Forex News Timeline

Monday, October 18, 2021

GBP/USD has been boosted by Brexit calm and clearer Fed path. The Bank of England's (BoE) next decision will be influenced by UK inflation. Elevated n

GBP/USD has been boosted by Brexit calm and clearer Fed path. The Bank of England's (BoE) next decision will be influenced by UK inflation. Elevated numbers are key to more sterling gains, Yohay Elam, an Analyst at FXStreet, reports. UK inflation stands out, as it could determine the BoE's next decision “Market observers seem resigned to accept that the Brexit topic will linger for a long time – but there is a difference between making the headlines and being a side story. If quiet negotiations replace pompous speeches, sterling could shine. On the other hand, ongoing clashes could pressure the pound.” “Contrary to the continent, COVID-19 infections refuse to fall in Britain, but the disease's impact on markets is diminished. Any seasonal change in cases or hospitalizations could weigh on the pound.”  “UK inflation is critical for the BoE's upcoming decision. Headline inflation shot to 3.2% YoY in August, above the bank's 1-3% range. If price rises remain elevated, there is room for substantial gains for sterling, as a rate hike in November would seem imminent. A drop below 3% would provide relief to the BoE and could take some of the hot air out of the pound.”  

The USD/CHF pair built on its stead intraday ascent and climbed to fresh daily tops, around the 0.9260 region during the early European session. The p

A goodish pickup in the USD demand assisted USD/CHF to regain positive traction on Monday.Hawkish Fed expectations, a fresh leg up in the US bond yields acted as a tailwind for the USD.A softer risk tone might underpin the safe-haven CHF and cap any further gains for the major.The USD/CHF pair built on its stead intraday ascent and climbed to fresh daily tops, around the 0.9260 region during the early European session. The pair managed to regain some positive traction on the first day of a new trading week and inched back closer to Friday's swing high amid a goodish pickup in the US dollar demand. The prospects for an early policy tightening by the Fed pushed the yield on the benchmark 10-year US government bond back closer to the 1.60% threshold. This, in turn, was seen as a key factor that acted as a tailwind for the greenback. The FOMC meeting minutes released last Wednesday reaffirmed that the Fed remains on track to begin rolling back its massive pandemic-era stimulus by the end of 2021. The markets also seem to have started pricing in the possibility of an interest rate hike in 2022 amid worries that the recent widespread rally in commodity prices will stoke inflation. This further contributed to the spike in the bond yields. Meanwhile, fears about a faster than expected rise in inflation, along with signs of a global economic slowdown have been fueling concerns about the return of stagflation. Adding to this, Monday's disappointing Chinese macro data weighed on investors' sentiment. This was evident from a generally softer tone around the equity markets, which could benefit the safe-haven Swiss franc and cap gains for the USD/CHF pair. Market participants now look forward to the release of US Industrial Production data for some impetus later during the early North American session. This, along with US bond yields, might influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment for some meaningful opportunities around the USD/CHF pair. Technical levels to watch  

CAD’s rally continued this week, with USD/CAD breaking decisively below 1.24. Economists at ING believe USD/CAD downside potential should be more cont

CAD’s rally continued this week, with USD/CAD breaking decisively below 1.24. Economists at ING believe USD/CAD downside potential should be more contained in the week ahead. Inflation set to confirm the need for tapering “We think that a headline rate around 4.0% should allow markets to further reinforce their view around the prospect of the Bank of Canada ending QE by year-end. Any above-consensus read may fuel speculation that the Bank will start tightening earlier in 2H22 and add support to CAD. Still, we don’t think the USD correction has long legs, so USD/CAD downside potential should be more contained in the week ahead.” “One topic that should attract increasing market interest is the BoC mandate, which is due for renewal by the end of this year. We are inclined to think the current inflation target (2%, with a +/- 1% tolerance band) will be renewed, although there is some speculation it could be made more flexible, like in the US.” 

According to FX Strategists at UOB Group, losses in USD/CNH could accelerate on a break below 6.4240. Key Quotes 24-hour view: “We highlighted yesterd

According to FX Strategists at UOB Group, losses in USD/CNH could accelerate on a break below 6.4240. Key Quotes 24-hour view: “We highlighted yesterday that the weakness in USD could ‘retest the 6.4240 level before stabilization can be expected’. However, USD traded between 6.4273 and 6.4391 before closing at 6.4350 (+0.10%). The quiet price actions are viewed as part of a consolidation and USD is likely to trade sideways for today, expected to be within a range of 6.4280/6.4480.” Next 1-3 weeks: “There is not much to add to our update from yesterday (14 Oct, spot at 6.4340). As highlighted, downward momentum is beginning to build but USD has to close below 6.4240 before a sustained decline can be expected (next support is at 6.4100). The chance for USD to close below 6.4240 is quite high as long as it does not move above the ‘strong resistance’ level (currently at 6.4540) within these few days.”

WTI and Brent are over $82/bbl and 84/bbl, respectively. How much higher can oil go? Howie Lee, Economist at OCBC Bank, remains highly sceptical about

WTI and Brent are over $82/bbl and 84/bbl, respectively. How much higher can oil go? Howie Lee, Economist at OCBC Bank, remains highly sceptical about $100 oil. Pre-shale days are far away “Many are looking at oil’s price chart and pointing out the lack of notable resistance levels from here to $100 for their $100-oil justification. But to do that demonstrates a lack of understanding of the oil market structure. The era of $100 oil was before the US shale boom and stocks were way tighter than what they are now.” “Despite the current stock tightness, stocks are still not as tight as the pre-shale era – hence, it does seem ambitious to suggest prices return to pre-shale days.” “If implied gasoline consumption increases from 9,750kbpd to 10,500kbpd on a sustained basis (+8%), or commercial oil inventories fall by 70mn barrels to 350mn barrels (-17%) then that $100 theory may have a chance – but these are huge hurdles that I am not particularly optimistic about. On that lack of optimism, it appears that this is as high as the oil market may go – Brent at $85, WTI at $80 – with the potential for a slight overshoot by $3- $5/bbl.”  

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, begins Monday’s session on a positive footing around 94.20

DXY starts the week on a positive note above 94.00.US 10-year yields cling to gains around 1.60% on Monday.Industrial Production, NAHB Index, Fedspeak come up next.The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, begins Monday’s session on a positive footing around 94.20. US Dollar Index looks to data, yields The index regains composure and upside traction after three consecutive daily pullbacks, including the corrective downside from new 2021 highs past 94.50 recorded on October 12. The move higher in the index comes in tandem with the recovery in US yields, where the front end of the curve flirts with the 0.42% level and the belly surpasses the 1.60% yardstick so far on Monday. The dollar, in the meantime, appears well supported by solid prospects for a tapering announcement as early as at the November meeting, while Fed speakers have been also intensifying their support to this view particularly since the September FOMC event. In the US data sphere, Industrial and Manufacturing Production figures are due later in the NA session seconded by Capacity Utilization, the NAHB Index and TIC Flows. What to look for around USD The index corrected lower following new 2021 highs past 94.50 on October 12, although the bearish move has so far met decent contention near 93.70. Supportive Fedspeak, an anticipated start of the tapering process, higher yields and the rising probability that high inflation could linger for longer continue to prop up the sentiment around the buck for the time being and keep sustaining the case for the resumption of the uptrend in DXY in the relatively short-term horizon.Key events in the US this week: industrial Production, NAHB Index (Monday) – Building Permits, Housing Starts (Tuesday) – Initial Claims, Philly Fed Index, CB Leading Index, Existing Home Sales (Thursday) – Flash Manufacturing PMI (Friday).Eminent issues on the back boiler: Persistent uncertainty around Biden’s multi-billion Build Back Better plan. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan. US Dollar Index relevant levels Now, the index is gaining 0.10% at 94.16 and a break above 94.56 (2021 high Oct.12) would open the door to 94.74 (monthly high Sep.25 2020) and then 94.76 (200-week SMA). On the flip side, the next down barrier emerges at 93.75 (weekly low October 14) followed by 93.67 (monthly low Oct.4) and finally 92.98 (weekly low Sep.23).

