The Dollar Index plunged more than 1.5% after the release of the U.S. CPI, which indicated a softening in inflationary pressures. The market is reassessing the likelihood of further US interest rate hikes.
The U.S. Dollar staged a modest recovery from Wednesday’s significant decline, spurred by signs of easing inflation from the U.S. CPI report. However, a resilient economic performance was underscored by the latest U.S. retail sales data released yesterday, which beat expectations and supported the greenback’s upward push.
Conversely, oil prices fell on the back of a significant increase in U.S. crude oil inventories, adding to concerns about the demand outlook. Amid this market backdrop, the Australian dollar maintained its elevated position, supported by robust employment data that signaled a continued robust labor market. Meanwhile, all eyes are on the meeting between U.S. and Chinese leaders, which is expected to have an impact on equities, the dollar and commodities. The outcome could herald market shifts and heightened volatility.
Dollar Index
The U.S. dollar staged a rally on the back of better-than-expected retail sales data, although the Census Bureau’s reading for October fell from 0.90% to -0.10%, much worse than the -0.30% expected. However, gains will be limited by the Federal Reserve’s expected pause on interest rates following a series of disappointing inflation reports. Ongoing trade uncertainties between the U.S. and China continue to cloud the economic outlook, prompting investors to closely monitor developments for nuanced trading signals.
The Dollar Index is trading higher after bouncing off support. The MACD is showing diminishing bearish momentum, while the RSI is at 32, indicating that the index may be entering oversold territory.
Resistance level: 104.80, 105.40.
Support: 104.05, 103.30.
XAU/USD
Gold prices are retreating amid the appreciation of the US dollar, making dollar-denominated gold more expensive. At the same time, the ongoing US-China meeting is taking center stage for global investors. Positive developments from the meeting could potentially spark risk appetite in the global financial market, diminishing the appeal of safe-haven gold.
Gold prices are trading lower following the previous retracement from the resistance level. The MACD is showing diminishing bullish momentum, while the RSI is at 53, suggesting that the commodity may extend its losses to the support level, as the RSI has dropped sharply from the overbought territory.
Resistance level: 1965.00, 1985.00.
Support level: 1940.00, 1915.00.
GBP/USD
The British pound retreated from recent highs as the U.S. dollar rallied. Lower than expected U.S. CPI data hinted at a possible peak in interest rates, which briefly weakened the Dollar. However, robust U.S. retail sales that beat market expectations underscored the resilience of the economy and revived the dollar’s strength. Attention now turns to Friday’s release of UK Retail Sales data, which will determine the Cable’s trajectory.
Despite a technical retracement, the Cable has formed a higher high price pattern, suggesting a bullish trend for the pair. The RSI has dropped out of the overbought territory, while the MACD has crossed above the zero line, indicating that the bullish momentum has waned.
Resistance level: 1.2420, 1.2501.
Support: 1.2306, 1.2207.
AUD/USD
The Australian dollar is encountering resistance at the strong 0.6510 level, forming a double top pattern. Upbeat U.S. economic data, particularly strong retail sales figures, have supported the Dollar’s strength. Conversely, Australia’s tight labor market, as evidenced by the latest employment data, points to continued inflationary pressures, supporting the strength of the Aussie Dollar.
The AUD/USD has retreated from its strong resistance level of 0.651 and is heading into the liquidity zone. The RSI has dropped out of the overbought territory while the MACD is about to cross, indicating that the bullish momentum is waning.
Resistance level: 0.6510, 0.6620.
Support: 0.6390, 0.6300.
Nasdaq
Wall Street was buoyed by the release of the Producer Price Index (PPI) for October, which showed a notable 0.5% decline, the largest monthly drop since April. This, coupled with positive developments in Washington aimed at averting a government shutdown, pushed the index to its latest high and set it on a course towards its all-time high of 16,764.
The Nasdaq is now hovering near the 16000 level, which was its recent high, and a break above this level will be a solid bullish signal for the index to challenge its all-time high of 16764. The RSI is still in the overbought territory while the MACD continues to rise, indicating that the bullish momentum is strong.
Resistance level: 16374.00, 17000.00.
Support: 15200.00, 14610.00.
USD/JPY REVIEW
The USD/JPY pair bounced back near its support level of 150.40, driven by a strengthening dollar after robust U.S. retail sales data showed the resilience of the U.S. economy. Conversely, the Japanese yen saw weakness against other currencies as yesterday’s release of Japan’s GDP came in below expectations, potentially complicating the Bank of Japan‘s monetary policy decisions.
The USD/JPY was suppressed at its strong resistance level, but quickly recovered to erase most of yesterday’s losses. The RSI has bounced and the MACD has crossed, indicating that bullish momentum is building.
Resistance level: 151.70, 152.70.
Support: 150.40, 149.30.
BTC/USD
Bitcoin experienced a strong rebound yesterday, rising over 6.5% on increased optimism surrounding the potential approval of a bitcoin ETF by the SEC. However, the SEC has delayed its decision on whether to approve the first U.S. bitcoin ETF, with speculation pointing to a possible approval in January next year. The launch of a bitcoin ETF is expected to provide institutions and investors with a regulated way to gain exposure to bitcoin.
BTC continues to trade within its upward sloping channel, indicating a bullish trend. The RSI has spiked and is about to enter the overbought zone, while the MACD has crossed and broken above the zero line, indicating that the bullish momentum in BTC is still intact.
Resistance level: 40960, 44670.
Support: 33700, 30600.
CL Oil
Oil prices are experiencing a significant drop following the long-awaited inventory report. The U.S. Energy Information Administration (EIA) showed a significant increase of 3.60 million barrels last week to 421.9 million barrels, far exceeding the market’s expectations of a 1.80 million barrel increase. The unexpected increase in inventories is adding pressure to oil prices, marking a significant downturn in the market.
Oil prices are trading lower following the previous retracement from the resistance level. The MACD is showing increasing bearish momentum while the RSI is at 37, indicating that the commodity may extend its losses as the RSI remains below its mid-line.
