Market Drivers – US Session 14/10/2022

Mohamed Abdelhamid 15 October, 2022 4:29 am Commodities, Forex Market, Market Update

The 10-year US Treasury yields travelled above 4% on Friday, while the US dollar index neared 20-year highs after this week’s macro data paving the way for more rate hikes by Fed.

In response, gold dropped below the $1,650 an ounce level, with December futures last trading at $1,643.87, down 1.74% on the day versus Thursday’s closing price at $ 1666.00 per ounce. This is posing real danger for gold.

Gold market is not able to take a breath due to the dollar’s strength. What makes this so tough is seeing the Japanese yen at levels lower than the Asian crisis and British pound in the midst of dealing with market financial stability risks.

The EUR/USD pair is flat for the week and trading at around 0.9718 versus the previous close at 0.97763. Volatility remained throughout the first half of the week as market players awaited first-tier US events. The different announcements triggered some wild moves across financial boards but fell short of affecting the USD uptrend.

Economic Data

The preliminary result of the University of Michigan’s consumer sentiment index for October rose to 59.8 from 58.6, versus economists’ estimates of 59.0, thus bringing the reading up to 9.8 points above an all-time low reached in June.

Retail sales were flat in September, down from a revised. 0.4% growth in August, the Commerce Department reported Friday. Retail sales fell 0.4% in July. Excluding sales of automobiles and at gas stations, retail sales rose 0.3%. Excluding gas sales, spending was up 0.1%

According to the Federal Reserve Bank of Atlanta’s GDPNow model, the US economy is expected to grow at an annualized rate of 2.8% in the third quarter, down slightly from 2.9% in the previous estimate.

The number of total active drilling rigs in the United States rose by 7 this week, according to new data from Baker Hughes published on Friday. The total rig count rose to 769 this week—226 rigs higher than the rig count this time in 2021.

Other Developments

US Treasury Secretary Janet Yellen on Friday took steps back from earlier speculation that G7 nations are pondering a $60 per barrel price cap on Russian oil. Yellen also noted that leader have not taken any decision in this regard as well.

The GBP/USD pair falls below 1.1200 due to political row in the UK. At the time of writing, the GBP/USD is trading at 1.1177, below its opening price, after hitting a daily high of 1.1366. The British pound extends its loss amid two weeks of chaos around Liz Truss’s mini-budget, which ended with replacing Finance minister Kwasi Kwarteng by James Hunt, as Truss struggles to calm the markets.

WTI futures resumed their downward trend on Friday, and are on track to an 8% weekly depreciation after having peaked at $93.58 on Monday. The US oil benchmark is retracing gains from Thursday’s rebound to test the support area at $85.50.

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