GBP/USD has faced rejection once again near the 1.3770 region, with the bears now fighting back control, dragging the rates lower towards 1.3700. In d

GBP/USD snaps three-day uptrend, as 1.3768 remains a tough nut to crack.Firmer yields, US dollar recall cable sellers, as Bailey’s comments ignored.Will GBP/USD yield a symmetrical triangle breakout on the 1D chart?      GBP/USD has faced rejection once again near the 1.3770 region, with the bears now fighting back control, dragging the rates lower towards 1.3700. In doing so, the cable turns into the red zone for the first time in four trading sessions, retreating from four-week highs reached last Friday. The latest leg down in the spot could be mainly associated with the rebound in the US dollar across the board, as the Treasury yields extend the American Retail Sales blowout-inspired rally amid increasing hawkish Fed’s expectations. Further, adding to the downside in the spot is the looming Brexit concerns, with the European Union (EU) states growing weary of the Northern Ireland (NI) Protocol, Brexit and the UK bad faith. The dynamics in the yields and the greenback will continue to have a significant bearing on the cable, in absence of relevant UK/US macro data. From a near-term technical perspective, the price has stalled the upside at the symmetrical triangle resistance of 1.3768. A daily closing above the latter will confirm the upside break from the triangle, calling for a fresh run towards 1.3800. The next bullish target is seen at the downward-sloping 100-Daily Moving Average (DMA) at 1.3814. The 14-day Relative Strength Index (RSI) holds above the midline, keeping the buyers hopeful. GBP/USD: Daily chart Alternatively, 50-DMA at 1.3716 offers immediate support to the pair, below which a sharp drop towards 1.3625 cannot be ruled out. That level is the confluence of the 21-DMA and rising trendline (triangle) support. GBP/USD: Additional levels to consider  

The kiwi continued its march higher into the end of the week, closing the New York session at highs for the week just shy of 0.7075. Higher interest r

The kiwi continued its march higher into the end of the week, closing the New York session at highs for the week just shy of 0.7075. Higher interest rates and a weaker USD are set to propel the NZD/USD pair, economists at ANZ Bank report. Improved technical picture “A good chunk of the strength appears simply to be USD weakness, but NZ interest rates are also rising as markets start to question whether the OCR might just keep rising as inflation fears percolate. The implications of that for the domestic economy aren’t necessarily great given high levels of debt, but for now, markets are trading the NZD like all other late-cycle assets, where buyers remain the dominant force.”  “Technically, the picture is certainly way more upbeat than it was a week ago.” “Support 0.6805/0.6860 – Resistance 0.7170/0.7215/0.7310”  

USD/JPY stays relatively calm after posting its strongest weekly close since March 2017 at 114.20. The energy crisis has left the JPY vulnerable and a

USD/JPY stays relatively calm after posting its strongest weekly close since March 2017 at 114.20. The energy crisis has left the JPY vulnerable and a test of major resistance at 115.00 beckons for USD/JPY, economists at ING report.  Rising US yields continue to fuel the pair's upside “The USD/JPY pair will also find support from US yields, where our rates team still expect a further rise as market tightening expectations move towards those of the Fed.” “Japan’s monthly trade balance is expected to widen towards the JPY500 B area. Any wider deficit could provide USD/JPY with the nudge through 115.00 as the market sinks its teeth into the energy dependence story.”  

The pound has now crept to its highest levels versus the euro since spring 2020. Plenty of market commentators are concerned about the impact of early

The pound has now crept to its highest levels versus the euro since spring 2020. Plenty of market commentators are concerned about the impact of early Bank of England rate hikes on UK growth prospects though the most relevant question is ‘could’ the BoE hike rates soon, not ‘should’ it, in the opinion of economists at Rabobank. They forecast EUR/GBP at 0.85 on a three-month view. Headwinds are coming  “Fears around the medium-term outlook for the UK economy could hinder the prospects for the pound next year and beyond.” “Tensions with French fishermen and disagreements about the Northern Ireland protocol have brought warnings of a trade war between the UK and the EU. Neither had had a significant impact on the pound to date. That said, this is a risk that the differences between the UK and the EU won’t be resolved easily and, on the margin, this news-flow provides an additional disincentive to GBP investors.” “We are not expecting the BoE to raise rates in the coming months and see scope for GBP to edge lower on disappointment.” “We are forecasting EUR/GBP at 0.85 on a three-month view. We expect USD strength to push cable back to the 1.36 area on a three-month view.”  

On Monday, EUR/USD is trading in the negative territory below 1.1600. The European Central Bank's dovish outlook remains intact and makes it difficult

On Monday, EUR/USD is trading in the negative territory below 1.1600. The European Central Bank's dovish outlook remains intact and makes it difficult for the common currency to find demand. Economists at ING expect the pair to see a period of consolidation. PMIs to start show the impact of the gas crisis? “EUR/USD has shown no interest in wanting to break big support at 1.1500 and a further period of consolidation looks likely.” “The top of the range should be the 1.1650/70 area.” “On the data front, the highlight of the week will be the flash October PMIs. Confidence in the manufacturing sector has been softening a little, but we could get to see the first impact of the gas crisis that is hitting the European industrial base.” “ We have quite a few ECB speakers over the coming week, but not until the likes of Lagarde or Lane change their tune will there be a re-rating of the EUR. In fact, our rates team feel that the ECB cycle is already over-priced (10bp ECB rate hike priced for late 2022) while the Fed cycle is under-priced.”   

EUR/GBP is in new 18 month lows. The pair fell below the key support at 0.8471/49 on Friday and is set to target the 0.8239 2019 low, Karen Jones, Tea

EUR/GBP is in new 18 month lows. The pair fell below the key support at 0.8471/49 on Friday and is set to target the 0.8239 2019 low, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, reports. Rallies to find initial resistance at the previous 0.8471 “EUR/GBP on Friday eroded key support at 0.8471/49, which represented the recent low and lows since 2019. This was an extremely negative price action. The break of this support leaves attention on the 0.8239 2019 low.” “The 200-month ma lies at 0.8159.” “Rallies will find initial resistance at the previous low at 0.8471 and the 55-day ma at 0.8538 and will need to regain this to challenge the 0.8659/73 highs since May.”  

USD/JPY keeps well and sound a probable visit to the 114.20 level in the next weeks, commented FX Strategists at UOB Group. Key Quotes 24-hour view: “

USD/JPY keeps well and sound a probable visit to the 114.20 level in the next weeks, commented FX Strategists at UOB Group. Key Quotes 24-hour view: “USD traded between 113.20 and 113.71 yesterday, narrower than our expected sideway-trading range of 113.10/113.75. USD traded on a firm note during early Asian hours as it rose above 113.80. Upward momentum has improved, albeit not by much and USD could rise but the major resistance at 114.20 is likely out of reach for today (minor resistance is at 114.00). Support is at 113.60 followed by 113.40.” Next 1-3 weeks: “Our view from Tuesday (12 Oct, spot at 113.40) still stands. As highlighted, the recent impulsive surge suggests that further USD strength would not be surprising and the next resistance is at 114.20. The USD strength is deemed intact as long as it does not breach 113.00 (‘strong support’ level was at 112.80 previously). Looking ahead, the next resistance above 114.20 is at 114.55.”

Asian stocks edge lower following the release of key Chinese economic data. Further Investors remain concerned about the rising energy prices, which e

Asian stocks kickstart the fresh trading week on a lower note.China reports the weakest Q3 GDP data in a year, oil prices soar.New Zealand prints higher CPI data, RBNZ says more aggressive hiking cycle ahead.Asian stocks edge lower following the release of key Chinese economic data. Further Investors remain concerned about the rising energy prices, which exacerbate the global inflationary concerns. MSCI’s broadest index of Asia-pacific shares outside Japan falls 0.07%. The Shanghai Composite Index is trading down 0.6%, following the disappointing third-quarter Gross Domestic Product (GDP), which expands 4.9% YoY basis, below the market expectations of 5.2%. The Nikkei 225 index declines 0.2%, following Japan’s Prime Minister comments that there will be no change in sales tax. He further said that the country must issue government bonds to fund policies aimed at helping the public defence from the coronavirus pandemic. The ASX 200 trades higher 0.4% on Monday, after a strong closing on Wall Street last week, led by the energy and financial sectors. Meanwhile, Australia secured additional COVID-19 treatments as the country gradually reopens to the international level. Oil prices surge more than 1% on Monday, hitting the seven-year high near $83.00.
 

