Gold Skyrocketed, USD Dropped. What Drives The Market Today?

Gold Skyrocketed, USD Dropped. What Drives The Market Today?

What you need to know on Thursday

  • US Inflation Rate came out greater than analysts expected: 0.4% vs the forecast of 0.3%). US Core Inflation Rate met the expectations of 0.2%.
  • The Fed published the detailed record of its latest meeting. As expected, it revealed that officials are ready to start tapering on November 2-3 (a gradual cut of asset purchases). Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
  • The 10-year Treasuries yields, boosting demand for non-interest-bearing gold. The yellow metal may start actually a long uptrend if high inflation persists.
  • Oil closed lower as traders assessed OPEC’s skepticism around the strength of crude demand even after prices hit the highest since 2014.
  • The Australian unemployment rate came out better than expected: 4.6% vs the expected 4.8%. However, the employment change came out worse. AUD/USD dropped immediately after the release but then continued rising.
  • JP Morgan announced upbeat third-quarter earnings, reporting profits of $11.7 billion. Today, we expect earnings reports from BAC, Wells Fargo, Morgan Stanley, and Citigroup.

Tech outlook

EUR/USD has escaped the descending channel breaking above the 50-period moving average (MA) at 1.1570. However, it stopped ahead of the strong resistance level of 1.1600. The jump above it will open the doors to the high of October 4 at 1.1635. Support levels are the 50-period MA at 1.1570 and yesterday’s low of 1.1545.

EURUSDDaily.png

Gold has skyrocketed! It has approached the 100- and 200-day MAs at $1800. It may struggle to cross this strong resistance level, but if it manages to break it, the doors to the next round number of $1815 will be open. Support levels are the 50-day MA at $1775 and the low of October 11 at $1730.

 XAUUSDDaily.png

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The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now. 

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On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies. 

Uptrend in Gold Starts Now
Uptrend in Gold Starts Now

Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!

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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.

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S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.

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