October’s US CPI rates eyed

Peter Iosif, ACA, MBA IronFX

October’s US CPI rates to dominate the markets

The USD was on the retreat as the week began in the FX market, reversing any gains made on Friday by the stronger-than-expected US employment report for October. Today we highlight the release of the US CPI rates for October. Should the rates accelerate, given also the tightening of the US employment market, then the way for the Fed to tighten its monetary policy in December opens. In the flip side, should the rates slow down, we may see the greenback sliding lower.

US stock markets regain some ground

US stock market indexes like Dow Jones, S&P 500 and Nasdaq were on the rise yesterday as lower oil prices tended to improve the market sentiment. Also, a possible slowdown of the US CPI rates for October could lift US equities, including tech shares. In today aftermarket hours we get CoreWeave’s earnings report. Should the EPS and Revenue figures rise beyond expectations and be accompanied also by a robust forward guidance by the company, the market’s sentiment may improve further, supporting US equities.

Diplomacy hopes set Oil prices under pressure

Oil prices remained under selling pressure as market hopes for diplomacy to reach a breakthrough in the US-Iran conflict intensified. Further downplaying of the risk of an escalation in the US-Iran conflict by US President Trump, tends to ease market worries for the supply side of the international oil market thus weighing on its price.

Gold’s price edges higher

Gold’s price edged higher yesterday, as oil prices edged lower, enhancing market hopes for lower inflation in the US economy. We continue to view the negative correlation between gold’s price and oil prices as being active currently. Today we note the release of October’s US CPI rates and a possible acceleration of the rates could weigh on the precious metal’s price and vice versa.

Other highlights for today

Today we note the speeches of Dallas Fed President Logan, Kansas Fed President Schmid and Fed Vice Chair Bowman while the BoC issues last meetings summary of monetary policy deliberations and API releases its weekly oil inventories figure. Tomorrow in the Asian session, Fed Vice Chair Bowman and Philadelphia Fed President Paulson speak and later on we get Germany’s final HICP rate for October

Charts to keep an eye out

S&P 500 rallied yesterday breaking the 7490 (R1) resistance line now turned to support. The RSI rose nearing the reading of 50, implying a switch in the market sentiment from a bearish one to a neutral stance for the index. Given that the downward movement of the index has been interrupted and the bearish market sentiment has eased, we switch our bearish outlook in favour of a sideways motion bias for now. Should the bears regain control over S&P 500, we may see the index breaking the 7490 (S1) support line and start aiming, if not breaching the 7330 (S2) support level. Should the bulls take over, we may see the index breaking the 7620 (R1) resistance line, and start aiming if not breaching also the 7750 (R2) resistance level.

XAU/USD’s price action, edged higher yet remained between the 3960 (S1) support line and the 4275 (R1) resistance level. Also the RSI indicator remains just above the reading of 50, implying a rather neutral stance on behalf of the market for gold’s price, allowing us to maintain yesterday’s sideways motion bias for the time being. Should the bulls take over we may see gold’s price breaking the 4275 (R1) resistance line and start aiming for the 4550 (R2) resistance base. Should the bears take over, gold’s price may drop below the 3960 (S1) support line and start aiming for the 3600 (S2) level.

Calendar follows

US 500 Cash daily chart

Support: 7490 (S1), 7330 (S2), 7190 (S3).
Resistance: 7620 (R1), 7750 (R2), 7875 (R3).

XAU/USD daily chart

Support: 3960 (S1), 3600 (S2), 3250 (S3).
Resistance: 4275 (R1), 4550 (R2), 4890 (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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