Here is what you need to know on Monday, October 18: The greenback is gathering strength in the early hours of the European session on Monday as inves

Here is what you need to know on Monday, October 18: The greenback is gathering strength in the early hours of the European session on Monday as investors stay focused on the US Treasury bond yields in the absence of significant fundamental drivers and high-tier data releases. September Industrial Production data will be featured in the US economic docket in the second half of the day but the market mood alongside the performance of US T-bond yields is likely to continue to impact the USD's valuation.  Earlier in the day, the data from China revealed that the Gross Domestic Product (GDP) expanded by 0.2% on a quarterly basis in the second quarter after growing by 1.3% in the second quarter. This reading missed the market expectation of 0.5% and caused risk sentiment to sour during the Asian trading hours. The US stocks futures are down between 0.1% and 0.3%, suggesting that Wall Street's main indexes are likely to open not too far away from Friday's closing level. On a weekly basis, the S&P 500 and the Dow Jones Industrial Average rose 1.8% and 1.6%, respectively. In the meantime, the benchmark 10-year US Treasury bond yield is up nearly 2% at 1.605%.Gold suffered heavy losses in the second half of the previous week as the precious metal remains extremely sensitive to movements in the US T-bond yields. XAU/USD is currently moving sideways in a relatively tight range around $1,770 but the pair could feel renewed bearish pressure when trading volume rises with European and American traders entering the market.EUR/USD's recovery attempt failed to convince investors that the pair was about to reverse its direction. The European Central Bank's dovish outlook remains intact and makes it difficult for the common currency to find demand. On Monday, the pair is trading in the negative territory below 1.1600.USD/JPY stays relatively calm after posting its strongest weekly close since March 2017 at 114.20. Rising US T-bond yields continue to fuel the pair's upside.GBP/USD managed to close the second straight week in the positive territory and seems to have gone into a consolidation phase above 1.3700. The Bank of England's hawkish policy outlook and renewed Brexit optimism help the British pound stay resilient against the dollar. Despite rising copper prices, the AUD/USD pair edges lower on Monday pressured by the disappointing Chinese growth data. Cryptocurrencies: Bitcoin continues to trade above $60,000 as crypto investors wait for the first Bitcoin ETF to debut in the US either on Monday or Tuesday. Ethereum stays within a touching distance of $4,000 and Ripple is fluctuating around $1.1.

In light of preliminary readings from CME Group for natural gas futures markets, open interest dropped by around 1.7K contracts and reversed two daily

In light of preliminary readings from CME Group for natural gas futures markets, open interest dropped by around 1.7K contracts and reversed two daily builds in a row on Friday. On the flip side, volume went up by nearly 70K contracts after two consecutive daily pullbacks. Natural Gas faces solid support around $4.70Natural gas prices receded further at the end of last week. The downtick was on the back of shrinking open interest, however, playing against a deeper move lower at least in the very near term. The commodity, in the meantime, is seen facing decent contention in the $4.70 region per MMBtu for the time being.

FX option expiries for October 18 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.1525 644m 1.1575 556m 1.1600-05

FX option expiries for October 18 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts         1.1525 644m 1.1575 556m 1.1600-05 652m 1.1655 551m - USD/JPY: USD amounts          112.50 542m 114.00 303m - AUD/USD: AUD amounts 0.7425 640m 0.762 620m - USD/CAD: USD amounts        1.2450 740m

Gold price is pressuring lows near $1765. As FXStreet’s Dhwani Mehta notes, XAU/USD eyes $1750 after rejection at the critical 200-Daily Moving Averag

Gold price is pressuring lows near $1765. As FXStreet’s Dhwani Mehta notes, XAU/USD eyes $1750 after rejection at the critical 200-Daily Moving Average (DMA) at $1796. Dynamics in the yields and dollar will be closely followed by gold traders “The rising inflationary concerns-led earlier Fed’s tightening calls keep the buoyant tone intact around the Treasury yields, which limits the upside attempts in XAU/USD.”  “Gold is looking to extend Friday’s decline towards the horizontal 21-DMA support at $1761. A sustained break below the latter could bring the last week’s demand area at $1750-$1745 back into play. Further south, the multi-week lows of $1722 could be on the sellers’ radars.” “Gold bulls will need to recapture the 50-DMA at $1778 to revive the bullish interests. The next relevant target awaits at $1795, the confluence of the 100 and 200-DMAs. Buyers will then aim for the $1800 round number.”  

AUD/USD faces some consolidative mood in the near term ahead of a potential advance to the mid-0.7400s in the next weeks, suggested FX Strategists at

AUD/USD faces some consolidative mood in the near term ahead of a potential advance to the mid-0.7400s in the next weeks, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “Yesterday, we highlighted that AUD ‘is likely to advance even though it may not be able to maintain a foothold above the major resistance at 0.7405’. We added, ‘the next resistance at 0.7450 is not expected to come into the picture’. AUD subsequently rose to 0.7427 before closing on a firm note at 0.7416 (+0.48%). The advance is deeply overbought and AUD is unlikely to strengthen much further. For today, AUD is more likely to trade between 0.7385 and 0.7430.” Next 1-3 weeks: “We detected the build-up in upward momentum last Friday (08 Oct, spot 0.7310) and has held a positive view in AUD since then. As AUD rose strongly, we highlighted yesterday (14 Oct, spot at 0.7380) that ‘0.7405 appears to be within reach and a break of this level would open up the way for further AUD gains towards 0.7450’. AUD subsequently rose to a high of 0.7427. There is no change in our view even though AUD could consolidate for a couple of days first before heading towards 0.7450. On the downside, a break of the ‘strong support’ at 0.7350 (level was at 0.7325 yesterday) would indicate that the current positive phase has come to an end.”

Having tested three-year highs of 114.46 in early Asia, USD/JPY is consolidating above 114.00, as the bulls take a breather before resuming the upside

USD/JPY stalls the upside amid risk-off mood, awaits US data.US Treasury yields retreat from highs, DXY remains broadly underpinned. USD/JPY remains bid amid a quiet start to the week, Fed sentiment to lead the way. Having tested three-year highs of 114.46 in early Asia, USD/JPY is consolidating above 114.00, as the bulls take a breather before resuming the upside momentum. The major closely follow the price action in the US Treasury yields, tagging alongwith the benchmark 10-year rates. The renewed uptick in the yields drove the currency pair back towards the multi-year tops reached on Friday. However, the 10-year rates seem to lack follow-through upside bias above 1.60%, capping USD/JPY’s effort to refresh three-year tops. The downside in the major remains cushioned by the strengthening US dollar, as the risk tone remains softer heading into early European trading. China’s Q3 GDP disappointed with 4.9% YoY vs. 5.2% expected, hitting a fresh yearly low. The re-emergence of the China slowdown worries combined with surging oil prices tempered the market mood and supported the dollar bulls. Meanwhile, Japanese Prime Minister Fumio Kishida said that he has no plans to change the sales tax. The pair is likely to get influenced by the broader market sentiment and the yields’ price action, as the US data docket is relatively scarce. Fedspeak will draw some attention, however, amid rising Fed’s hawkish expectations. USD/JPY: Technical outlook “The USD/JPY first resistance level is October 4, 2018, high at 114.54, which is a crucial price level, unsuccessfully tested four times in four years. A break above the latter can clear the way for further gains, exposing key resistance levels like January 27, 2017, high at 115.37, followed by January 9, 2017, high at 117.52. On the other hand, failure at 114.00 could open the door for a leg-down in confluence with the current RSI oversold conditions,” explains FXStreet’s Analyst Christian Borjon Valencia. USD/JPY: Additional levels to consider  

CME Group’s advanced figures for crude oil futures markets noted open interest resumed the upside and increased by around 20.6K contracts on Friday. O

CME Group’s advanced figures for crude oil futures markets noted open interest resumed the upside and increased by around 20.6K contracts on Friday. On the other hand, volume shrank for the fourth consecutive session, this time by around 102.5K contracts. WTI: Rally looks unabated, but a correction looks likely There seems to be no respite for the upside momentum in prices of the WTI. Friday’s uptick was in tandem with rising open interest allowing for the continuation of the move in the very near term at least. However, the current overbought condition of the commodity hints at the likelihood of a corrective decline in the not-so-distant future. On the upside, the $85.00 mark per barrel already emerges on the horizon.

