Bullish tendencies for Oil, AI worries for US equities

Peter Iosif, ACA, MBA IronFX

USD stabilises while Aussie gets support from hawkish RBA

The US dollar seemed to resist bearish tendencies in today’s Asian session yet is still at rather low levels. In the UK, the pound failed to get some support from the higher-than-expected UK September CPI rates. In the land of down under, AUD reached a three-week high against the USD. RBA Deputy Governor Hauser said that the inflation outlook looked "materially worse“ and additional possible hawkish signals could add more support for AUD in the FX market.

US stock markets boosted by positive earnings releases

US stock futures were up in today’s Asian session, as traders considered the latest round of earnings reports. SpaceX’s figures, which may have been the highlight yesterday, were better than expected and overall the market sentiment seemed to get a boost yesterday. Today we expect market focus to be placed on the releases of Meta Platforms, Tesla and IBM. On a deeper fundamental level, we note that market sentiment seems to turn more cautious given inflation and AI worries, exercising downward pressure on US equities.

Oil prices continue to rise

Oil prices were on the rise in today’s Asian session, as escalating tensions in the Gulf region fueled fears of supply disruptions. Market worries intensified about disruptions and risks in oil shipping through the Red Sea, but also threats to oil infrastructure in Saudi Arabia. Also, the drawdown reported for US oil reserves by API yesterday added to the bullish market sentiment for oil.

Gold remains stable

Gold’s price edged lower for a fourth day in a row, during today’s Asian session, yet is still in a sideways motion. Higher oil prices stoked inflationary concerns for the US economy, weighing on gold’s price. Also, gold traders tend to keep an eye out for next week’s Fed meeting, at which the bank is expected to remain on hold, yet the bank is expected to proceed with monetary policy tightening in its December meeting.

Other highlights for today

In today’s American session, we get the US EIA weekly crude oil inventories figure and later ECB President Christine Lagarde speaks. In tomorrow’s Asian session, we New Zealand’s CPI rates for Q3 and in the European session, we get France’s October Business climate and UK’s CBI indicators for October and Q4 and later on Canada’s October Business barometer and Turkey’s CBT interest rate decision and the bank is expected to cut rates which could weigh further on the TRY.

Charts to keep an eye out

AUD/USD moved higher breaking the 0.6995 (S1) resistance line, now turned into a support level. We maintain a bullish outlook for the pair yet note that the RSI indicator remains near 50, implying a rather indecisive market hence along the bullish outlook we also issue a warning for any possible tendencies of stabilisation. Should the bulls lead the pair, AUD/USD could aim if not break the 0.7085 (R1) line. Should the bears take over, AUD/USD could break the 0.6995 (S1) level, and start aiming for the 0.6905 (S2) line.

Dow Jones rose yesterday testing the 52685 (R1) resistance line. We maintain a bullish outlook for the index and intend to keep it as long as the upward trendline guiding it remains intact. The RSI indicator rose above the reading of 50, implying a growing bullish market sentiment for the index. Should the bulls maintain control, we may see Dow Jones’ price action breaking the 52685 (R1) resistance line, and start aiming for the 53500 (R2) resistance level. For a bearish outlook we would require a break below the prementioned upward trendline signalling an interruption of the upward movement and Dow Jones’ price to continue to drop by breaking the 51700 (S1) support level and start aiming for the 50500 (S2) support level.

Calendar follows

AUD/USD cash daily chart

Support: 0.6995 (S1), 0.6905 (S2), 0.6830 (S3).
Resistance: 0.7085 (R1), 0.7185 (R2), 0.7280 (R3).

US 30 Cash daily chart

Support: 51700 (S1), 50500 (S2), 49600 (S3).
Resistance: 52685 (R1), 53500 (R2), 54730 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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