EURUSD
- The EUR/USD pair has been losing ground for the second consecutive day and is trading near 1.0696, just above the psychological support level at 1.0700. This decline reflects a recent trend of weakness.
- Federal Reserve (Fed) officials have been sending mixed signals regarding the future path of interest rate hikes. This led to a rise in U.S. Treasury bond yields on Monday and prompted some short-covering moves in the U.S. Dollar (USD).
- On Tuesday, Fed Governor Christopher Waller and New York Fed President John Williams are scheduled to speak. Any hints they provide regarding the future of interest rates will likely have a significant impact on the USD's direction.
- The main event risk for the week is expected to be the speech by Fed Chair Jerome Powell on Wednesday and Thursday. Powell's statements will be closely monitored as this is his first appearance after the November Fed meeting.
- Over the weekend, European Central Bank (ECB) President Christine Lagarde made hawkish remarks that are providing some support for the shared currency (EUR) and helping limit the downside for the EUR/USD pair.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: In summary, the EUR/USD is currently in a downtrend, influenced by mixed signals from the Fed regarding interest rates. Key speeches from Fed officials this week, as well as Jerome Powell's address, will be closely watched for potential impacts on the USD. Additionally, support from Christine Lagarde's hawkish comments is helping to mitigate EUR/USD's losses.
GBPUSD
- GBP/USD reversed its previous direction and retreated to the 1.2350 area after reaching its highest level in nearly two months at 1.2430. This reversal indicates a shift in sentiment for the currency pair.
- The US Dollar (USD) is making a recovery from a near eight-week low, which is putting pressure on the GBP/USD pair. This recovery is driven by less dovish remarks by members of the Federal Reserve (Fed) and an uptick in US Treasury bond yields on Monday.
- The British Pound (GBP) is facing downward pressure due to the Bank of England's (BoE) bleak outlook. The BoE stated that the UK economy risks falling into a recession next year, which has weighed on the GBP.
- The GBP/USD pair faced a failure near the technically significant 200-day Simple Moving Average (SMA), which has contributed to the recent selling pressure and a mildly offered tone for the currency pair.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: Gold price is facing continued selling pressure for the second consecutive day and is maintaining a bearish tone. It is trading just above the monthly low, indicating a decline in demand for the precious metal.
GOLD
- Federal Reserve (Fed) Governor Lisa Cook mentioned that the central bank's current target interest rate is adequate to return inflation to the Fed's 2% target. However, the Fed remains vigilant to ensure that the inflation target is achieved. This suggests that the Fed is closely monitoring inflation dynamics.
- Minneapolis Fed President Neel Kashkari stated that he would lean towards overtightening monetary policy rather than risking not doing enough to bring inflation down to the central bank's 2% target. This commentary introduces uncertainty regarding the Fed's future policy actions.
- Investors are increasingly convinced that the Federal Reserve is nearing the end of its rate-hiking cycle. This sentiment has been reinforced by the softer US jobs data released on the previous Friday. Market pricing now indicates a higher likelihood of the Fed cutting interest rates in June 2024.
- The central focus for the gold market remains on the upcoming appearances by Fed Chair Jerome Powell on Wednesday and Thursday. His statements and insights into the Fed's future policy decisions are expected to have a significant impact on the precious metal's price.
Closing statement:In summary, Gold (XAU/USD) is under selling pressure, partly due to recent statements from Fed officials creating uncertainty about the central bank's future policy decisions. Market expectations are leaning towards the end of the rate-hiking cycle and potential rate cuts in the future. The market is closely monitoring the upcoming appearances of Fed Chair Jerome Powell for further guidance on the Fed's stance.
CRUDE OIL
- Western Texas Intermediate (WTI) is trading lower, near $79.80 per barrel during the Asian trading session. This marks the first time it has fallen below the $80 threshold since August.
- Crude oil prices are experiencing a retracement, with the primary driver being downbeat economic data from China, the world's second-largest oil consumer. This data has offset the positive impact of commitments from major oil-producing nations, Saudi Arabia and Russia, to cut production by 1.2 million barrels per day until the end of 2024.
- China's Trade Balance data for October indicates a reduced surplus balance at $56.53 billion, falling significantly short of market expectations. Exports on a year-on-year basis saw a notable decline of 6.4%, surpassing the expected decline of 3.1%.
- Analysts from UBS suggest that the production cuts initiated by Saudi Arabia and Russia might extend into the first quarter of 2024. This potential extension is attributed to seasonally weaker oil demand that typically occurs at the beginning of each year.
- Global manufacturing Purchasing Managers' Index (PMI) data points to a slowing economic slowdown. This could act as a limiting factor on oil prices, as weakening economic conditions tend to reduce demand for oil.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement:Crude oil prices are on the decline, mainly due to disappointing economic data from China, which has outweighed the positive impact of production cuts by major oil-producing nations. There is also speculation about the potential extension of these production cuts into the first quarter of 2024, but the overall economic slowdown is tempering oil price gains.
DAX
- German factory orders increased by 0.2% in September, surprising economists who had expected a 1.0% decline. This data followed a 3.9% surge in August, suggesting that the German manufacturing sector is holding its recovery momentum.
- In October, the German Services PMI fell from 50.3 to 48.2, while the Eurozone Services PMI decreased from 48.7 to 47.8. The services sector represents a significant portion of the euro area economy, and the weak PMI numbers continue to signal an economic recession in the Eurozone.
- Investor caution is evident, as they await speeches from the European Central Bank (ECB) and the Federal Reserve (Fed) this week. The focus has shifted from monetary policy expectations and earnings to the macroeconomic outlook, which appears gloomy for the German and Eurozone economies. This could test the appetite for riskier assets.
- Germany's industrial production continued to decline in September. Official data showed a drop of 1.4% month-on-month, indicating dwindling activity in the manufacturing sector, which is a crucial part of the Eurozone's economic powerhouse.
- On Tuesday, Eurozone producer prices will be closely monitored. A more significant decline in year-on-year producer prices would confirm a weakening demand environment. In addition, speeches by ECB Executive Board members will be noteworthy. Luis de Guindos, Elizabeth McCaul, and Andrea Enria are scheduled to speak.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: In summary, despite better-than-expected German factory orders, weak Eurozone Services PMI and declining industrial production are raising concerns about the overall economic health of Germany and the Eurozone. Investor caution is prevalent, and the focus is on macroeconomic outlook amid speeches from central bank officials.