Cable is predicted to move into a consolidative phase in the next weeks, noted FX Strategists at UOB Group. Key Quotes 24-hour view: “We highlighted y

Cable is predicted to move into a consolidative phase in the next weeks, noted FX Strategists at UOB Group. Key Quotes 24-hour view: “We highlighted yesterday that ‘there is room for GBP to advance to 1.3695, possibly 1.3715’. The subsequent advance exceeded our expectations as GBP rose to 1.3734. However, GBP pulled back sharply from the high. The pullback has room to extend but any weakness is likely limited to a test of 1.3645. The strong support at 1.3595 is not expected to come into the picture. Resistance is at 1.3695 followed by 1.3715.” Next 1-3 weeks: “Yesterday, we highlighted that GBP ‘is likely to head higher to 1.3715’. We added, ‘a break of 1.3715 would shift the focus to 1.3750’. We did not quite expect the rapid manner by which GBP moved above 1.3715 as it popped to 1.3734 during London hours before retreating. There is no change in our view for now but GBP could consolidate for a couple of days first before heading higher. Only a break of the ‘strong support’ at 1.3595 (no change in level) would indicate that 1.3750 is out of reach.”

Open interest in gold futures markets reversed two daily builds in a row and went down by around 13.2K contracts at the end of last week considering f

Open interest in gold futures markets reversed two daily builds in a row and went down by around 13.2K contracts at the end of last week considering flash data from CME Group. Volume, instead, went up by around 39.2K contracts. Gold remains capped by $1,800 Friday’s sharp pullback in gold prices was amidst decreasing open interest, which is indicative that further losses appear out of favour for the time being. In the meantime, intermittent bullish attempts are seen facing solid resistance around the $1,800 mark per ounce troy.

After testing the $1,800 mark in a month on Thursday, the gold prices track lower. Gold is posting a fall for the second straight day as the fresh tra

Gold extends the previous session’s decline on Monday below $1,770.Higher US Treasury yields underpin the demand for the US dollar.Higher inflation worries and China’s dismal Gross Domestic data strike investors risk-sentiment.After testing the $1,800 mark in a month on Thursday, the gold prices track lower. Gold is posting a fall for the second straight day as the fresh trading week begins. The US benchmark 10-year Treasury yields rise above 1.60%, reducing non-yielding bullion’s opportunity cost.  The US Dollar Index, which tracks the performance of the greenback against the basket of six major currencies trades higher above 94.10 with 0.19% gains, making gold expansive for other currencies holders.  The US Retail Sales, which jumps 0.7% in September, beating the market estimates of a 0.2% decline bolster expectations for sooner-than-expected interest rate hikes from the US Federal Reserve. In addition to that, the Bank of England (BOE) Governor Andrew Bailey also hints that the British central bank is gearing up to raise interest rates in December or early 2022 as inflation risk mounts.
Gold is generally considered a hedge against inflation and currency volatility. A Hawkish move by the major central banks would diminish gold’s appeal. In addition to that, the SPDR Gold Trust, the world’s largest physically-backed gold exchange-traded fund (ETF) said its holding falls 0.3% to 980.1 tons on Friday from 982.72 tons a day earlier. Nevertheless, the lower prices get support from the fall in global equities and concerns on the patchy global growth recovery.  Asian stock market and US futures slid amid surging energy prices boosting worries about inflation and as Chinese growth falters. China’s economy stumbles in the third quarter, hurt by power shortages, supply chain bottlenecks, and major disruptions in the property market. The Gross Domestic Product (GDP) expands 4.9% in July-September, much below the market forecast. 
 
Technical levelsXAG/USD daily chart Gold prices fell nearly 40 points on Friday after testing the $1,800 mark on Thursday for the first time since September, 15. The downside is being confirmed as the prices trade below the crucial 100-day and 50-day Simple Moving Averages (SMA) confluence. The Moving Average Convergence Divergence (MACD) holds below the midline with a bearish crossover. Any downtick in the MACD indicator would amplify the selling pressure and the prices would approach Tuesday’s low of $1,750.81. A daily close below the mentioned level would entice bears to retest the $1,740 horizontal support level. XAU/USD bears could meet the September, 29 low at $1,7217. Alternatively, if the prices sustain the intraday high, it could retrace back to the $1,780 horizontal resistance level, above the 50-day SMA at $1,777.66. Next, the XAU/USD bulls would again test the 100-day SMA at $1,782.21. A daily close above the mentioned level would see the $1,820 horizontal resistance level for the bulls. XAU/USD additional levels
 

In opinion of FX Strategists at UOB Group, EUR/USD is stil expected to attempt s move to 1.1640 in the next weeks. Key Quotes 24-hour view: “Yesterday

In opinion of FX Strategists at UOB Group, EUR/USD is stil expected to attempt s move to 1.1640 in the next weeks. Key Quotes 24-hour view: “Yesterday, we held the view that ‘further gains are not ruled out but the major resistance at 1.1640 is unlikely to come into the picture’. Our view was not wrong as EUR rose to 1.1624 before pulling back. Upward pressure has eased and EUR is unlikely to strengthen much further. For today, EUR is more likely to trade sideways within a range of 1.1570/1.1620.” Next 1-3 weeks: “There is no change in our view from yesterday (14 Oct, spot at 1.1595). As highlighted, the recent weak phase has ended. The rapid rebound has gained momentum and EUR is likely trade with an upward bias towards 1.1640. Further advance is not ruled out but 1.1640 may not be easy to crack. The upward bias is deemed intact as long as EUR does not move below 1.1540 within these few days.”

These are the main highlights for the CFTC Positioning Report for the week ended on October 12. Speculators remained on the bearish side regarding the

These are the main highlights for the CFTC Positioning Report for the week ended on October 12. Speculators remained on the bearish side regarding the euro for the second consecutive week, although net shorts eased from the previous week as well as the net position to open interest to -2.65% (from -3.22%). Higher yields following the debt ceiling truce and rising cautiousness ahead of the release of the Nonfarm Payrolls kept the risk complex under pressure and forced EUR/USD to drift lower to new 2021 lows.USD net longs climbed to levels last seen around 3 years ago just past the 35K contracts, while the net position to open interest stayed near 55%. US yields advanced after the federal government extended the funding at least until early December while Fedspeak continued to support a November tapering announcement, all sponsoring a fresh YTD peak in the US Dollar Index (DXY) past the 94.50 level. In the safe haven galaxy, net shorts in CHF receded to 2-week lows and net shorts in JPY climbed to levels last seen in early May 2019. The Japanese yen accelerated its losses and pushed USD/JPY to new 2021 highs well past 113.00 the figure. Net longs in crude oil move higher to levels last seen in early August around 405K contracts. The continuation of the rally in crude oil prices remained propped up by the relentless energy crunch as well as the steady hand from the OPEC+ at its meeting on October 4.

Japan PM Kishida: No plan to change sales tax more to come ...

Japanese Prime Minister Fumio Kishida said in a statement on Monday, he has no plans to change the sales tax.   more to come ...

The GBP/JPY cross-currency pair posts gains for the eight-straight session. The pair seems exhaustive near the five-year highs around 157.40. At the t

GBP/JPY accumulates mild gains on Monday in the initial European session.Bulls fear the formation of a Doji candlestick near five-year highs.Momentum oscillators hold onto the overbought zone throw caution for aggressive bids.The GBP/JPY cross-currency pair posts gains for the eight-straight session. The pair seems exhaustive near the five-year highs around 157.40. At the time of writing, GBP/JPY is trading at 157.04, up 0.02% for the day. GBP/JPY daily chart On the daily chart, the GBP/JPY cross currency pair has risen sharply after breaking the strong long-time resistance barrier near the 152.90-153.00 zone, which coincides with the 21-day and the 50-day Simple Moving Average’s (SMA) confluence. The pair embarks above the 157.00 mark for the first time since 2016. Now, the upside seems exhaustive as the formation of a Doji candlestick suggests indecisiveness among traders. If the price breaks the intraday’s low, it could fall back to the psychological 156.00 mark. Furthermore, the overbought  Moving Average Convergence and Divergence (MACD) hints at more downside toward the 155.10 horizontal support level. The Relative Strength Index (RSI ) reads above 70, which suggests the stretched buying conditions. Next, the GBP/JPY bears could approach the 154.00 horizontal support level. Alternatively, if the price continues to move higher, the bulls would first meet the previous day’s high of 157.41. A daily close above this level would open the gates for the June ,2016 high near 160.67. GBP/JPY additional levels  

New Zealand Prime Minister Jacinda Ardern announced on Monday, the lockdown in the country’s largest city of Auckland will be extended by two weeks. m

New Zealand Prime Minister Jacinda Ardern announced on Monday, the lockdown in the country’s largest city of Auckland will be extended by two weeks.   more to come ....

