Market Drivers – US Session, October 11

Mohamed Abdelhamid 12 October, 2023 1:35 am Commodities, Daily Economic Reports, Economic Report, Forex Market, Market Update

Gold broke above $1,860 and jumped to $1,875, boosted by lower yields and the weaker dollar. Silver joined the rally, climbing above $22.00.

The US Dollar finished flat despite higher-than-expected US wholesale inflation and the release of the FOMC minutes. The Greenback remains weak as US yields continue to pull back. The stock market in Wall Street saw another rise, driven by a risk-on sentiment late in the session, which did not help the US Dollar.

Economic Data

The US Producer Price Index (PPI) accelerated unexpectedly in September, rising from 2.0% to 2.2% compared to the expected 1.6%. However, this did not trigger major concerns. The crucial moment will be on Thursday with the release of the Consumer Price Index (CPI). The annual rate is expected to decrease in September to 3.6% from 3.7%. Volatility is expected. The weekly Jobless Claims report will also be released.

FOMC Minutes

The FOMC minutes showed a divergence of perspectives, reinforcing the data-dependent approach and indicating that a significant rebound in inflation would be necessary to reach a consensus for more rate hikes.

Several participants commented that, with the policy rate likely at or near its peak, the focus of monetary policy decisions and communications should shift from how high to raise the policy rate to how long to hold the policy rate at restrictive levels.

Following the FOMC minutes, the DXY pulled back and finished flat at 105.75, rebounding from near the strong support at 105.50. The 10-year US Treasury yield dropped to 4.55%.

Forex Developments

EUR/USD held onto recent gains and remained near the strong resistance area at 1.0630. The pair maintains a bullish tone, but after continuous rising for over a week, a consolidation phase is looming. However, the US CPI number could bring volatility and decisive breaks. The European Central Bank (ECB) will release the accounts of the September meeting.

USD/JPY rose and closed above 149.00. It continues to move sideways between 148.20 and 149.10. Japanese data due on Thursday includes Machinery Orders and the Producer Price Index.

GBP/USD posted a second consecutive daily close above the 20-day Simple Moving Average (SMA) as the recovery continues. It is hovering around 1.2300, showing some signs of exhaustion. The UK will release GDP, Industrial Production, and trade data on Thursday.

AUD/USD remains near the 20-day SMA, and the 55-day SMA awaits at 0.6450; above that area, the Aussie dollar could rise further. Below 0.6375, the outlook could turn neutral. The Melbourne Institute will release the Survey of Consumer Inflationary and Wage Expectations.

NZD/USD declined after rising for five consecutive days but remained above 0.6000 and held above the 20-day SMA. The pair peaked near the 100-day SMA at 0.6056. The Food Price Index is due early on Thursday in New Zealand.

USD/CAD moved sideways for the second day in a row around 1.3600. The Canadian Dollar held relatively well despite the decline in crude oil prices.

During the Asian session, the New Zealand Food Price Index is due to be released; in Japan, the Producer Price Index and Machinery Orders. Additionally, the Melbourne Institute will release its inflation expectations survey. Later in the day, market attention will be on the UK monthly GDP data, the ECB minutes, and the US Consumer Price Index.

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