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EUR/USD and Gold Rates Edge Higher as US Dollar Retreats

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Equity market’s rally weakens, while markets await the coronavirus vaccine’s approval. How EUR/USD and Gold started this week?

Slowing Down Rally

Global stock markets rally decelerated on Monday on new US-China renewed tensions as the US prepares to impose new sanctions on some Chinese officials. On Friday, the US economy gave an alarm signal as created 245K jobs much lower than the expected 469K, this pointed out the need for a better than the $500 billion stimulus-package some Republican have been trying to sell and makes the $900 Billion-proposal more likely.

Last week, the UK was the first country to approve the coronavirus vaccine followed by Bahrain, and this week the US is expected to give the green light to deploy the vaccine on Friday, aiming that every American to be able to have the vaccine by Q2-2021.

 

  Stock Market

Change %

S&P 500

+0.6%

Dow Jones

+0.6%

NASDQ

+0.3%

Japan 225

+0.5%

DAX 30

+0.5%

FTSE 100

+1.1%

CAC 40

+0.9%

 

EUR/USD and Main FX Markets 

The greenback price fell last week on the back of weak US job data, therefore more stimulus is expected from the Fed especially after Powell's statement that the central bank would tolerate increases in the inflation rate until the employment target is achieved. At the start of December, the US dollar index broke below the September 1 low at 91.71 and edged lower eyeing a test of 89.45.

The Euro benefited from the better-than-expected manufacturing PMI numbers 53.8 with a weaker US Dollar price. The EUR/USD hit on Friday an over two and a half years high at 1.2176 then retreated, a close above the high end of the technical resistance at 1.2148 could send the price towards the monthly resistance level at 1.2355 (November 2014 low).  

The British Pound investors' eyes are on the last attempt of the EU-UK negotiators to reach a fair deal this week. The GBP/USD opened this week with a downward gap at 1.3414 eyeing a test of the low end of the current trading zone 1.3185 – 1.3460.

Gold and Oil 

The Oil upward trend remained in place driven by an OPEC+ production deal and hopes that the US stimulus package combined with the coronavirus vaccine rollout could boost demand in 2021. Nonetheless, Libyan output increase and the possible incorporation of Iranian oil under Biden’s presidency keeps the lid on the Oil price.  The Brent Crude technical outlook remains positive while above $46.47, a close below that level changes it to neutral.

 The Gold benefited from a weaker US Dollar and rallied above $1,796 eyeing a test of $1,861, a close above this level changes the precious metal outlook from negative to neutral and may cause a rally towards $1,921/oz.

Looking Ahead

Not much today on the economic calendar, investors await the Canadian Ivey PMI number of November at 4:00 PM (GMT).

Sources: Bloomberg, Reuters

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.