The EUR/USD pair remains subdued in the Asian session on Monday. The pair opens up near 1.1600 but fails to preserve the upside momentum. At the time

EUR/USD starts the fresh trading week on a lower note.US Dollar Index regains 94.00 amid risk aversion.Dovish ECB, Fed tapering, mixed eurozone economic data calls for the euro subdued price action.The EUR/USD pair remains subdued in the Asian session on Monday. The pair opens up near 1.1600 but fails to preserve the upside momentum. At the time of writing, EUR/USD is trading at 1.1587, down 0.09%. The greenback rises above 94.00 following the higher US 10-year benchmark Treasury yields. Higher inflation worries over rising energy prices, and upbeat US Retail sales data pushes bond yields on the higher side. Investors are bracing up for the Fed’s tapering as soon as November whereas the European Central Bank (ECB) dovish stance weighs on the shared currency. The risk sentiment deteriorates following the disappointing Chinese GDP data. It is worth noting that, S&P 500 Futures is trading at 4,461, down 0.03% for the day. The ECB President Christine Lagarde said that the central bank will continue to aid the eurozone economy as the fallout from the pandemic lingers, adding to her previous comments on the inflation as “ largely transitory”. In addition to that, ECB Governing Council member Klass Knot shrugged off the inflationary fear and the prospects of the near term interest rate hike scenario.  On the economic data front, the eurozone Industrial Output declines by 1.6% in August, following a revised 1.4% growth in July. As for now, traders are waiting for the US Industrial Production Data, US Fed’s Quarles Speech to take fresh trading impetus. EUR/USD additional levels  

The USD/CAD pair bounced around 40 pips from the Asian session lows and was last seen hovering near the top end of its intraday trading range, around

A modest USD strength assisted USD/CAD to stage a modest bounce from over three-month lows.Hawkish Fed expectations elevated US bond yields, the cautious marked mood benefitted the USD.Bullish crude oil prices might underpin the loonie and keep a lid on any meaningful gains for the pair.The USD/CAD pair bounced around 40 pips from the Asian session lows and was last seen hovering near the top end of its intraday trading range, around the 1.2385-90 region. Having shown some resilience below mid-1.2300s, the USD/CAD pair attracted some buying on the first day of a new week and for now, seems to have snapped four successive days of the losing streak. The uptick allowed the pair to move away from over three-month lows touched on Friday and was sponsored by a modest US dollar strength. The USD drew some support from elevated US Treasury bond yields, which remained well supported by the prospects for an early policy tightening by the Fed. The market expectations were reaffirmed by Friday's upbeat US monthly Retail Sales figures, while unexpectedly rose 0.7% in September as against a 0.2% decline anticipated. The markets also seem to have started pricing in the possibility of an interest rate hike in 2022 amid worries that the recent widespread rally in commodity prices will stoke inflation. Apart from this, the prevalent cautious mood around the equity markets was seen as another factor that benefitted the greenback's safe-haven status. Against the backdrop of fears about a faster than expected rise in inflation, a sharp deceleration in the Chinese economic growth fueled concerns about the return of stagflation. In fact, the world's second-largest economy recorded a modest 0.2% growth during the third quarter and the yearly rate fell to 4.9% from 7.9% previous. This, in turn, kept a lid on the optimism and dented investors' appetite for perceived riskier assets. That said, an extension of the recent bullish run in crude oil prices to fresh multi-year tops might continue to underpin the commodity-linked loonie. This, in turn, should keep a lid on any strong gains for the USD/CAD pair. Market participants now look forward to the release of US Industrial Production data for some impetus later during the early North American session. This, along with US bond yields, might influence the greenback. Traders will further take cues from oil price dynamics for some short-term opportunities around the USD/CAD pair. Technical levels to watch  

The Reserve Bank of New Zealand (RBNZ) released its Sectoral Factor Model Inflation gauge for the third quarter of 2021 after the publication of the o

The Reserve Bank of New Zealand (RBNZ) released its Sectoral Factor Model Inflation gauge for the third quarter of 2021 after the publication of the official consumer price index (CPI) by the NZ Stats early Monday. The gauge accelerated 2.7% QoQ in Q3 vs. 2.2% prior. The inflation measures are closely watched by the RBNZ, which has a monetary policy goal of achieving 1% to 3% inflation. FX Implications The Kiwi dollar consolidates on the RBNZ’s inflation gauge, as NZD/USD hovers below 0.7100. The spot is currently trading at 0.7084, higher by 0.24% on the day. About the RBNZ Sectoral Factor Model Inflation The Reserve Bank of New Zealand has a set of models that produce core inflation estimates. The sectoral factor model estimates a measure of core inflation based on co-movements - the extent to which individual price series move together. It takes a sectoral approach, estimating core inflation based on two sets of prices: prices of tradable items, which are those either imported or exposed to international competition, and prices of non-tradable items, which are those produced domestically and not facing competition from imports.

The NZD/USD pair surrendered a major part of its upbeat NZ GDP-led gains to one-month tops and was last seen trading in the neutral territory, around

NZD/USD struggled to capitalize on the post-NZ GDP gains to over one month tops.Overbought RSI on 4-hourly charts seemed to be the only factor that capped gains.A sustained strength beyond the 0.7100 mark is needed to confirm a bullish bias.The NZD/USD pair surrendered a major part of its upbeat NZ GDP-led gains to one-month tops and was last seen trading in the neutral territory, around the 0.7075-80 region. A cautious mood around the equity markets was seen as a key factor that acted as a headwind for the perceived riskier kiwi amid a subdued US dollar price action. This, along with disappointing Chinese macro data, weighed on antipodean currencies and contributed to the intraday decline. From a technical perspective, the uptick faltered near a resistance marked by a descending trend-line extending from YTD tops touched in February. The mentioned barrier coincides with the very important 200-day SMA, around the 0.7100 mark and should act as a pivotal point for short-term traders. Meanwhile, technical indicators on the daily chart are holding comfortably in the bullish territory and support prospects for an extension of last week's strong move up. That said, slightly overbought RSI on hourly charts seemed to be the only factor that prompted some profit-taking. Nevertheless, the near-term bias remains tilted in favour of bullish traders. Hence, any meaningful pullback might be seen as a buying opportunity. This should help limit the downside near 100-day SMA, around the 0.7020-15 area, which is followed by 50-day SMA near the 0.7000 psychological mark. That said, bulls are likely to wait for a sustained strength beyond the 0.7100 confluence hurdle before placing aggressive bets. The NZD/USD pair might then climb to September monthly swing highs, around the 0.7155-60 region, before aiming to reclaim the 0.7200 round-figure mark. NZD/USD daily chart Technical levels to watch  

USD/INR is consolidating the recent move to the upside and the subsequent correction in critical daily support as follows: USD/INR daily chart The pri

USD/INR bulls are tiring following the recent daily bullish impulse. The supply area achieved is critical and bulls need to move higher from here for a break of the upside. USD/INR is consolidating the recent move to the upside and the subsequent correction in critical daily support as follows: USD/INR daily chart The price of USD/INR met the daily support zone and is now in the process of consolidation at a critical juncture. If the price fails to move higher from here, there is an argument for a long term consolidation with 74.50 eyed as a downside target.   

