Precious metals and commodities fail to witness a positive start for the final quarter of the year. While European shares and US stock futures have started October on a firmer footing after US legislators struck a last-minute deal to avoid a government shutdown.
Moving ahead, meetings of major central banks with RBA and RBNZ on the horizon return this week. Investors will also be keeping an eye on the US ISM manufacturing PMI on Monday as well as the US nonfarm payroll data for February on Friday. The NFP expectations are for 150k jobs to have been added to the US economy in September and the unemployment rate is projected to have ticked back down to 3.7%.
After having closed the last 5 trading days of the previous week in negative territory, the precious metal struggling to regain momentum on Monday morning. Overall, the momentum remained bearish for the last week as investors scaled back their expectations of a FED rate hike pause after releasing stronger-than-expected US GDP and weekly jobless claims reports. This week is littered with key U.S. economic figures and any market disappointment over the outcome of them could potentially support the gold price recovery.
Technically the current price action signals suggest that a medium-term bearish trend remains intact. On the downside, $1838 is the immediate support level, followed by $1830. If the metal breaks below $1830, the slump will quickly extend toward the key demand area of $1818/14. On the upper side, the precious metal is likely to find immediate resistance at $1852 and then $1864, any break above the $1864/65 level could lead the prices of the gold towards the next resistance level of $1880/82.
The US dollar, also often seen as the ultimate safe-haven currency, started the new trading on a mixed note. Therefore, the outlook of the pair is neutral with a bullish bias. This week's US employment report is expected to be a pivotal moment for the US dollar. The upcoming data on the jobs market could help investors determine how the Federal Reserve will move ahead with its interest rate policy. The U.S. rate futures market pricing a 14% chance of a rate hike in November, according to the CME's FedWatch tool. That was more than 40% a month ago.
The greenback managed to close above 106 on Friday despite the retreat, and the initial bias remains neutral for the upcoming week. The key resistance is located for the index above 106.80 (the previous week's high), a break above this level will confirm a possible move to 107.20. On the downside, any meaningful pullback now seems to find some support near the 105.70/60 zones, below which the slide could further get extended towards the 105.20/00 regions.
EURUSD is trying hard to stay away from the 1.0500 psychological support so that the bearish pressure does not increase and then the pair faces stronger sellouts. Moving ahead, this week the Eurozone will see the release of the European PMI numbers, as well as the German factory orders. Surprises to the upside could be quite bullish for the Euro, as the fundamentals for the German economy and its manufacturing sector have not been very positive lately.
Although the overall trend is mixed, in the short term it seems that evidence is starting to emerge that a short-term recovery of the euro. This week, the currency pair needs to stay above 1.0500 to have a chance to develop upside momentum in the near term. If the price breaks and closes above 1.0500, the next upside level to watch is 1.0640 then 1.0720. Nevertheless, if it continues to fall, the slump will quickly extend toward the 1.0460/40 mark.
Dow Futures started this week's trading session on a positive note after the avoidance of a US government shutdown. For Dow this week, important economic news to watch includes US ISM manufacturing data on Monday, the ADP employment report and ISM services PMI on Wednesday and the September jobs report on Friday.
From a technical perspective, Dow is maintaining a negative bias according to the weekly chart. This week, If the bearish momentum continues then the next key support area to watch is 33,200/000. On the upper side, If the Dow regains upside momentum and presses back above 34,000 then the key resistance area to watch is 34,300/500.
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