GBP rallies, Oil gains and US equities correct lower

Peter Iosif, ACA, MBA IronFX

GBP rallies across the board

The USD continued to lose ground in the FX market yesterday, yet across the Atlantic, the shock from the violent protests and the uncertainty for Eurozone’s and France’s political outlook still weighs fundamentally on EUR. Tomorrow, we highlight the release of the Euro Zone’s preliminary PMI figures for October and possibly lower than expected readings could weigh on the common currency. Across the Channel, the GBP seems to be the main winner in the FX market, despite any fiscal worries. With accelerating UK CPI rates and a tighter employment market, pound traders await the release of UK’s retail sales for September and preliminary PMI figures for October tomorrow, while BoE Governor Bailey speaks today and better than expected rates and figures along a possibly hawkish tone by Bailey could support the GBP further.

US stockmarkets correct lower

US stock markets were on the rise yesterday with SpaceX and Super Micro earnings reports boosting the market’s sentiment. Yet futures corrected lower during today’s Asian session as market worries for Tesla and its potential merger with SpaceX tended to worry investors. In today’s earnings calendar we note the releases of the less glamorous P&G, Lockhead Martin and Spotify. Fundamentally, market worries for inflation in the US and for AI trades are still present and seem to weigh on US equities, allowing for a more cautious market approach to emerge.

Oil gains some ground

Oil prices continued to correct lower yesterday yet jumped in today’s Asian session. The renewal of Houthi attacks on Saudi Arabia tended to intensify market worries for the supply side of the international oil market thus providing support on a fundamental level for oil prices. Possible further escalation of tensions in the area could provide additional support for oil, while an easing of the market’s worries could weigh.

Gold slides lower for fourth day in a row

Gold’s price slid lower for a fourth day in a row. Market worries for inflationary pressures in the US remain high given also the high oil prices, thus weighing on gold’s price. Gold traders also keep an eye out for the Fed’s meeting next Wednesday at which the bank is expected to remain hawkishly on hold, and we note the event as the next big test for gold’s price.

Other highlights for today

In today’s American session, we note the release of Canada’s PPI rates for September. In tomorrow’s Asian session, we get the preliminary PMI figures of Australia, Japan and Japan’s CPI rates for September.

Charts to keep an eye out

GBP/USD moved higher placing more distance between the 1.3300 (S1) support line and its price action. We maintain a bullish outlook for cable given also that the RSI indicator has risen above 50, implying a bullish market sentiment for the pair. Should the bulls continue to lead GBP/USD, the pair could break the 1.3510 (R1) resistance line and start aiming for the 1.3655 (R2) level. Should the bears take over, GBP/USD could reverse direction by breaking the 1.3300 (S1) support level, and start aiming for the 1.3155 (S2) support base.

WTI’s price edged higher in today’s Asian session yet remained well below the 101.00 (R1) resistance line. The intact upward trendline and the RSI indicator being above 50, dictate a bullish outlook, yet we worry for WTI’s inability to form new higher peaks and warn of a possible stabilisation. Should the bulls take over, we may see WTI’s price breaking the 101.00 (R1) resistance line, and aim for the 108.85 (R2) resistance level. Should the bears take over, we may see WTI’s price breaking the prementioned upward trendline, continue to break also the 94.30 (S1) support line and start aiming for the 87.55 (S2) support base.

GBP/USD daily chart

Support: 1.3300 (S1), 1.3155 (S2), 1.3010 (S3).
Resistance: 1.3510 (R1), 1.3655 (R2), 1.3865 (R3).

WTI cash daily chart

Support: 94.30 (S1), 87.55 (S2), 82.00 (S3).
Resistance: 101.00 (R1), 108.85 (R2), 114.00 (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.

AUD/USD pulls back from monthly high but holds above 0.7000

AUD/USD retreats from the monthly high set earlier this Thursday, sliding back to 0.7000 during the Asian session as a further escalation of tensions in the Middle East undermines the risk-sensitive Aussie. However, recent hawkish comments from RBA officials could support the Australian Dollar. Furthermore, the prevailing US Dollar selling bias, despite Fed hike bets and geopolitical uncertainties, could limit losses for the pair.

USD/JPY declines to a one-week low; eyes trading range support near 157.50 on weaker USD

USD/JPY drops to a one-week low during Thursday’s Asian session, with bears now awaiting a break below multi-week range support near mid-157.00s before placing fresh bets amid a broadly weaker US Dollar. Despite bets for a December Fed rate hike and Middle East jitters, the recent decline in US bond yields keeps USD depressed near a three-week low. Moreover, hawkish BoJ expectations and intervention risks underpin the Japanese Yen, further weighing on the currency pair.

Gold bounces off monthly low as USD selling remains unabated amid falling bond yields

Gold pares heavy intraday losses to the monthly trough, though it retains an intraday bearish tone below $4,100 during Thursday’s early European session. The US Dollar selling bias remains unabated as Federal Reserve officials recently signaled there is no urgency to raise interest rates at the upcoming October 27–28 meeting. Furthermore, US bond yields extend their retracement slide from multi-year highs, keeping USD bulls on the back foot and offering some support to the precious metal.

Dogecoin stays weak despite whales and new deal

Dogecoin price remains under pressure, trading below $0.081 despite a modest rebound earlier this week. Santiment data shows signs of accumulation, and Wednesday’s announcement of a Dogecoin Labs partnership with the Dogecoin Foundation adds a mildly bullish sentiment. Meanwhile, mixed derivatives metrics and weakening momentum indicators continue to limit the meme coin recovery.

Dow Jones Industrial Average climbs with the AI trade, led by a bank

The Dow Jones Industrial Average got most of its share of Wednesday's artificial intelligence (AI) rally from a bank and a bulldozer maker. The index closed near 52,800, its highest close since early September. SpaceX (SPCX) reported 161% revenue growth and the Nasdaq Composite rose more than 1%, but under price weighting the gains that counted most belonged to Goldman Sachs (GS) and Caterpillar (CAT).

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.