Following the release of the September activity numbers, China’s National Bureau of Statistics (NBS) released a statement, via Reuters, expressing the

Following the release of the September activity numbers, China’s National Bureau of Statistics (NBS) released a statement, via Reuters, expressing their take on the economy. China's economy maintained recovery trend in Jan-Sept. China's economy faces rising international uncertainties, recovery still not solid, not balanced. Will keep economic operations within reasonable range, will achieve full-year targets.AUD/USD remains confined in a range, around mid-0.7400s post-Chinese macro data

The AUD/USD pair extended its sideways consolidative price action and remained confined in a narrow trading band, around the 0.7400 mark post-Chinese

AUD/USD witnessed a subdued/range-bound price action on the first day of the week.A cautious mood in the equity markets acted as a headwind for the perceived riskier aussie.Mostly disappointing Chinese macro data did little to impress bulls or provide any impetus.The AUD/USD pair extended its sideways consolidative price action and remained confined in a narrow trading band, around the 0.7400 mark post-Chinese data dump. The pair struggled to capitalize on its early uptick back closer to over one-month tops touched on Friday and witnessed a modest pullback from the 0.7435 region on the first day of a new week. The prevalent cautious mood around the equity markets was seen as a key factor that acted as a headwind for the perceived riskier aussie amid a subdued US dollar price action. This, along with weaker than expected Chinese macro releases, collaborated to cap the upside for the China-proxy Australian dollar. The National Bureau of Statistics of China reported this Monday that the economic growth in the world's second-largest economy decelerated to 0.2% and 4.9% YoY rate during the third quarter, as against the previous quarter's 1.3% and 7.9%, respectively. Adding to this, China's Industrial Production also fell short of market expectations and increased by a 3.1% YoY rate in September, down from 5.3%. This, to a larger extent, offset a better than expected monthly Retail Sales figures, which recorded a growth of 4.4% in September. This comes amid fears of a faster than expected rise in inflation and added to worries about stagflation. That said, the market reaction, so far, has been limited and warrants some caution for aggressive traders. The recent widespread rally in commodity prices turned out to be a key factor that continued lending some support to the resources-linked aussie. Hence, it will be prudent to wait for a strong follow-through selling before confirming that the AUD/USD pair has topped out in the near term. Technical levels to watch  

China Fixed Asset Investment (YTD) (YoY) came in at 7.3%, below expectations (7.9%) in September

China's annualized GDP figures for the third quarter of 2021 arrived at 4.9% vs. 5.2% expected and 7.9% previous, with the QoQ reading coming in at 0.

China's annualized GDP figures for the third quarter of 2021 arrived at 4.9% vs. 5.2% expected and 7.9% previous, with the QoQ reading coming in at 0.2% vs. 0.5% expected and 1.3% last. With regard to Retail Sales YoY, the number was 4.4% vs. 3.3% exp and 2.5% previous while Industrial Output YoY came in at 3.1% and 4.5% exp and 5.3% prior. Meanwhile, the Fixed Asset Investment YoY stood at 7.3% vs 7.9% expected and 8.9% last. more to come ...

China Retail Sales (YoY) came in at 4.4%, above forecasts (3.3%) in September

China Industrial Production (YoY) came in at 3.1% below forecasts (4.5%) in September

China Gross Domestic Product (YoY) came in at 4.9% below forecasts (5.2%) in 3Q

China Gross Domestic Product (QoQ) came in at 0.2%, below expectations (0.5%) in 3Q

Analysts at Goldman Sachs predict that China’s central bank will refrain from cutting the Reserve Ratio Requirement (RRR) this year. Key quotes “Inste

Analysts at Goldman Sachs predict that China’s central bank will refrain from cutting the Reserve Ratio Requirement (RRR) this year. Key quotes “Instead, the People's Bank of China might rely on: Open market operations, its medium-term lending facility and targeted tools to keep liquidity supply and demand relatively stable.”  “Amid tight regulations on property financing, shadow banking, and local government borrowing, as well as increased supervision on anti-corruption, credit demand has remained soft.”  USD/CNY fix: 6.4300 vs the estimated 6.4295

Western Texas Intermediate (WTI) is scaling higher in the Asian session on Monday. The supply crunch and global demand upsurge boost the demand for bl

Western Texas Intermediate (WTI ) starts the new trading session with stronger gains.Crude oil approaches a 7-year high near $83.00 amid a shortage of gas and coal.OPEC launches price war against US shale producers.Western Texas Intermediate (WTI) is scaling higher in the Asian session on Monday. The supply crunch and global demand upsurge boost the demand for black gold.  At the time of writing, WTI is trading at $82.60, up 0.83% for the day. Crude oil prices hit a fresh seven-year high as shortages of natural gas in Europe and Asia continue to boost demand for oil amid supply-side bottlenecks. According to the International Energy Agency (IEA), the energy crunch is expected to uplift oil demand by 500,000 barrels per day (bpd). This, in turn, will results in a supply gap of around 700,000 bpd through the end of the year. In addition to that, the Organization of the Petroleum Exporting Countries (OPEC) begins a price war against the US shale producers. Furthermore, the demand has picked up with the recovery from the COVID-19 pandemic amid the easing of coronavirus related travel restrictions. As for now, the US dollar dynamics and the demand-supply constraint continue to influence WTI prices. WTI additional levels  

The main event of the session is due at the top of the hour with the Chinese data dump that will include Gross Domestic product readings for the third

The main event of the session is due at the top of the hour with the Chinese data dump that will include Gross Domestic product readings for the third quarter. With the nation's property sector and energy crisis, the economy is under scrutiny for fears of global contagion. This makes the reading an important one for forex, specifically the Australian dollar which has enjoyed a surge in Aussie yields at the start of the week following the New Zealand Consumer Price Index upside surprise.  GDP is expected to only edge 0.4% higher, seeing the annual rate drop sharply from 7.9% in Q2 to around 5.0%. Analysts at Westpac explained that the underlying this result is the proactive approach taken by authorities to stop delta’s spread within China, which hit consumption hard, and weaker momentum in construction and investment. meanwhile, in a note on Friday, analysts at TD Securities stressed that the ''supply constraints, extreme weather, regulatory measures, and environmental policies likely led to a further slowing in manufacturing activity in Sep.'' Also out today is September data for Retail Sales (f/c 3.5%yr), Industrial Production (f/c 3.8%yr) and fixed asset investment. ''Retail spending is likely to fare better given the rebound in the services PMI, as activity restrictions were lifted in many provinces and domestic tourism picked up. However, a high base last year will limit gains,'' analysts at TD Securities argued.  How might the data affect AUD/USD? AUD is a trade-off between external factors for the near-term directly impacting the economic landscape for the now and medium-term and risk-sentiment. Risk sentiment, when elevated, such as we saw on Friday owing to US Retail Sales and strong earnings results, is supportive of the Aussie. With that being said, Australia stands to lose a great deal in the face of a Chinese economic collapse as its main source of export income. Data today will reflect the state of the Chinese economy vs projections which have been dialled back in recent weeks owing to the Evergrande Gray rhino event that has sent shivers down the spine of the financial markets.  In technical analysis, we are seeing hidden bearish divergence again from a daily perspective as follows: Should the Chinese data really disappoint, there is a probability that it will be the catalyst to send the Aussie lower on its way towards a test of the W-formation's neckline for the days ahead. There is a confluence of the W-formation, as a reversion pattern and bearish, the 61.8% golden ratio target that meets the 21-day moving average at the neckline near 0.73 the figure.  For the very near term, 0.7390 will be eyed on a poor outcome from an hourly basis: If the data surprises on the upside, then the recent spike in Aussie yields should help to elevate the currency higher towards 0.7480 and the daily highs of August.  About GDP The Gross Domestic Product (GDP) released by the National Bureau of Statistics of China studies the gross value of all goods and services produced by China. The indicator presents the pace at which the Chinese economy is growing or decreasing. As the Chinese economy has influence on the global economy, this economic event would have an impact on the Forex market. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative (or Bearish).

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.4300 vs the estimated 6.4295 and prior 6.4386. About the fix China ma

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.4300 vs the estimated 6.4295 and prior 6.4386. About the fix China maintains strict control of the yuan’s rate on the mainland. The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled. Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day closing level and quotations taken from the inter-bank dealer.

