Article by: ETO Markets
RBA Governor Michele Bullock revealed that the CPI had slightly increased, slightly above estimates but comfortably within the range that was expected. Bullock stressed the central bank's balancing act, which aims to slow down the economy's growth without inviting the recession into its embrace.
Because of the positive US Treasury yields and the stronger-than-expected preliminary S&P Global PMI data from the US that were issued on Tuesday, the US Dollar Index is still rising.
In October, the US S&P Global Composite PMI increased from 50.2 to 51.0. While the Manufacturing PMI increased to 50.0, the Services PMI saw growth, coming in at 50.9.
The US Q3 GDP is expected to be the main focus for investors on Thursday. On Friday, attention will be focused on Australia's Producer Price Index and the US Core Personal Consumption Expenditures.
Furthermore, the influx of safe-haven assets is expected to be sustained by geopolitical uncertainty. Benjamin Netanyahu, the prime minister of Israel, declared that his country was prepared to launch a ground invasion of Gaza, with a consensus being reached on the attack's timeframe.
Investors also flocked to safety in gold price and the US Dollar, as the US Treasury bond yields resumed their upward trajectory, with the benchmark 10-year bond yield closing in on the 5.0% level once again.
Rising borrowing costs continue to weigh on the corporate mood. And therefore, reduced appetite for risk assets remains in vogue. Fresh escalation in tensions on the Hamas-Israel conflict, after Israel Prime Minister Benjamin Netanyahu said that Israel is preparing a ground invasion of Gaza, further tempered investors’ sentiment.
Gold price validated a Bull Flag formation, as seen on the daily chart, closing Wednesday above the $… falling trendline resistance. There may be more upward potential, as the Relative Strength Index is flirting with overbought territory. The high of $… on July 20 is currently the point of immediate resistance. Following that, purchasers of gold will show their strength by pushing for the $… barrier and the five-month high of $….
On the other hand, if the price of gold encounters resistance at a higher level, the fixed support at $… will become important throughout the correction. The psychological level of $… will be retested further south.
With Israel fiercely refusing pleas for a ceasefire to enable humanitarian aid into the Gaza Strip for populations besieged in the conflict zone, WTI Crude Oil is seeing a jump on Wednesday driven by geopolitical tension. Because of the OPEC’s significant production restrictions, the world's crude oil markets continue to worry about a severe undersupply. However, slow global growth is reducing demand for fossil fuels, which limits upward movement in barrel prices.
Despite Wednesday's fear-driven rise, WTI Crude Oil has stopped a drop that has seen its bids close lower for three consecutive trading days. WTI is still down more than 6% from last Friday's peak around $…. WTI is still cycling about its 50-DMA, but it is currently heading higher and the early October low of $… serves as a barrier to any further declines.
