Market Drivers – US Session, October 2

Mohamed Abdelhamid 3 October, 2023 2:24 am Commodities, Forex Market, Market Update

The key event in the Asian session, Tuesday, will be the Reserve Bank of Australia meeting. Later in the day, Switzerland will report consumer inflation, and in the US, the JOLTS Job Openings data will be released.

Key Developments

The US dollar made a great start to the week, continuing the upward trend that began on Friday. With a daily closing above 107.00, the US Dollar Index reached its highest level since November. The US dollar’s advance is still being supported by rising US yields, cautious market sentiment, and encouraging US data.

For the first time since 2007, the yield on the US 10-year note topped 4.70%. The ISM Manufacturing PMI for the US came in at 49, exceeding the market average of 47.7, exceeding expectations. The JOLTS Job Openings data is due on Tuesday. The ADP report and the Nonfarm Payrolls will be released later this week, along with more US employment data.

EUR/USD broke below 1.0500, reaching fresh year-to-date lows. The pair remains under pressure after sustaining the bearish trend. A potential support level lies around 1.0460. The strong US Dollar also weighed down GBP/USD, which broke below 1.2100, hitting three-month lows.

Amid increasing yields, USD/JPY is slowly approaching the 150.00 mark. A break above 150.00 could spark volatility and rumours of Japanese government intervention.

The AUD/USD currency pair continued to reverse from 0.6500 and fell to 0.6360. No change is anticipated when the Reserve Bank of Australia (RBA) announces its monetary policy decision on Tuesday. This will be Michele Bullock’s first meeting as governor.

Despite depreciating against the US dollar, the kiwi outpaced the AUD and CAD. NZD/USD retreated to 0.5950 but continued to trade above the 20-day Simple Moving Average (SMA) after failing to hold above 0.6000. On Wednesday, the Reserve Bank of New Zealand (RBNZ) will meet to discuss monetary policy.

USD/CAD is back at September highs, slightly below the 1.3700 area, which is a key resistance level. A break higher would clear the way for more gains. Canada will report employment data on Friday.

Metals had another terrible day, with Gold falling more than $20 to $1,828, the lowest level since March, and Silver collapsing by more than 5% to $21.00. XAG/USD lost more than 10% from Friday’s high.

Economic Data

Manufacturing activity contracted at the slowest pace in nearly a year according to the September ISM. Recent data signal some relief in the sector, while higher oil prices point to potential upside risk ahead.

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