Wed, Oct 05, 2022 @ 14:44 GMT
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Europe To Experience Thin Volume | Gold & Aussie Up While Dollar & Oil Lower

Gold Price Dependent on Surprise From Jackson Hole Meeting
Dollar Index Looks At Fed’s Balance Sheet Talk
Oil Supply And Compliance
Aussie Data Push The Pair Higher

We are expecting a mixed session over in Europe as traders will pick up the momentum from the US. If you look at the equity market, one thing becomes apparent across the board that the pull back is the major play. We are just no longer at record highs and things look even weaker in the Eurozone where the divergence between the euro and the equity market is biting. Volume in the market is thin and we expect this theme to continue in the Asian markets.

The Geopolitics are still flashing on the trader’s dashboard and they remain risk averse. The Jackson Hole meeting is the chief event for this event and it is pretty much safe to say that we are very dubious to get anything new from this, but still traders want to hedge their risk ahead of that unexpected outcome.

Gold Price Dependent on Surprise From Jackson Hole Meeting

Hence, we are seeing this move in the gold price and we do expect mammoth move in the gold price if there is any kind of surprise from the ECB or the Fed. The ECB is under pressure to tighten their belt when it comes to their ultra-loose monetary policy but yet they are unsure because of the inflation which is miles away from their shores. Similarly, the recent stagnant inflation data has also made the Fed a little wary and this has crashed the odds of another rate hike for year.

When it comes to the gold price, the rally is just going. The yellow metal has rallied nearly 11 percent so far this year. A close above the 1300 mark, this would give us a strong signal that the current uptrend is here to stay which could attract some fresh capital.

Dollar Index Looks At Fed’s Balance Sheet Talk

The dollar index edged lower on the back of the inflation concerns. The balance sheet talks by the chairwomen of the Federal Reserve Bank could support the dollar but again we do not think she is going to be hawkish as this is going to be the most important task for the Fed after they have initiated the process of normalisation of the interest rate.

Oil Supply And Compliance

Oil prices slipped on the back of the news that the Libyan pipeline which connects the sharara oil field to the Zawiya export terminal. The compliance by the OPEC cartel is going to remain the focal point amid traders and it is expected that the cartel may actually have even lower compliance headline number which is not sitting well with oil traders. There is no point of having a production cut deal if you are constantly going to keep on cheating.

Aussie Data Push The Pair Higher

The Aussie CB leading index printed a solid number which is more positive for the economy and for the currency. The AUD/USD pair needs to break above the high of 0.7950 to continue its uptrend and the dollar weakness in the coming days could easily stimulate that move. As long as we stay above the 100 and 200 day moving averages, the odds are in favour that we are more likely to break to the upside.

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