Atlanta Federal Reserve President Raphael Bostic is open to pausing rate cuts if economic data suggests inflation remains high. Recent reports, including a hot September jobs report and consumer price index, indicate inflationary pressures may persist, supporting a possible pause in rate cuts for November. Despite the CPI report, futures markets still expect a rate cut, with an 83.3% probability of a quarter-point reduction. Concerns about a slowing economy are also heightened by a sharp rise in jobless claims, although this may be distorted by temporary factors like hurricane disruptions. The economic outlook remains uncertain, and experts suggest waiting out the turbulence.
NZD & AUD
The New Zealand dollar fell sharply following a 50 basis point rate cut by the Reserve Bank of New Zealand. This decision was driven by weak economic conditions and excess capacity in the economy. The NZD/USD exchange rate dropped below 0.61, reflecting investor concerns about further rate cuts from the RBNZ, with some economists anticipating another 50 basis point cut in November. This decline is part of a broader trend, with the currency losing over 270 pips in the past week. Additionally, the global market sentiment has been risk-averse, further exacerbating the NZD's decline. The Australian dollar is also feeling pressure due to weak demand in China,
NZDUSD (Daily). A double top at 0.6350 has formed. Technical suggests further downside movement in the near term as the market seeks to test this year’s double-bottom at 0.5850.
AUDUSD (H4). The level at 0.6820 has transitioned from resistance to support and is now acting as a potential resistance. We are waiting for a higher price to find an ideal selling opportunity.
OIL
Oil prices jumped over 3% on Thursday due to US fuel demand spiking ahead of Hurricane Milton, Middle East supply risks, and stronger energy demand signals from the US and China. West Texas Intermediate hit $75.85. Supply disruptions in Florida and concerns over Israeli retaliation against Iran fuelled the increase. Optimism about China's economic measures and potential US interest rate cuts support higher oil prices.
WTIUSD (Daily). After experiencing a sell-off at the beginning of last week, oil prices tested the dynamic resistance that has now shifted to support. Following a dip to $71 per barrel, the price rebounded. Given the underlying fundamentals, we anticipate that prices will continue to rise from this point.
GOLD
Gold price rose on Thursday as traders bet on a possible Federal Reserve interest-rate cut next month, following recent US economic data. Gold climbed 1% to $2,642 per ounce, rebounding after a six-session losing streak. The increase was driven by rising weekly jobless claims, which indicate a potential weakening in the labour market. With an 80% chance of a Fed rate cut in November, gold is positioned to gain as lower rates make the dollar weaker. Heightened geopolitical tensions in the Middle East and strong demand from central banks further boosted gold’s outlook.
XAUUSD (H1). In the short term, gold is experiencing bearish momentum as buyers are taking profits. We expect a rebound to around $2,650 and the bearish trend to continue towards $2,590 level.
Fullerton Markets Research Team
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