Strong jobs data, fragile risk sentiment and a Dollar at resistance

Frank Walbaum

Important news this week

Tue, 10th, 14:30 CET US Consumer Price Index (Core).

Thu, 12th, 08:00 CET UK Gross Domestic Product.

Fri, 13th, 14:30 CET US Producer Price Index.

Strong jobs data, fragile risk sentiment and a Dollar at resistance

The US dollar starts the week with a stronger tone after last week's gains, but the Dollar Index remains below the important 102.00 resistance area. The surprisingly strong NFP report has complicated the outlook: while it confirms the resilience of the US economy, it may also give the Federal Reserve more reason to maintain a restrictive policy stance or even consider further tightening if inflation remains persistent. This could support the dollar, but the technical resistance still leaves room for another rejection and renewed weakness.

Market talk

Oil ended the week on a weak note, trading below $90 on the weekly chart. The recent loss of momentum suggests further downside may be possible, particularly if demand concerns continue to outweigh geopolitical supply risks. Lower energy prices could provide some relief for inflation and consumers, although a deeper decline might also reflect concerns about global economic growth.

Equity markets remain mixed. US technology stocks have attempted a recovery, but the sector continues to face considerable pressure. Concerns about elevated AI investment, valuations and the ability to turn infrastructure spending into sustainable profits remain important obstacles. The growing controversy surrounding Nvidia CEO Jensen Huang could add another layer of uncertainty and keep sentiment towards major technology stocks fragile.

In FX, AUD/USD remains under significant pressure, although a modest recovery has emerged. The pair continues to reflect weak risk sentiment, and a sustained recovery would be needed before the broader technical outlook improves.

Cryptocurrencies are also struggling. Selling pressure increased again over the weekend, keeping the outlook negative. Bitcoin remains below its 50-week moving average, an important technical warning that leaves the door open to further losses. Ethereum and the wider crypto market are also vulnerable if risk appetite continues to deteriorate.
Precious metals are moving in the opposite direction. Gold and silver have turned higher despite the stronger US dollar, suggesting that safe-haven demand and portfolio hedging remain relevant. Gold is approaching its 50-day moving average around $4,150. A break above this level could improve the short-term technical picture and signal a stronger recovery.

Overall, markets remain caught between a resilient US economy and growing concerns about risk assets. The dollar's reaction around 102.00, the performance of AUDUSD and the ability of gold to break above its 50-day average will be important signals to watch this week.

Tendencies in the markets

Equities slightly positive, USD weaker, crypto negative, oil weak, metals positive, JPY mixed.

Author

Frank Walbaum

AUD/USD holds rebound near 0.6900 on US-China trade optimism

AUD/USD holds the rebound near 0.6900 in the Asian session on Monday. Mixed China's inflation data for October fails to provide any inspiration to the Chinese proxy, the Australian Dollar, but China's extension of the suspension of 24% tariffs on US goods and reduced US-Iran tensions help the Aussie pair cling to recovery gains.

USD/JPY retreat in sync with USD, appraches 158.00

USD/JPY is back in the red at the start of the week on Monday, eyeing the broad US Dollar retreat amid easing US-Iran tensions. Traders also resorting to profit-taking following the blockbuster US Nonfarm Payrolls data-led rally. US CPI report is next in focus.

Gold rises amid US-Iran peace deal hopes, softer US Dollar

Gold price recovers some lost ground above $4,020 during the early European trading hours on Monday. The prospects of diplomacy in the US-Iran conflict and weaker US Dollar (USD) boost the precious metal.

Solana: Persistent ETF outflows extend downside risk in SOL

Solana trades below $90 on Monday, ticking higher after over 3% losses below a long-term support trendline the previous day. SOL has been steadily declining over the last five weeks, aligning with five straight weekly outflows from Solana-focused Exchange-Traded Funds totaling over $150 million.

Economics week ahead

This week, attention turns to Tuesday’s CPI report, with no year-over-year readings available because of last October’s shutdown-related data gap. We expect headline and core inflation to clock 0.28% and 0.21% month-over-month, respectively. Softer core inflation would offer some relief after September’s upside surprise but should still leave our call for a December rate hike intact.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.