• Equity markets

  • Oil

  • Gold

Equities quickly bounce back

It didn't take long for investors to buy the dip, with equity markets back in the green on Thursday following a two day pause which appeared to be nothing more than soft profit taking.

The rebound even follows a brief dip in US futures overnight, which came very suddenly and appeared to be triggered by very little, but those losses were gradually recouped over the following hours. The US inflation data on Wednesday didn't do the markets any harm, with the slight dip only adding to the case for rate cuts this year, although it wasn't quite significant enough to dramatically alter people's views.

The odds have slightly moved in favour of a third rate hike by the end of the year – although no hike this month – but this has been something of a coin toss for a while with the pendulum swinging back and forth between two and three. Ultimately, the meeting – assuming it takes place – between Trump and Xi later this month will highly influence how aggressive the Fed will be, which is probably largely why the central bank is expected to hold this month.

Oil spikes on reports of tanker explosions

Oil prices have spiked on Thursday following reports of tankers being attacked in the Gulf of Oman, off the coast of Iran. This comes a month after allegations of sabotage in the same region, which was blamed on Iran and threatened to stoke further tensions in the region. It comes at a time when the US has imposed sanctions on Iran in an attempt to reduce oil exports to zero, ruin the economy and apply maximum pressure to the regime after Trump pulled out of the nuclear accord.

The knee jerk reaction is more a response to the risks associated with higher tensions in the region and prospect of more attacks, than immediate impact on oil supplies. It comes at a time when oil prices have been under pressure from weaker economic prospects and record US output, despite efforts by OPEC and its allies to reduce output and cut the oversupply. WTI was hovering around $50 when the reports came out which may have aided the rally, being such a key support level. As long as prices remain below $55 though, it will continue to look vulnerable.

Gold eyes prior peak after brief correction

Gold is continuing to edge higher today, supported to an extent by the weaker dollar, not that it held the yellow metal back much yesterday. It found strong support around $1,320 earlier this week and has since burst higher with the previous peak around $1,350 in its view. A break of this could propel gold higher, although it will have to be matched with momentum because as we saw last week, the absence of this saw it reverse course very quickly.

The shallow correction earlier this week will be encouraging for gold bulls, having only retraced around a third of the previous rally, although this optimism may fade fast if it runs out of steam prior to the peak. Risk appetite in the markets is likely to work against gold but the dollar looking vulnerable is clearly supportive.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD defends gains above 1.1300 amid broad dollar recovery

EUR/USD defends gains above 1.1300 amid a broad-based US dollar recovery. The shared currency remains at the mercy of the broader market sentiment as the data docket is light on Monday. COVID-19 stats in focus. 

EUR/USD News

GBP/USD batting to extend gains beyond 1.2600

Risk-on mood limits the dollar’s bullish potential. GBP/USD bounces from daily lows, but Brexit concerns weigh on Sterling. BOE Governor Bailey's speech awaited.

GBP/USD News

Gold sits near daily tops, just below $1810 level

A combination of supporting factors assisted gold to regain positive traction on Monday. Sustained USD selling remained supportive amid concerns about rising COVID-19 cases. The prevalent risk-on mood might turn out to be the only factor capping any strong gains.

Gold News

Dominance war to push Ethereum to $270

The Altcoin segment is still in full swing while the crypto board leaders, Bitcoin and Ethereum, remain stuck at the same levels as in recent weeks. The dispute for market share, or dominance in technical terms, remains at a point of maximum tension. 

Read more

WTI breaches $40 mark as talks of OPEC+ output cuts easing weigh

WTI (August futures on Nymex) extends Friday’s sell-off into the European trading this Monday, following a brief consolidation seen above $40 mark earlier in the Asian session.

Oil News

Forex Majors

Cryptocurrencies

Signatures