The British Pound was the clear loser in the currency space on Friday against the US dollar and other currency pairs. The bearish sentiment was fueled following the release of a downbeat UK retail sales report. UK retail sales were markedly weaker than expected last month, hurt by cost-of-living pressure and unseasonably warm weather. The Office for National Statistics (ONS) reported a 0.9 percent drop in retail sales for the month, following a 0.4 percent increase in August.
'Retailers reported that the fall over the month was because of continuing cost-of-living pressures, alongside the unseasonably warm weather reducing sales of autumn-wear clothing,' the ONS said.
US major indices ended with notable losses on Thursday after Federal Reserve Chair Jerome Powell suggested the US central bank is inclined to hold interest rates steady again at its next meeting while leaving open the possibility of a future hike if policymakers see further signs of resilient economic growth. Fed Chairman Powell gave a speech saying that the downward path of inflation in the US could be "bumpy" and would take time. If there is more evidence that the economy is strong, it may be worth raising interest rates.
Crude oil prices showed a lot of volatility and closed with significant gains on Thursday. Technically the current price action signals suggest that a medium-term bullish trend remains intact. This week's strong bullish momentum was supported by fears of an escalation in the Middle East conflict, stronger-than-expected economic data from China and massive inventory build.
In the currency market, EURUSD struggles for clear directions. During the previous session, the currency pair recovered back to above 1.0600 supported by the softer dollar. Meantime, the US dollar index retreated back to the key support area of 106 after Fed Chairman Jerome Powell hinted at keeping the interest rates unchanged. Moving ahead to the North American session, the dollar investors should closely monitor the comments from the FED policymakers Harker and Mester.
The safe haven metal sustains the upward trend and investors are expecting that the metal will cross the psychological barrier of $2,000 per ounce in the coming days. As of this writing, gold price hovers near $1980, the highest level in three months. While considering the strong rally, the RSI on the 4-hr chart starts to point lower looking for an exit from the overbought area, so a healthy correction from the $1984/90 price level is a possible scenario.
On the data front, US weekly unemployment figures remain at normal levels despite high-interest rates and inflation. Jobless claim applications fell by 13,000 to 198,000 – the lowest since January, for the week ending Oct. 14, the Labor Department reported Thursday. While the Philly Fed Manufacturing Index remained in negative territory for a 2nd straight month.
Moving ahead today, the important events to watch:
US –Jobless claims: GMT – 12.30
US – Philly FED manufacturing index: GMT – 12:30
Technical Outlook and Review
EURUSD: The currency pair trades steady above 1.0590. If the bullish momentum continues, then the next upside level is to watch 1.0620 and 1.0640 today. On the downside, any meaningful pullback now seems to find some support near the 1.0560 zones, below which the slide could further get extended towards the 1.0530/20 regions.
The important levels to watch for today: Support- 1.0560 and 1.0520 Resistance- 1.0620 and 1.0640.
GOLD: For today, gold now has to face first resistance near $1984, a break above will drive prices above the $1993/95 mark. On the downside, immediate support stands at $1970 while next support stands at $1964/62; a break below $1962 can accelerate the move down to $1950.
The important levels to watch for today: Support- 1970 and 1962 Resistance- 1995 and 2000.
Quote of the day – It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong - George Soros.