Markets in Asia were mostly higher on Thursday, tracking the positive overnight cues from Wall Street as investors evaluated the U.S inflation data and latest minutes from the September Fed meeting. The improving sentiment across Asian markets was also helped by optimism over the global economic recovery and prospects of higher interest rates to tame inflation. The greenback had it rough while gold enjoyed its best session in seven months, gaining almost 2% helped by falling Treasury yields. European markets have opened higher this morning with US futures also in the green.

Dollar humbled by inflation data

The dollar weakened across the board yesterday in a ‘buy the rumour, sell the fact’ reaction following the hot U.S inflation report. Consumer prices in the United States increased 5.4% year- over-year in September after advancing 5.3% in August and 0.4% versus expectations of 0.3% on the month. The decline in Treasury yields dragged the greenback lower with the Dollar Index (DXY) tumbling towards the 94.00 level. While the firm inflation data reinforced taper expectations, it has also fuelled speculation around the Federal Reserve raising interest rates sooner than expected. This has been reflected in Fed Funds futures which have pulled forward the first interest rate hike from late 2022 to almost a full 25 basis point hike by September. The prospects of higher interest rates down the line could limit the dollar’s losses.

Fed officials see tapering in Q4

According to the minutes from September’s policy meeting, Federal Reserve officials agreed they should start tapering in mid-November or mid-December. In regard to inflation, most officials at the meeting expressed concerns over the associated risks due to supply disruptions and labour shortages. Overall, the minutes were hawkish and confirmed that tapering could start as early as next month.

Oil bulls remain in the building

Oil is continuing its upward trend, driven by the global energy crunch and supply restraints from the world’s top producers. The commodity found itself under pressure on Wednesday thanks to OPEC’s monthly report and the American Petroleum Institute reporting a larger-than-expected increase in stockpiles. OPEC cut its global demand outlook for 2021 from 5.96 million barrels per day (bpd) to 5.82 million bpd due to the Delta variant outbreaks in the summer. However, it left its forecast for 2022 unchanged at 4.15 million bpd.

All eyes will be on the Energy Information Agency (EIA) U.S crude oil inventory report and the International Energy Agency (IEA) monthly oil market report today. If they illustrate a similar outlook to OPEC, where the demand is projected to decline in 2021, this could impact upside gains.

Both WTI and Brent crude have appreciated over 60% since the start of 2021. With Brent trading around $83.88 as of writing, some analysts are targeting the psychological $100 level in 2021 which has not been seen since 2014.

Commodity spotlight - Gold

Gold prices exploded higher on Wednesday afternoon, gaining almost 2% as the dollar and Treasury yields tumbled following the hot US inflation report. With gold highly sensitive to taper expectations, real yields and the dollar’s direction, the next few weeks could be wild for the precious metal.

In regard to the technical picture, the widely watched 200-day moving average is just below $1800. But a strong move above that level could open the doors towards the summer highs at $1834. Should $1800 prove to be reliable resistance, a decline back towards $1777 could be on the cards.

Disclaimer:This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD remains vulnerable near 1.1600 amid firmer dollar

EUR/USD is hovering around 1.1600, on the defensive amid a broadly stronger US dollar. Markets cheer US-Sino talks and stimulus progress despite looming inflation fears. The Fed-ECB monetary policy divergence weighs down on the euro. US Consumer Confidence data awaited.

EUR/USD News

GBP/USD hovers around 1.3750, Brexit talks in London eyed

GBP/USD is trading above 1.3750, struggling for a clear direction after Monday’s rebound. Market sentiment improves on stimulus hopes, US-Sino talks but the dollar remains firmer. UK’s Frost offers EU Dec deadline to solve the row over the NI proposal. All eyes on the Brexit talks.

GBP/USD News

XAU/USD flirts with $1,800 amid stronger USD, risk-on mood

Gold snaps a five-day uptrend, refreshes intraday low of late. Market sentiment dwindles amid pre-GDP caution, light calendar. US Treasury yields rebound, add strength to the greenback.

Gold News

Traders book profits from Shiba Inu to push Dogecoin to $0.34

Dogecoin price could see some incoming speculative money from profit-taking in Shiba Inu A bullish close above the Cloud on the daily chart indicates future upswing likely. The outperformance of Shiba Inu is likely as Dogecoin lags the majority of the market.

Read more

Conference Board Consumer Confidence October Preview: Watch what we do... Premium

Confidence expected to slip to 108.3 from 109.3 in September. Michigan Consumer Sentiment eroded slightly in October. Sentiment seems divorced from labor market and Retail Sales. Federal Reserve taper will not hinge on a happy US consumer.

Read more

Majors

Cryptocurrencies

Signatures