EURUSD
- EUR/USD Price: EUR/USD is trading in a narrow range around 1.0850 in the Wednesday European session, reflecting investor caution as the market digests recent gains.
- ECB on Rate Cuts: Within the European Central Bank, opinions differ on the necessity for further rate cuts. ECB board member Isabel Schnabel emphasized that while the upcoming US presidential election could impact European economic policy, the ECB doesn't see a need for immediate action based on potential outcomes. This cautious stance suggests a wait-and-see approach amid political uncertainties.
- Bundesbank President on Inflation: Bundesbank President Joachim Nagel believes the ECB is close to reaching its inflation goals but acknowledges persistent inflationary pressures in services, where inflation remains at 3.9%. This commentary indicates that the ECB is monitoring inflation closely, especially in sectors that may sustain higher prices longer than anticipated.
- US Economic Resilience: Recent US macroeconomic data points to sustained economic strength. The ADP reported a robust 233,000 private-sector jobs added in October, underscoring steady labor market momentum. Separately, the US Bureau of Economic Analysis revealed that Q2 GDP growth was revised to 2.8% (annualized), slightly lower than the previous 3% but still indicator of economic resilience.
- Strong US Data: The strong US employment data and GDP growth figures may support the US dollar, given expectations that the Federal Reserve might adopt a less aggressive approach to easing. This economic resilience reinforces the dollar's appeal.
| 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 EUR/USD remains in a consolidation phase as ECB officials adopt a cautious outlook while the US economy displays ongoing strength. As markets await further policy signals and economic data, EUR/USD may encounter resistance around current levels, with the euro's direction depending on upcoming ECB and Fed policy decisions.
GBPUSD
- GBP/USD Price: GBP/USD trades around 1.2970 during the European session on Thursday, attempting to recover from recent declines. The pair faces mixed sentiment as traders evaluate both UK fiscal policy changes and US economic data.
- Impact of the UK Budget: The Pound Sterling saw downward pressure after the UK’s new Labour government presented its first budget on Wednesday, which included £40 billion in tax hikes. This budget, aimed at addressing public finance deficits and enhancing public services, has added fiscal tightening concerns for GBP traders.
- Upcoming Speech: Traders are closely watching a speech by Bank of England (BoE) Deputy Governor Sarah Breeden at the Hong Kong Monetary Authority and Bank for International Settlements conference. Insights from this speech could provide clues on the BoE’s stance on monetary policy amid fiscal changes in the UK.
- US GDP: On Wednesday, US GDP growth for Q3 was reported at 2.8% annualized, down from 3.0% in Q2 and below the forecast of 3.0%. The slightly lower growth rate created modest headwinds for the US dollar, as it added to speculation about the Fed’s next moves on rate policy.
- US PCE Price Index: Later in the North American session, traders will be focused on the US Personal Consumption Expenditure (PCE) Price Index, which is closely watched by the Fed as a key inflation gauge. The outcome could influence expectations for Fed rate adjustments, affecting both US bond yields and the GBP/USD exchange rate.
| 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: GBP/USD faces a balanced outlook amid the UK’s new fiscal policy direction and moderating US growth signals. Key updates from the BoE and US PCE data could steer near-term sentiment, with the pair likely to react to inflation and central bank policy cues from both regions.
GOLD
- Gold’s New Highs: Gold (XAU/USD) is in a consolidation phase, trading just below the recent record high of $2,790. The precious metal is well-positioned to benefit in both risk-off environments, where it typically attracts safe-haven flows, and in scenarios where a weaker US dollar provides support.
- US ADP Data: The US Dollar found strength after a robust ADP report, with private sector job creation in October at 233,000, significantly higher than the expected 115,000. This data supported the dollar, weighing on gold’s momentum as it signals resilience in the labor market.
- US Inflation Trends: The inflation metric reinforces expectations that the Federal Reserve might remain cautious on rate cuts, impacting gold’s outlook against the USD.
- Political Uncertainty: Persistent uncertainty around the US presidential election continues to drive demand for gold as investors hedge against potential volatility. This political backdrop supports ongoing intraday buying interest.
- Key Upcoming Data: The September PCE Price Index in the US, due Thursday, may have a moderate impact given the quarterly inflation figures already included in the GDP report. Additionally, Friday’s October Nonfarm Payrolls report is expected to provide further insights on US employment trends, influencing both USD and gold sentiment.
Closing statement: Gold’s position remains strong as it benefits from risk aversion and safe-haven demand amid political uncertainties and strong USD data. Key US data points may continue shaping its direction, but overall, gold appears well-supported on dips as it tests record levels.
CRUDE OIL
- WTI Price: West Texas Intermediate (WTI) crude oil is trading near $68.60 in early Thursday’s European session, as market sentiment fluctuates amid mixed inventory data and geopolitical risks.
- EIA Inventory Data: The US Energy Information Administration (EIA) reported a modest decrease in US crude stockpiles by 0.515 million barrels for the week ending October 25. This decrease surprised markets that were anticipating a much larger build of 2.3 million barrels, providing some support to oil prices.
- Potential OPEC+ Production Decision: Crude prices might find additional backing on expectations that OPEC+ could consider delaying the planned December production increase. Such a delay would likely support prices by maintaining supply constraints, as the alliance monitors demand and price trends.
- Geopolitical Concerns: Escalating tensions in the Middle East continue to impact market sentiment. Israel’s military has issued stern warnings of significant retaliation if further missile attacks from Iran occur, adding to global supply concerns.
- US Envoy Ceasefire Proposal: In a potential de-escalation, US envoy Amos Hochstein reportedly suggested a possible ceasefire between Israel and Hezbollah could be reached before the US elections on November 5, according to Lebanese Prime Minister Najib Mikati. Such developments could ease supply disruption fears, exerting downward pressure on oil prices.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: WTI crude oil is positioned for mixed movements as conflicting factors, including inventory draws, potential OPEC+ supply adjustments, and geopolitical tensions, drive short-term fluctuations. Traders may look to geopolitical developments and further supply news as they gauge potential directions for oil prices heading into November.
DAX
- DAX Declines: The DAX index dropped by 1.13% on Wednesday, extending losses from the previous session’s 0.27% decline. Weak corporate earnings and Euro area economic indicators contributed to the downward momentum.
- Major Stock Movers: Infineon Technologies and SAP led the declines, losing 3.48% and 1.99%, respectively, as Melexis's subdued forecast weighed on tech stocks across Europe. In the auto sector, Volkswagen managed to hold steady while other stocks extended their losses.
- GDP Figures: Investors closely watched economic data for signs of resilience in the Euro area. The German economy managed to expand by 0.2% in Q3 2024, avoiding a recession, while the Eurozone economy outpaced expectations with a 0.4% Q3 growth rate, doubling the previous quarter's 0.2%.
- Inflation Impact: Germany's annual inflation rate rose from 1.6% in September to 2.0% in October, suggesting the ECB may reconsider a 50-basis point rate cut in December, as higher inflation tempers dovish expectations.
- German Data: German retail sales showed a monthly increase of 1.2% in September, signaling a recovery in consumer demand. However, import prices remained 1.3% lower year-over-year, reflecting global cost pressures easing.
| 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 from disappointing corporate results and mixed economic data, with the tech and auto sectors facing headwinds. Better-than-expected GDP growth in Germany and the Eurozone offers some resilience, although rising inflation could influence ECB rate decisions, affecting the broader market sentiment. Investors will continue to monitor economic data, particularly on inflation and retail performance, for indications of the Eurozone's near-term economic trajectory.