Market Drivers – US Session, October 10

The US dollar suffered on Tuesday as Wall Street concluded with gains. The price of crude oil slightly declined while trading in narrow bands. Prices for commodities fluctuated, holding onto recent gains. The Middle East scenario is still a source of uncertainty.

For the first time since August, the EUR/USD price moved above the 20-day Simple Moving Average (SMA). Key barrier for the pair, which is now trading around 1.0600, is at 1.0630. On Wednesday, Germany will announce the final CPI for September.

As market confidence continued to improve, the US Dollar lost strength once more, and US rates remained well below recent highs. While the 2-year yield went below 5%, the 10-year yield ended up at 4.6 percent. Since September 18, the DXY index’s daily close has not been lower than 106.00.

The September Producer Price Index (PPI), which the US will issue on Wednesday, could have substantial repercussions if it surprises to the upside. The Federal Reserve (Fed) will publish the minutes from the September FOMC meeting later in the day. The Consumer Price Index (CPI) is expected on Thursday.



GBP/USD also rose above the 20-day SMA. The rally faded near 1.2300, but short-term momentum still favors the Pound. The Japanese yen was the underperformer on Tuesday among G10 currencies. The modest rebound in yields combined with rising equity prices weighed on the currency. USD/JPY peaked above 149.00 but then pulled back to 148.60.

AUD/USD rose for the fifth consecutive day. The pair is holding firm above 0.6400, looking set to extend the recovery. Key resistance awaits at 0.6500.

NZD/USD held above 0.6000 and posted its highest daily close in two months at 0.6040. It also rose for the fifth consecutive day.

USD/CAD moved sideways near the 1.3600 area as the Canadian Dollar consolidated recent gains. A flat 20-day SMA is awaits at 1.3555.

What to watch on Wednesday

During the Asian session, RBA Deputy Governor Kent will deliver a speech. Additionally, Japan will release its Machinery Tool Orders report. Later in the day, the key reports to watch for will be the US Producer Price Index (PPI) and the release of the FOMC minutes.

Also Read:
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NY Fed: Year-ahead expected inflation edges higher