The price of gold on Friday plummetted following signs that the US economy may not be declining at a rate that could spark stagflation in 2022. Data a

Gold is firming at a critical level of support on the daily chart.Stagflation risks are being weighed as a driver for gold. Oil prices are parabolic and supply chain disruption supports the bullish outlook for gold. The price of gold on Friday plummetted following signs that the US economy may not be declining at a rate that could spark stagflation in 2022. Data at the end of the week was surprisingly strong in US Retail Sales which pressured the remaining bulls on the day to cash in and step aside. XAU/USD fell from a high of $1,796.49 to a low of $1,764.86 on Friday.  At the open of the week, the price is 0.14% higher as bulls look to protect a strategic layer of support, as illustrated below, and trades near $1,770. The high of the day so far has been $1,772 and the lows were $1,764. The week ahead will have plenty of Federal Reserve speakers, and the Fed’s Beige Book could give further insight into the breadth and depth of bottlenecks facing US industry. Depending on the Fed's rhetoric, gold prices will likely be caught in conflicting sentiment with regards to inflation, stagflation, timings for tapering and final liftoff.  Oil risks are higher still In this regard, the oil price will be closely monitored which has been at the crux of the recent concerns for stagflation: In the above monthly chart of the world's benchmark for oil prices, Brent, the price is moving parabolic and towards the 2018 highs. They temporarily broke through $85/bbl as the global energy crisis escalates and this spells stagflation risk to the gold markets. ''A tight supply-demand outlook that is particularly fueling upside momentum in Brent crude and heating oil, which can be exacerbated by up to 1 million bpd of incremental winter demand due to natural gas switching for crude and fuel oils,'' analysts at TD Securities explained.  Meanwhile, looking at positioning data, the analysts also noted that ''speculators continued to increase exposure to WTI crude, adding longs and cutting shorts as the ongoing energy crisis remains a substantial risk. With supply risks remaining extremely elevated, OPEC did not offer much to cool the price action.'' ''Two-way risks remain elevated,'' the analysts said, ''but the right tail remains the fattest suggesting speculators will be happy to hold on to length in the short-term.'' Arguments against stagflation risks For the week ahead, it will really be a matter of what side of the argument the markets want to fall on. There are plenty of arguments against stagflation risks brewing just as fast as the arguments for it have risen in recent weeks. For one, analysts at ANZ bank argued that ''activity and price data for September out last week ran counter to the stagflation narrative – there was broad-based strength in retail sales while a range of inflation measures, though still elevated, came in softer than expected.'' Additionally, the analysts noted that ''the Atlanta Fed Wage Growth Tracker, a measure we follow closely, jumped to 4.2% y/y in September up from 3% in May. The increase is largely owing to a sharp rise in wages for low-skilled workers in leisure and hospitality.'' Moreover, the analysts explained that ''President Biden is working with ports on the west coast to ease backlogs. In addition, a number of large logistic and retailing companies are set to expand the use of non-peak hours to ease supply-chain logjams.'' Gold technical analysis For the latest in-depth technical analysis of gold, see here: Gold Chart of the Week: XAU hit the $1,800 target, now what? However, at a snapshot, we are likely to see some consolidation to start the week off.  ''As illustrated above, the price is testing not only dynamic support but horizontal also. This would be expected to hold initial tests and potentially lead to a restest of the prior day's lows of the Doji candle which has a confluence with the 61.8% Fibonacci retracement level near 1,786.'' ''If gold does manage to break the dynamic trendline support, there is still going to be room into the 1,750s where price could find itself stuck in a range, aka, the ''barroom brawl''.  If, on the other hand, the price holds and moves up beyond 1,770 again, that would be bullish.''

EUR/USD edges lower in a quiet session on Monday The pair confides in a narrow trade band with no meaningful traction. At the time of writing, EUR/USD

EUR/USD remains muted in the early Asian session on Monday.The pair consolidates for the third-straight session.MACD trades in the oversold zone with the underlying bullish sentiment.EUR/USD edges lower in a quiet session on Monday The pair confides in a narrow trade band with no meaningful traction. At the time of writing, EUR/USD is trading at 1.1599, down 0.02% for the day. EUR/USD daily chart On the daily chart, the EUR/USD pair has started the October series on a lower note below 1.1600 while testing the yearly lows around 1.1524 on Tuesday. The spot already trades below the 21-day and the 50-day Simple Moving Average (SMA), indicating a downside risk.  Now, if the price crosses the 21-day SMA at 1.1618, it could register fresh daily gains. In doing so, the first upside target would be the 1.1650  horizontal resistance level followed by the high of September 29 at 1.1690. The Moving Average Convergence Divergence (MACD) indicator trades in the oversold zone, any uptick could mean the 1.1750 horizontal resistance zone for the EUR/USD bulls. Alternatively, if the price breaks the session’s low, the EUR/USD bears would once again dominate the trend with their eyes on the 1.1555 horizontal support level. Next, the market participants would test Wednesday’’s low at 1.1528. A break below the mentioned level would open the gates for the lows last seen in 2018. EUR/USD additional level
 

GBP/USD is making headway at the start of the week towards daily highs and there are prospects of a higher high for the forthcoming sessions at this r

GBP/USD bulls are moving on in the daily highs. An upside extension through the resistance opens the next layer of daily resistance. GBP/USD is making headway at the start of the week towards daily highs and there are prospects of a higher high for the forthcoming sessions at this rate of momentum.  The following is an analysis of the daily, hourly and 5 min times frames that illustrate the bullish bias until the next layer of daily resistance.  GBP/USD 1-hour chart The price of GBP/USD has rallied from the 78.6% Fibonacci retracement of the hourly correction and could be destined to make a higher high. GBP/USD 15-min chart From a 5-min perspective, the bulls are making tracks from a 38.2% Fibo of the same correction with the 21-SMA close and supportive. GBP/USD daily chart However, from a daily perspective, the price will be headed towards a wall of resistance from which could see the price turn on its head in the coming sessions:

The GBP/USD pair accumulates gains on Monday. The pair posts gains for the fourth-straight session. At the time of writing, GBP/USD is trading at 1.37

GBP/USD attempts to push higher on the first trading day of the week.US Dollar Index trades below 94.00 on improved risk sentiment.Hawkish BOE, Brexit headlines, and general risk-on mood influence the sterling’s prospects.The GBP/USD pair accumulates gains on Monday. The pair posts gains for the fourth-straight session. At the time of writing, GBP/USD is trading at 1.3759, up 0.10% for the day. The US Dollar Index, which tracks the performance of the greenback trades below 94.00 despite the higher US benchmark 10-year Treasury yields. Investors remain optimistic followed the upbeat US Retails sales data, which jumps 0.7% in September, much above the market estimates of a 0.2% decline whereas the University of Michigan’s Consumer Sentiment falls 71.4 in October below the market forecast of 73.1. The mixed readings weigh on the greenback. On the other hand, the British pound gains following the hawkish comments from the Bank of England (BOE) Governor Andrew Bailey. He said that the central bank is ready to act if there is a significant rise in medium-term inflation. Further, he acknowledged that there are some supply-side concerns. In addition to that, the caution following the UK and EU new round of negotiations on the Northern Ireland deal after London demanded extensive changes in the deal, limits the gain for the British pound. As for now, traders keep their focus on the GBP Rightmove House Price Index, US Industrial Productions data to gauge market sentiment. GBP/USD additional levels
 

New Zealand Business NZ PSI up to 46.9 in September from previous 35.6

United Kingdom Rightmove House Price Index (YoY) climbed from previous 5.8% to 6.5% in October

New Zealand Consumer prices rose 2.2% in the September quarter, taking the annual inflation rate to 4.9%. This sent the kiwi 0.2% higher vs the green



