EURUSD
- Current Position: The EUR/USD remains in a consolidation phase below 1.0900 in Friday’s European session. Clearing the 200-day SMA could signal a more positive outlook for the pair.
- US Dollar and PCE Inflation: On Thursday, the US Dollar faced challenges as US Personal Consumption Expenditures (PCE) data showed a 2.7% year-over-year increase in core inflation for September, supporting a moderate inflationary trend in the US.
- Eurozone Inflation: The Eurozone’s annual inflation rate rose to 2.0% in October, exceeding expectations and the prior 1.7% reading. Core inflation in the Eurozone remains at 2.7% year-over-year, maintaining pressure on ECB policymakers.
- ECB Stance on Policy: The ECB reiterated its data-dependent and meeting-by- meeting policy approach in October, signalling a flexible stance based on economic data. The uptick in inflation may weigh on the ECB’s decision-making as it considers future rate adjustments.
- US Employment Data: Investors are adopting a cautious stance ahead of the US October employment report, which will reveal Nonfarm Payrolls and Unemployment Rate data, potentially providing insights into the Fed’s future monetary policy.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD remains range bound as markets weigh recent inflation data from both the Eurozone and the US. Eurozone inflation exceeding expectations adds pressure on the ECB, while the US PCE data suggests steady inflation stateside. Investors await key US employment data to assess potential shifts in the Fed’s stance, which could significantly impact the currency pair’s near-term direction.
GBPUSD
- Current Position: The GBP/USD holds steady around 1.2900 early on Friday after a significant drop on Thursday.
- Impact of UK Budget: The Pound Sterling (GBP) declined following the announcement of the Labour government’s first budget, which introduced £40 billion in tax increases. These measures aim to address public finance shortfalls and support public services, adding to economic concerns.
- Revised Inflation Forecasts: The UK Office for Business Responsibility (OBR) increased its 2024 inflation forecast to 2.5% from a prior 2.2% estimate. This revision suggests higher inflation pressures, leading traders to anticipate fewer rate cuts from the Bank of England (BoE) soon.
- BoE Policy Outlook: The BoE is expected to cut rates by 25 basis points in November but likely to hold steady in December, reflecting the cautious stance on inflation and economic growth.
- US Nonfarm Payrolls: Investors are looking forward to the Nonfarm Payrolls (NFP) report due later Friday. The US economy is forecasted to have added 113,000 jobs in October, with an Unemployment Rate steady at 4.1%, which could influence GBP/USD dynamics based on the Fed’s next steps.
| 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: The GBP/USD is stabilizing near 1.2900 as the market digests the UK budget’s impact and OBR’s inflation forecast revisions. As traders await the US NFP data, any surprises could prompt further volatility, potentially impacting the pair’s near-term trajectory.
GOLD
- Current Position: Gold (XAU/USD) is trading above $2,750 on Friday, recovering some ground after trimming most of its weekly gains. Despite a corrective decline in the daily chart, the trend is not yet indicating a bearish outlook.
- Fed Rate Cut Expectations: The Federal Reserve (Fed) will announce its monetary policy decision next Thursday, with a 25 basis points (bps) rate cut anticipated by 94.5% of the market, a slight decrease from the prior week’s 95.5%.
- Jobless Claims: Initial Jobless Claims for the week ending October 25 fell to 216,000, down from the previous 228,000, indicating a stable labor market.
- PCE Index: The Personal Consumption Expenditures (PCE) Price Index for September showed annual inflation at 2.1% and a monthly increase of 0.2%, in line with expectations. However, the core PCE rose 2.7% year-over-year, slightly above the anticipated 2.6%, which could influence the Fed’s approach to inflation.
- NFP Report on the Horizon: The US Nonfarm Payrolls (NFP) report is due on Friday, with 113,000 new jobs expected in October and the unemployment rate predicted to remain at 4.1%. This report could shift investor sentiment and impact Gold’s trajectory based on its effect on US Dollar strength.
Closing statement: Gold's resilience above $2,750 reflects investor caution ahead of the Fed’s decision and the NFP report. Despite a corrective pullback, the overall outlook remains cautiously optimistic as economic indicators continue to support safe-haven demand.
CRUDE OIL
- Current Position: West Texas Intermediate (WTI) Oil is steady around $70.60 per barrel during Friday's European trading hours, building on gains from the previous session.
- Geopolitical Risks: According to Israeli intelligence cited in a Reuters report via Axios, Iran may be planning an attack from Iraq involving drones and ballistic missiles, potentially before the US presidential election on November 5. This threat adds tension to the oil market, potentially supporting prices due to heightened geopolitical risk.
- OPEC+ Production Outlook: OPEC+ is reportedly considering delaying its planned output increase for December, possibly pushing it to January, due to ongoing concerns about weak demand and rising supply. This delay could provide additional support to oil prices by curbing supply growth.
- US Oil Production: US oil production reached a record 13.4 million barrels per day (bpd) in August, an increase of 1.5% month-over-month, according to the latest EIA report. This record output suggests supply pressures are still a factor.
- Market Sentiment: Crude oil remains a favored asset on Wall Street, with supportive indicators from the US and Chinese economies boosting market sentiment. Steady demand from the world’s two largest economies provides a supportive backdrop for crude prices.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The combination of geopolitical tensions, OPEC+’s potential delay of production increases, and strong US production data maintains WTI as a favoured trade, especially amid supportive economic signals from the US and China. Oil prices are likely to stay resilient, underpinned by a balanced supply-demand outlook and broader market interest.
DAX
- Current Trend: The DAX extended its losing streak to four sessions on Thursday, dropping by 0.93% after a previous 1.13% decline, reflecting broad market weakness and persistent selling pressure.
- Political Concerns: Fears around a potential second Trump presidency weighed on investor sentiment. Concerns are centered on possible punitive tariffs that Trump could impose, potentially worsening the already fragile Eurozone economy.
- Eurozone Inflation Data: Thursday’s Eurozone inflation report slightly increased from 1.9% in September to 2.0% in October. However, core inflation remained stable at 2.7%, moderating investor expectations for a significant 50-basis point ECB rate cut in December.
- US Economic Indicators: The US Personal Income and Outlays Report showed increased personal spending, pointing to persistent inflationary pressures. This data tempered expectations for a 25-basis point Fed rate cut in December, as higher spending could signal more inflation ahead.
- Upcoming US Jobs Report: Investors are closely watching the US nonfarm payrolls report on Friday. Expectations are for an increase of 113k jobs in October, following September’s surge of 254k, with the unemployment rate expected to remain at 4.1%. This data will be pivotal for further Fed policy direction.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The DAX remains under pressure amid concerns over US trade policies, persistent Eurozone inflation, and mixed economic signals from the US. Investor sentiment remains cautious, with upcoming US jobs data likely to influence short-term direction.