EURUSD
- The EUR/USD is currently trading near 1.0550, and it is on the defensive, hovering at weekly lows early on Thursday. This comes as traders eagerly anticipate the European Central Bank (ECB) interest rate decision.
- The pair is under pressure due to expectations of the ECB pausing its interest rate policy. This expectation is driven by slowing inflation and subdued economic activity. The ECB is likely to keep interest rates unchanged.
- It is anticipated that discussions during the ECB meeting will revolve around modifications to reserve requirements and the balance sheet. ECB President Christine Lagarde is expected to maintain a hawkish tone, considering the persistently high inflation levels and to align with the more hawkish members of the bank.
- The Eurozone Central Bank reported a decrease in year-on-year private loans growth to 0.8% from 1% in August, reflecting a potential slowdown in lending activity.
- On a different note, housing data released in the US exceeded expectations on Wednesday, potentially affecting the USD's performance.
| SMA (20) | Slightly 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: In summary, the EUR/USD is currently facing downward pressure as the ECB is expected to keep interest rates unchanged amid economic concerns. Discussions on reserve requirements and balance sheets will be closely watched, and the pair remains sensitive to inflation levels. The recent housing data from the US exceeded expectations and may influence the couple's performance.
GBPUSD
- GBP/USD has retreated and is trading below 1.2100 in early European trading on Thursday. This follows a decline this week from the 1.2300 level.
- The pair is under pressure due to risk-averse market sentiment, which is influenced by escalating tensions in the Middle East and a surge in US bond yields. The rising yields have strengthened the US Dollar.
- Data from the US shows that business activity in the private sector expanded slightly more in early October than in September. The S&P Global Composite PMI improved from 50.2 to 51.
- The key focus is on the release of Q3 Gross Domestic Product (GDP) data, including the Core Personal Consumption Expenditure Price Index. Additionally, Jobless Claims and Durable Goods Orders will be relevant. These releases are significant for market direction.
- Robust economic data from the US could further strengthen the US Dollar, while negative surprises could trigger a correction in the currency.
| SMA (20) | Slightly Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement:GBP/USD is facing selling pressure, driven by a risk-averse market influenced by geopolitical tensions in the Middle East and rising US bond yields. Upcoming US economic data will be pivotal in determining the pair's direction, with strong data likely to boost the US Dollar.
GOLD
- Gold is on an upswing, taking advantage of widespread risk-aversion in the marke This sentiment is primarily driven by escalating tensions in the Middle East.
- Fresh escalations in the current conflict are influencing investor sentiment, increasing demand for safe-haven assets like gold.
- A typical risk-off market environment was observed in the US following a disappointing tech earnings report from Google's parent company, Alphabet Inc. This contributed to the appeal of gold as a safe-haven asset.
- While the strength of the US economy is expected to improve risk appetite, it also provides the Federal Reserve with room to maintain higher interest rates for a longer period. The Personal Consumption Expenditure (PCE) inflation data for September, the Fed's preferred inflation gauge, is scheduled for release on Friday.
- The central bank is anticipated to keep rates unchanged in its next meeting, but Fed officials have signaled the possibility of at least one more interest rate hike this year. This is in line with their stance of keeping rates higher for a longer duration, supported by concerns about persistent inflation and a strong economy.
Closing statement: Gold is experiencing a resurgence in demand as a safe-haven asset due to escalating Middle East tensions and a recent downturn in the US stock market. Economic strength is expected to bolster risk appetite but also gives the Federal Reserve room to maintain higher interest rates for an extended period. The Fed's next moves and economic indicators like the PCE inflation data will be closely monitored by investors.
CRUDE OIL
- WTI Crude Oil prices struggled to make significant gains after a recent rebound from sub-$82.00 levels, which marked a near two-week low. The commodity is trading around $85.00 per barrel.
- Investors are closely monitoring the situation in the Middle East, which is having a significant impact on oil prices. Geopolitical tensions in the region have the potential to disrupt global oil supplies, given its strategic location near the Strait of Hormuz.
- There are doubts regarding strong global fuel demand due to looming recession risks, which are putting pressure on oil prices. The uncertainty surrounding the global economy is leading to concerns about future oil consumption.
- The Energy Information Administration's report revealed a notable increase in US crude inventories, rising by 1.4 million barrels to 421.1 million barrels in the week ending October 20. This exceeded consensus estimates and indicates potential cooling of fuel demand in the US.
- The combination of these factors, along with mixed fundamentals, is causing traders to refrain from making aggressive directional bets on Crude Oil prices. Consequently, this has led to subdued range-bound price movements in the market.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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WTI Crude Oil prices have been experiencing limited upward momentum, despite a recent rebound, due to the influence of geopolitical tensions in the Middle East. There are concerns about global fuel demand amid the risk of an economic recession, and increased US crude inventories have added to the uncertainty. These mixed factors have resulted in a subdued and range-bound price action for Crude Oil.
DAX
- German business sentiment figures for October brought relief to the market. The DAX saw improvements in business sentiment, both in terms of the current assessment and economic outlook, which supported buyer appetite.
- Corporate results earnings played a pivotal role in preventing the DAX from closing in negative territory. Deutsche Bank reported a profit before tax of €5.0 billion, marking a 3% increase, and showcased an improving capital outlook. This report led to a substantial surge in Deutsche Bank AG's stock, rising by 8.18%.
- The European Central Bank (ECB) is set to make a crucial decision, with economists predicting that it will leave interest rates unchanged at 4.50%. The focus will likely shift to the ECB press conference, which could have a significant impact on market sentiment.
- The tone of the ECB press conference will be a focal point. A hawkish stance, indicating further interest rate hikes, could test the appetite for European-listed stocks. However, if the ECB signals plans to end the interest rate tightening cycle and acknowledges the potential for a mild economic recession, it could drive demand for DAX-listed stocks.
- Alongside the ECB's decisions and statements, corporate earnings reports will also be a key consideration. Major companies like Mercedes Benz Group and Volkswagen are scheduled to release their earnings reports on the same day.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: In summary, improving German business sentiment and strong corporate earnings results contributed to a positive market environment for the DAX. However, the focus will soon shift to the ECB's interest rate decision and press conference, which could have a substantial impact on market dynamics. Additionally, corporate earnings reports from prominent companies will continue to influence the DAX's performance.