New Zealand Consumer prices rose 2.2% in the September quarter, taking the annual inflation rate to 4.9%. This sent the kiwi 0.2% higher vs the greenback to print a fresh cycle high through 0.71 the figure.  The data came in as the highest level since 2011's GST related spike and was well above both the market and Reserve Bank of New Zealand's forecasts. Inflation pressures are broad-based which traders will now anticipate a more aggressive resolve by the central bank, underpinning the downside in AUD/NZD and upside in NZD/USD for the foreseeable sessions ahead.  Consumers Price Index, September quarter 2021 Quarterly change: 2.2%   Market expected +1.5% (Range 1.2% to 1.8%). Annual change:4.9%, RBNZ: 4.1%. Analysts at Westpac released a note after the release and explained, ''inflation is being boosted by increasing supply-side pressures, including disruptions to global manufacturing and distribution, as well as increases in international oil prices. Those pressures have been reinforced by strong domestic demand, which has allowed many businesses to pass cost increases through to final prices.'' ''Today’s result supports our forecast for a series of rate hikes from the RBNZ over the coming months.'' ''Inflation is expected to remain above the RBNZ’s target band through much of the coming year as New Zealand continues to be buffeted by a perfect storm of inflation pressures. In large part that’s due to global supply disruptions and other supply-side pressures. Those pressures are likely to endure for some time yet, and could become even more pronounced over the coming months as we head into the holiday shopping season here and abroad.'' The data lead to a spike in NZD/USD as follows:

United Kingdom Rightmove House Price Index (MoM) increased to 1.8% in October from previous 0.3%

In thin trade at the start of the week, New Zealand Consumer Prices that surprised to the upside at the start of the day has seen NZD/USD rally to tes

In thin trade at the start of the week, New Zealand Consumer Prices that surprised to the upside at the start of the day has seen NZD/USD rally to test 0.7100 and print 0.7105 the high. New-Zealand (Sep) CPI (YoY) actual: 4.9% vs 3.3% previous;est 4.2%. New-Zealand (Sep) CPI (qoq) actual: 2.2% vs 1.3% previous;est 1.5%. NZD/USD 5-min chart However, given the spread in early Asia, traders would find this data difficult to trade at the time of the release. Instead, this will be digested and factored into Tokyo's session. That, coupled with Chinese Gross Domestic Data makes for a potentially busy day ahead.   

AUD/NZD extends the previous week’s downside momentum on Monday in the initial Asian trading hours. The cross-currency pair opens the session’s higher

AUD/NZD edges lower on Monday in the Asian trading hours.Kiwi gains momentum against majors post-CPI data.Momentum oscillator holds onto the overbought zone with receding momentum. AUD/NZD extends the previous week’s downside momentum on Monday in the initial Asian trading hours. The cross-currency pair opens the session’s higher but fails to sustain the momentum. At the time of writing, AUD/NZD is trading at 1.0473, down 0.27% for the day. AUD/NZD daily chart On the daily chart, the AUD/NZD pair has been under selling pressure after testing multi-month highs above 1.0600 on Wednesday. The downside momentum catches further momentum after breaking the 100-day Simple Moving Average (SMA) at 1.0549.  Having said that, if the price breaks the 21-day SMA near 1.0465, it would test the 1.0450 horizontal support level. Overbought Moving Average Convergence (MACD)  suggests the possibility of the September 29 low of 1.0397 followed by the 1.0365 horizontal support level. Alternatively, if the price moves higher, it would first retest the 1.0500 horizontal resistance level followed by Friday’s high at 1.0552. A successful daily close above 100-day SMA would pave the way for the psychological 1.0600 mark. AUD/NZD additional levels  

AUD/USD is starting out flat in the open in a quiet start to the week, so far. At the time of writing, AUD/USD is trading at 0.7414 and oscillating wi

AUD/USD is at the mercy of external factors for the week ahead.AUD/USD is on the verge of correcting from the recent rally as it starts to decelerate. The neckline of the W-formation has a confluence with both the 21-day moving average and the 61.8% golden ratio.AUD/USD is starting out flat in the open in a quiet start to the week, so far. At the time of writing, AUD/USD is trading at 0.7414 and oscillating within a few pips of a range sat on the 1-hour 10 smoothed moving average. Conditions for commodity currencies have been positive for AUD which has enjoyed the inflation hedge taking place in forex since the Federal reserve turned a lot more hawkish of late. There has also been a specific notice paid to both offshore equities and US rates. In this regard, US stocks retained their firmer bias on Friday, with investors cheering better-than-expected Retail Sales growth for September as well as positive earnings results. Stagflation concerns soothed Stagflation concerns have been a thorn in the side for markets recently as the Federal Reserve has started to acknowledge that inflation may not be so transitory after all. This same at a time when data had started to tale off as well lead into a potentially cold winter and in the wake of the global energy crisis, underpinning stagflation fears. However, the better data and performances of US stocks coupled with softer core September CPI and PPI data earlier in the week went a long way to soothe those fears and to support risk related forex, such as AUD.  In markets, the S&P 500 ended higher by 0.8%, the Euro Stoxx 50 up 0.8% and the FTSE 100 rose 0.4%. The yield on the US 10-year note rose 6bps to 1.57% with bond prices feeling the pinch of a better risk tone. Meanwhile, Oil prices continued to be problematic with WTI rising a further 1.7% to USD82.7/bbl.  On the other hand, iron ore futures found support from renewed supply-side issues. ''Rio Tinto downgraded its expectations for iron ore exports this year to 320-325m tonnes from 325-340m tonnes, due to labour shortages in Western Australia,'' analysts at ANZ Bank said in a note today.'' However, there are dark clouds forming over the Australian economy despite the news that the nations second-largest city will see an easing of restrictions later this week. Instead, there is a watchful eye over Evergrande contagion, a housing sector meltdown in China and negative ramifications for Australia's export-dependent economy. When Cina sneezes, Australia catches a cold.  In this regard, investors will be watching key economic data from China today (including Gross Domestic Product) for any signs of weakness amid the energy shortages. External factors to impact AUD this week Meanwhile,  markets largely overlooked some quite grim jobs data in Australia, which clearly showed the deep impact of recent Covid-19 restrictions in the country. With that being said, the markets are not expecting the Reserve Bank of Australia to be so concerned for the outcome considering it has already been factoring some anticipated poor results pertaining to the summer covid crisis. The RBA has already pledged to keep policy on hold until February. However, there will be some focus on the October RBA policy meeting minutes in this regard but external factors, such as Chines data will be key. On a poor outcome, AUD/USD may struggle towards the 0.7460 September high. AUD/USD technical analysis From a technical perspective, we have some hidden bearish RSI divergence on the daily chart as follows: We saw the same not long ago which lead to a downside continuation in the trend as follows: As illustrated, the HBD led to a fresh low in the cycle. HBD is a continuation leading indicator that traders can use to help them to make trading decisions. In this regard, there are prospects of the following playing out in the next few days: AUD/USD is on the verge of correcting from the recent rally as it starts to decelerate. This exposes the neckline of the W-formation that has a confluence with both the 21-day moving average, the 61.8% golden ratio and within hidden bearish divergence. 0.7315 is eyed.   

NZD/USD ticks higher on Monday in the early Asian trading hours post-critical inflation data. The depreciative move in the US dollar pushes NZD/USD hi

NZD/USD kickstarts the first trading session of the new trading week on a higher noteUS Dollar Index remains subdued below 94.00 helping NZD/USD to push higher.Higher Inflation and business sentiment support the recent rally for kiwi.NZD/USD ticks higher on Monday in the early Asian trading hours post-critical inflation data. The depreciative move in the US dollar pushes NZD/USD higher. At the time of writing, NZD/USD is trading at 0.7075, up 0.17% for the day. Kiwi extends the previous week’s momentum and reaches the levels last seen in September. The sentiment is upbeat following the higher Consumer Inflation data (CPI), which comes at 2.2% in September, beating the market expectations of 1.4%  whereas the BusinessNZ Performance of Service Index (PSI) reads at 46.9 in September as compared to 35.6 in the previous month. Nevertheless, the upside seems limited as the policymakers are considering tightening restrictions in Auckland again due to rising coronavirus infections. On the other hand, the greenback remains under pressure on improved risk appetite. On Friday, the US Retail Sales data came at 0.7% in September, much above the market consensus of 0.2 declines. It is worth noting, that S&P 500 Futures is trading at 4,465, up 0.82% for the day.  As for now, all eyes are China’s Gross Domestic Product (GDP) data to take fresh trading impetus. NZD/USD additional levels  
 

New Zealand Consumer Price Index (YoY) above expectations (4.1%) in 3Q: Actual (4.9%)

New Zealand Consumer Price Index (QoQ) above forecasts (1.4%) in 3Q: Actual (2.2%)

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