EURUSD
- The EUR/USD pair experienced a downtrend during the first half of the day, reaching fresh weekly lows in the region of 1.0530. This decline was observed in anticipation of significant events.
- The European Central Bank (ECB) announced its monetary policy decision, as widely expected. Interest rates remained unchanged, with the Deposit Facility Rate held at 4%. However, the overall tone from the ECB was dovish, highlighting that current rates are sufficiently restrictive, and that underlying inflation continues to ease. Despite this, the ECB stressed that these rate levels must be maintained for a reasonably extended period.
- On the other side of the Atlantic, the United States published the preliminary estimate of Q3 Gross Domestic Product (GDP), which exceeded expectations. The US economy demonstrated strong growth, expanding at an annualized rate of 4.9% between July and September, significantly surpassing both the previous growth rate of 2.1% and the expected 4.2%.
- In response to the robust GDP data, the US Dollar gained strength. Simultaneously, Initial Jobless Claims for the week ending October 20 were reported at 210K, indicating a tight labor market in the United States.
- The combination of a dovish ECB and strong US economic data resulted in a decline in the EUR/USD pair as the US Dollar gained ground. The exchange rate slid to fresh weekly lows as a result.
| SMA (20) | Neutral | ||
| 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 pair experienced a decline as the European Central Bank (ECB) maintained its monetary policy but maintained a dovish stance. Meanwhile, strong US economic growth and a tight labour market contributed to the US Dollar's strength and the decline of the EUR/USD pair to weekly lows.
GBPUSD
- The GBP/USD pair struggled to maintain momentum from the previous day's rebound from the 1.2070 area, which represented a three-week low. During the Asian session on Friday, it exhibited minor fluctuations with modest gains and losses.
- Escalating geopolitical tensions drove investors to seek refuge late on Wednesday, which favored the US Dollar (USD) as it continued to perform better than risk-sensitive currencies like the British Pound (GBP).
- The GBP/USD pair was influenced by the easing of inflationary pressures in the United States (US), which helped offset the impact of a robust GDP report. The GDP data indicated that the US economy had experienced its fastest growth rate since 2021. This, in turn, has restrained USD bullishness and provided some support to the GBP/USD pair.
- The incoming US macroeconomic data continues to reflect a resilient economy, contradicting warnings of an impending recession. This ongoing strength may allow the Federal Reserve to maintain higher interest rates.
- Anticipation that the Bank of England (BoE) will maintain interest rates at a 15-year high of 5.25% on November 2 is influencing trading sentiment around the British Pound. This expectation might hinder traders from making significant bullish bets on the GBP/USD pair.
| SMA (20) | Slightly Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The GBP/USD pair consolidated during the Asian session, having rebounded from a three-week low. Geopolitical tensions and US inflation data have played a role in shaping its recent movements. While the US economy continues to show resilience, the anticipation of the BoE maintaining high interest rates could limit the strength of the British Pound against the US Dollar.
GOLD
- Gold prices remained relatively stable, trading above $1,985 during early Friday, following a day of volatile trading.
- The gold market is influenced by several factors, including the possibility of Japanese foreign exchange (FX) intervention, strong US Gross Domestic Product (GDP) data, ongoing concerns in the Middle East, and positive earnings reports from companies like Amazon.com Inc.
- Investors celebrated strong post-market earnings from US tech companies. Amazon.com Inc exceeded analysts' expectations for both revenue and earnings in the third quarter, which had a positive impact on Wall Street.
- Gold prices are supported by ongoing geopolitical tensions and concerns about a potential US government shutdown. These factors, coupled with the recent appointment of Mike Johnson as the new Speaker of the House in the US Congress, are contributing to the environment of uncertainty.
- Despite a resilient US economy, which aligns with the Federal Reserve's view of higher interest rates for an extended period, the data hasn't significantly boosted the US Dollar or US Treasury bond yields. This lack of response from these key financial indicators has implications for gold pricing.
Closing statement: In summary, Gold is holding steady above $1,985 as various factors, including Japanese FX intervention, US economic data, geopolitical concerns, and strong corporate earnings, impact its price. The environment of uncertainty and ongoing geopolitical issues continue to support gold.
CRUDE OIL
- Western Texas Intermediate (WTI) crude oil prices rebounded and were trading higher around $84.10 per barrel during the Asian session on Friday.
- The increase in crude oil prices was driven by United States (US) military strikes on Iranian targets in Syria. This development raised concerns about a potential escalation in the Middle East conflict.
- Israeli forces conducted an overnight raid on northern Gaza, and Prime Minister Benjamin Netanyahu expressed a commitment to a larger ground assault in the region. This heightened tensions and contributed to the uncertainty in the region.
- Market participants are apprehensive about the potential impact of the conflict on Middle Eastern countries that produce crude oil. The uncertainty about the disruption of oil supplies is a significant factor influencing oil prices.
- Despite the conflict, traders found it challenging to gauge the extent of disruption to oil supplies. Crude oil shipments from the Middle East appeared to be relatively unchanged in the initial days of the conflict.
| SMA (20) | Falling |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: Crude oil prices rebounded due to US military strikes on Iranian targets in Syria, causing concerns about a possible escalation in the Middle East conflict. Tensions in the region, particularly in Gaza, have added to the uncertainty regarding the production and shipment of crude oil from Middle Eastern countries.
DAX
- On Thursday, German corporate earnings had a negative impact on the DAX, leading to losses for the index.
- Mercedes Benz Group's earnings fell short of expectations. The luxury car manufacturer cited price competition in the electric vehicle (EV) sector as one of the contributing factors for its underwhelming performance.
- Volkswagen reported a 7% decline in year-to-date profits through September 2023. This challenging earnings report adds to the overall negative sentiment around DAX- listed companies.
- Despite the European Central Bank (ECB) ending its ten-rate hike cycle and hitting the pause button, the earnings-induced losses continued. During the ECB press conference, ECB President Lagarde discussed a weak near-term growth outlook but expressed confidence in a strengthening economy in the medium term.
- The German Earnings Calendar remains in focus, with MTU Aero set to release results on Friday. The absence of significant economic indicators from Germany leaves attention on the US economic and earnings calendar for potential market risk appetite.
| 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, DAX experienced losses due to disappointing corporate earnings, including those of Mercedes Benz Group and Volkswagen. Despite the ECB's recent monetary policy pause, challenges in the German automotive sector contributed to a negative sentiment. The focus now turns to upcoming earnings reports and external economic factors, notably from the United States.