The U.S. Dollar kept trading within a tight range, as investors were divided on the U.S. interest-rate outlook. The Dollar Index slipped 0.2% on the day to 98.34 on Thursday, and it moved to 97.847, losing 0.2% for the day.
The British pound rose 0.4% to $1.2523 after media reported that European Commission President Jean-Claude Juncker expects a Brexit deal to be reached by October 31.
The Bank of England held its benchmark rate unchanged at 0.75% as expected, reiterating that the future rate path would largely depend on the outcome of Brexit. U.K. official data showed that retail sales fell 0.2% on month in August (expected to be flat).
Economic Calendar – CAD Retail Sales Ahead
XAU/USD – Gold – Daily Analysis
On Wednesday when Federal Reserve cut the Interest rates by 0.25%, the Gold fell immediately. The Fed left traders with uncertainty about any further monetary easing as Fed Chairman Jerome Powell said that the cut was made to support the economy through weakened global growth and to boost the inflation and there was no guarantee over any further rate deductions.
Gold was supposed to move in bullish trend after the fed decision and interest rates cut should have weakened the greenback. However, the lack of commitment towards further monetary easing by the Federal Reserve gives strength to the US Dollar and put pressure on Gold, making it shortly after the news.
Two more Fed Policy meetings are remaining in October and December this year. The chances for further interest rate cuts are uncertain, or we can say they are 50% or less.
Existing Home Sales and sufficient job numbers along with strong U.S spending are also strengthening the Dollar Index. On Thursday 17:30 GMT, US Unemployment Claims release showed 208K, which was less than expected as 210K on 19:00 GMT, the Existing Home Sales showed a figure of 5.49M which was expected as 5.39M.
Further, Gold is likely to be showing moves after talks between the United States and China about the ongoing trade tensions.
Traders were also looking over the possibility of a safe haven event after the evidence of Iran involved in the Saudi oil fields attack. However, on Wednesday when the U.S President Donald Trump said that sanctions would be announced soon instead of taking any military action, the possibility of a safe haven event also faded away with that.
Gold is currently trading at $1498 and showing a slightly bullish trend for now.
XAU/USD – Daily Technical Levels
Pivot Point: 1,505.95
XAU/USD – Daily Forecast
Gold is consolidating in the widened range since the hawkish FOMC and Fed Rate Cute of 2.25% to 2% has come out. For the moment, it’s range is 1, 510 – 1,485.
The precious metal gold can trade upward upto 1509/10 today. Whereas, we can expect a selling somewhere around this level. Above 1510 area, the next target is likely to be 1,522.
EUR/USD – Consumer Confidence In Focus
The euro edged up 0.1% to $1.1044 over a weaker dollar. Later today, the eurozone’s Consumer Confidence Index for September will be released (vs. -7.0 expected).
The interest rates were cut to a range of 1.75% to 2% by the US Federal Reserve on Wednesday (23:00 GMT) as expected. According to FED Chair Powell, the cut was made to support the economy through weakened global growth and to boost inflation. He also mentioned that there was no guarantee over any further rate deductions.
This news made the currency pair moved down on Wednesday, but today there has been a move back higher after the traders changed their minds and adjusted with the Fed’s policy statement.
However, there is still hope for further rate cuts by Fed this year because of mixed opinions of officials of Federal Reserve about easing the policy.
According to Bloomberg, five of the officials wanted one more cut in interest rates this year, seven of them expected two more cuts and five expected no reduction by the end of the year.
EUR/USD – Daily Technical Levels
Pivot Point 1.1056
EUR/USD – Daily Forecast
The single currency Euro awaits the Eurozone’s consumer confidence data. However, the pair is likely to stay bearish below 1.1070 and bullish above 1.1020 today. Let’s trade the choppy sessions today.
GBP/USD – Weaker Inflation Weights
GBP/USD opened on Thursday with $1.24692; the pair is showing a bullish trend. Sterling is rising sharply after Jean Claude Juncker’s Sky News Interview. The latest Brexit headline has made the GBP/USD to move upward for around 50 pips.
According to the European Commissioner President, Jean Claude Juncker, there is no need for Irish backstop if there are alternative arrangements. He said that as long as all of the objectives are met, he is very much prepared to get rid of the backstop from withdrawal agreement. He also said that he is doing everything to get a deal because a no-deal Brexit would be catastrophic.
The interview suggested that there could be a deal by 31st October. GBP/USD has placed a high of 1.25599 after this news. Earlier today, the British pound fell initially, but then it started to move upward. However, it did not show the signs to break above the level $1.25 till Juncker’s interview.
On Thursday 16:00 GMT, the official UK bank rates remain unchanged. Bank of England (BOE) held the interest rates on 0.75% as expected. The release of Retail Sales data on 13:30 GMT showed that monthly retail sales of UK have declined to -0.2%. On Wednesday 13:30 GMT, the inflation data of the UK revealed that it has dropped to 1.7%. The staff of BOE stated that they expect the inflation to stay below the 2% target until the end of the year. They also said that they would try to avoid the UK from falling into recession this year.
Regarding USD, on Thursday 19:00 GMT, the existing home sales showed a figure of 5.49M which was expected as 5.39M & Natural gas storage came as 84B which were scheduled to be 75B.
GBP/USD – Daily Technical Levels
1.2536 1 .2548
Pivot Point 1.2543
GBP/USD – Daily Forecast
The Sterling has violated the ascending triangle pattern. This pattern was providing resistance at 1.2515, and now the same level is proving support to the Cable. Investors will be looking for buying trades above 1.2520 area to aim for 1.2600.
All the best for today.