USD vulnerability inspires bullish momentum in the commodity markets

Global Market

Dollar vulnerability remains the main theme which resonates within the global currency markets. The continuous diminishing expectations of a US rate hike in 2015 combined with the lack of clarity offered by the September meeting minutes has exposed the USD to more losses. Anxious market participants add additional pressure on the Dollar for which sentiment already remains bearish, and this can be reflected in the Dollar Index. The index remains technically bearish and any additional USD weakness derived from any soft economic data releases from the States this week may invite an opportunity for prices to decline to the next relevant support at 94.00.

Commodity markets experienced an appreciation in Monday’s European session on the back of Dollar weakness. Gold printed heavy gains trading to new daily highs of 1166.57 whilst WTI clipped to the $50 level. Investor anxiety inherited from the lack of direction on the US rate hike complimented with a risk-off trading environment has translated into an increased appetite for Gold. Additional risks associated with soft economic data releases from Asia may act as a catalyst which should send this yellow metal to the next relevant resistance at 1170.0 before the end of the trading week.

Asian equity markets wasted no time on Monday, with most concluding in green territory. The increased expectations that central banks may support growth by easing policy further may have temporarily mitigated the heavy risks concerning the development within the global economy. With these risks temporarily subdued, this has translated to some positive sentiment towards Asian equities in which as of writing the Shanghai Composite Index concluded +3.28% higher. Escalating expectations that further monetary policy from China may be impending should result in more upside momentum within the Shanghai Composite. This positive sentiment experienced within the Asian equities may ripple into the European and American equity markets this week.

The economic calendar today is fairly light but due to USD sensitivity the speeches from the FOMC members in the American session may promote some volatility later today. Market participants will be looking for any additional clarity or direction offered on the topic of a US rate hike.

Dollar Index

The Dollar Index is technically bearish on the daily timeframe. Prices are trading below the 20 Daily SMA and the MACD has crossed to the downside. As long as prices can keep below the 96.50 resistance, there may be a decline to the next relevant support at 94.00.

EURUSD

The EURUSD is technically bullish on the daily timeframe. Prices are trading above the 20 daily SMA and the MACD has crossed to the upside. Dollar weakness may provide the fuel to send prices to the next relevant resistance at 1.1430. A breakout above this level may open a path to 1.1620.

GBPUSD

The GBPUSD experienced an aggressive move to the upside based on USD weakness. Prices have traded above the daily 20 SMA but the MACD still trades to the downside. Prices currently reside around the 1.5350 which has been previous support in the past. A breakout above this new resistance may open a path to 1.5450.

USDJPY

The USDJPY has existed in a tight range for an extended period of time. As long as prices can keep below the 121.70 resistance, this pair remains bearish. A breakout or down within this dynamic wedge may be the first signal.

AUDUSD

The AUDUSD is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. The next relevant resistance is based at 0.7450.