Today inflation data for September is due out In the US and UK, where the trend is upwards in the short run for the US inflation and more stable for the UK economy. Yesterday, US economic data was weak, something that weakened also the Dollar and benefited especially commodity currencies.
The week ahead is packed with important news, including 2 Central Bank meetings and rate decisions. Bank of Canada and the ECB are both expected to leave their monetary policies unchanged. The markets will again be looking for a possible impact of Brexit and thus the possibility for more GBP weakness.
Currencies: The Dollar’s strength took a breather yesterday after reaching 7,5 month highs. The USD Index dropped 0.2% to 97.73 after rising as high as 98.169 the day before. EURUSD was trading in familiar tight range of 1.0965 and 1.1020 while GBPUSD rallied from 1.2180 to 1.2270 with no clear reason why. The Australian Dollar also rallied from 0.7620 in 0.7675 overnight. USD/CAD came under pressure in the early Asian session and dropped from 1.3130 to 1.3080. Interest rates remain they key focus for the USD, however a rate increase this year in not yet set in stone.
Stocks: Shares in Asia gained yesterday after Chinese date indicated a stronger than expected recovery. Nikkei rose 0.4% with USDJPY at 104.00. This morning DAX opened 50 points higher following its Asian counterparts. Last night, Wall Street had a mixed day with S&P 500 and Nasdaq closing at 0.35% and 0.39% respectively while the Dow closed in the red at -0.29%
Oil and Gold: Gold has rebounded yet once again from $1251 levels to $1260, ahead of its important top side resistance at $1265 (Oct 7th 2016 high). News that China data were better than expectations helped push the yellow metal’s prices higher. Significant support is at $1250 and any break below could drag the gold till $1226. In the daily chart gold closed below 200 –day Moving Average for the 3 consecutive days and this confirms major weakness at the moment. Oil prices dropped on Monday, weighed by oversupply concerns, with U.S. crude dropping below $50 as trade volumes spiked ahead of the Oct expiry date for American futures contracts.
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