment without repercussion.

Not to mention, this is a country believed to be behind the assassination of their military chief in Tehran.

Hamas insists that pressure must be put on Israel to accept the initial deal proposed by the Biden administration two months ago. Otherwise, there will be no further negotiations.

What do we fear might happen？ Initially, the looming threat of an attack from Hezbollah and Iran was held off due to the possibility of a successful negotiation. Now that talks have fallen through, it is presumed that these attacks may commence, potentially escalating into an all-out regional war.

And soon, potentially, into World War III. Why？ Because their allies will become involved. The U.S. will not allow Israel to fall, and Russia will not allow Iran to fall. Both of these countries have significant relations with their respective allies.

The death of a soldier from an allied nation in this conflict could be the catalyst for bringing more firepower into the conflict, possibly even reaching their own nations soil.

What will this news bring for us？ A likely fall in global market demand, a disruption in oil supply leading to a massive rise in demand and prices, doubt in West Asia, and potential fallout in trade and investments with the U.K. and Europe due to their proximity to the conflict and the potential threat to their borders. If war ensues, they are right next to ground zero.

This could also lead to disruptions in global trade as sea routes are affected by potential naval wars, a drop in risk-on assets like the stock market, a potential increase in demand for bonds and their prices, and a drop in yields—driven by uncertainty in the economy and the possible issuance of higher interest rates to combat rising prices due to inflationary expectations.

In addition, there will be increased demand for safe-haven assets that have managed to maintain value despite historical world wars: the Swiss Franc, the Japanese Yen, and metals like Gold and Silver.

Why is it important to note these potential factors, even if they are assumptions？ The fear of one can quickly become the fear of many. This could cause a disruption in the global supply chain, as one entity acting out of fear could trigger a cascading effect of others doing the same.

GOLD - Gold buying is currently evident in the markets as global concerns arise, pushing prices beyond the previous all-time high. The increase occurred at the end of August 16th, coinciding with the conclusion of the second day of ceasefire talks, with pessimism growing as reports emerged that Netanyahu had added two more conditions that seemed too absurd to accept. Prices are currently at 2503.865, breaking above the supply zone.

SILVER -Silver is showing a similar reaction to the news, as expected, moving toward 29.018 and potentially breaking through that level. We view this as a potential continuation of the price movement and a likely trend heading into September.

DXY - The Dollar lost strength after a dovish outlook from the Federal Reserve was released on Friday. Chicago Fed President Austan Goolsbee noted that the U.S. labor market and some leading economic indicators are flashing warning signs, citing rising levels of credit card delinquencies. Weaker-than-expected U.S. housing starts for July also added to the bearish sentiment.

Markets now see a 100% chance that the Fed will cut rates by 25 basis points in September, with a larger 50 bps reduction still possible. Investors are now looking ahead to Fed Chair Jerome Powells speech regarding the monetary policy path. However, this outlook may shift if wars in West Asia continue, as inflation expectations could change the narrative—potentially increasing the chances of a more hawkish Fed statement, which could surprise many traders with a sudden rise in prices.

GBPUSD - The Pound, as we observed last week, has indeed gained momentum, continuing to push prices upward and gaining strength against the Dollar as market expectations of a Fed cut reach 100%. However, there are doubts about the Pounds continued strength after the Bank of England raised the possibility of rate cuts in the coming months of 2024.

AUDUSD -The Aussie Dollar rose considerably after analysts and traders predicted no rate cuts anytime soon. It has been bolstered by a rebound in risk appetite, as strong U.S. retail sales and cooling inflation led investors to bet that the world's largest economy will dodge a recession and the Federal Reserve will cut rates in September. Fed members Mary Daly and Austan Goolsbee over the weekend flagged the possibility of easing in September, with investors expecting the same from Chair Jerome Powell in Jackson Hole on Friday. Currently, prices have risen beyond 0.66541.

NZDUSD -The Kiwi extends its rebound after the positive outlook of a Fed rate cut. However, it remains within the range of its previous high. While the possibility of the price continuing to rise beyond that point is not ruled out, the chances of a significant rally are lower, as market expectations of further rate cuts for the Kiwi are higher due to signs of economic slowdown. Although we saw improvements in recent data releases, it is still unsafe to entirely rule out potential weaknesses in the market. We suggest following specific systems to determine better entry points. Currently, prices are between 0.60455 and 0.60954.

EURUSD -The Euro has gained against the Dollar, and we see a potential continuation of price movement beyond 1.10361. Not much more can be said here, except to adhere to systematic trading practices to avoid being caught off guard by sudden reversals and to maintain proper risk management to prevent over-leveraging on USD trades.

USDJPY - The Yen has regained its losses against the Dollar, closing in on 146.512 and gaining considerable strength as expected. This recovery is supported not only by technical analysis and monetary policy expectations but also by fundamental assessments of geopolitical tensions.

USDCHF - The Swiss Franc (CHF) is also following our market expectations, failing to sustain trades beyond 0.87041. While there is potential for another attempt to test this level, we expect further price declines at that level.

USDCAD -The Loonie (Canadian Dollar) has found considerable strength against the Dollar, pushing prices toward 1.33612. Monday's open pushed prices lower as expectations of a potential oil disruption may cause the Loonie's price to rise significantly. While some anticipate further rate cuts by the Bank of Canada, we continue to monitor how prices evolve.

COT Report Analysis

CAD - WEAK (3/5)

CHF - WEAK (3/5)

GBP - WEAK (3/5)

JPY - STRONG (5/5)

EUR - WEAK (3/5)

AUD - WEAK (3/5)

NZD - WEAK (3/5)

USD - STRONG (4/5)

SILVER - STRONG (3/5)

GOLD - STRONG (5/5)