What You Need to Know

The Sterling hit its month high as the U.K.’s economic outlook seems brighter after Rishi Sunak took over as Prime minister. Sunak, who comes from a finance background, previously ran the UK’s finance ministry. On the other hand, Australia’s inflation climbed to a 32-year high in the 3rd quarter to 7.3%, the highest reading since 1990. In Asia, Data shows that retail traders are betting on a bearish Yen and taking advantage of BoJ’s intervention to build their position after the Yen rebounded last week. Oil prices fell as the report showed a rise in U.S. crude stockpile amid weaker demand and slowing economic growth.

Look Out For

Current rate hike bets on 2nd November Fed interest rate decision: 

75 bps (95.1%) VS 50 bps (4.9%)

Market Overview

Economic Calendar

Market Movements

DXY

The Dollar Index, which trades against a basket of six major currencies, dipped yesterday, with investors bracing for downbeat economic data from the United States yesterday. According to the Conference Board, US CB Consumer Confidence notched significantly from the previous reading of 107.8 to 102.5, which fared worse than expected at 106.5 and indicates a gloomy prospect for consumer spending activity in the United States. As for now, investors would continue to scrutinise the latest updates regarding the FOMC meeting on 2nd November to gauge the likelihood of movement for the US Dollar. 

On the technical front, the Dollar Index was traded lower following the prior breakout below the previous support level at 111.75. Nevertheless, the MACD, which illustrated diminishing bearish momentum while RSI at 34, indicating the product was going into oversold territory, suggested the index would likely rebound as a technical correction. 

Resistance level: 111.75, 113.45

Support level: 110.15, 107.80

XAU/USD

Gold prices rose as U.S. Treasury bond yields fell due to the market-fueled expectations that the Fed would likely slow down the pace of interest rate hikes. Meanwhile, sentiment for gold is upbeat, as the US housing market continues to deteriorate with lower than the estimation of CB consumer confidence data.  

From a technical view, the pair remains within its small range momentum as the MACD breaks through the 0 line, indicating a bullish momentum, while RSI is hovering between the range of 50-60 at the time of writing.

Resistance level  : 1681,1731

Support level : 1616

EUR/USD

The weak US Dollar, supported by the recent downbeat economic data from the United States region, has spurred bullish momentum on other regional currencies, such as EUR/USD, on a relative basis. On the other hand, the Euro extended its gains over the backdrop of positive economic data. According to the Ifo Institute for Economic Research, Germany’s Ifo Business Climate Index came in at 84.3, better than the market forecast of 83.3. 

On a technical view, the Euro was traded higher while currently testing the resistance level at 0.9995. Nevertheless, MACD had signalled a weakening bullish momentum,  while RSI at 68, indicating the product was going into overbought territory, suggested the pair would likely encounter retracement as a technical correction. 

Resistance level: 0.9995, 1.0105

Support level: 0.9895, 0.9760

BTC/USD

By following the footsteps of the U.S. market, BTC has once again traded above $20,000 for the 1st time in 2 weeks. The DXY index dropped to near $111,0, and it is believed that BTC and DXY have an inverse relationship. 

BTC is now trading near 20400 but the bullish momentum is likely to hold up a little bit at the resistance. The MACD line has crossed the signal line and is widening the gap signalling a bullish sign; however, the RSI has now stayed above 70 which indicates an oversold signal. 

Resistance level: 20400, 21850

Support level: 18715

DJ30

The Dow Jones continues to extend its bullish momentum, boosted by the recent weakening US Treasury yield following the release of downbeat economic data from the United States. The current negative economic data from the United States increased the expectations that the central bank could moderate its rate hike decision during the FOMC meeting, which sparked greater demand in the US equity market. 

From a technical view, the DJ30 extended its gains following a prior breakout above the Fibonacci (50%) level at 31465. Nevertheless, the MACD and RSI have indicated that the DJ30 is currently at an overbought level, suggesting the index to be traded lower in the short-term as a technical correction.  

Resistance level: 32125, 33055

Support level: 31465, 30810

USD/JPY

Investors are taking the opportunity of intervention-driven yen surges to build up bets on further weakness in the currency. At the same time, ‘’ yen could weaken even further next year, ‘’said Eisuke Sakakibara, Japan’s former vice minister of finance. 

The pair was little changed and trading above 148 at the time of writing. Meanwhile, MACD dropped below the zero line, indicating bearish momentum, and RSI dropped below the middle line and hovered around 42, which suggests a bearish momentum. 

Resistance level: 149.50, 152.00

Support level: 147.16, 145.00

Crude oil

Crude prices received bearish momentum following the release of the oil inventory data. According to the American Petroleum Institute, the US API Weekly Crude Oil Stock came in at 4.520M, much higher than the market forecast at 0.200M. 

On the technical front, the crude oil price is still trading sideways. MACD is currently at 0 while RSI is nearby at 50, indicating a sign that the commodity would wander in a range from 86.80 and 83.05.

Resistance level: 86.80, 90.15

Support level: 83.05, 79.50