27/10/2023 - 07:10 UTCThe U.S. Dollar gained early on Thursday, only to retrace later in the session and end the session almost unchanged against most major currencies, with the USDX posting gains of 0.06%. Dollar sentiment is currently mixed as Treasury yields fell due to signs of easing inflation while stronger-than-expected GDP data showing the economy grew at its fastest quarterly pace since 2021 supported the U.S. currency. While a rate hike on November 1st is highly unlikely, according to the CME Group Fed Watch Tool, chances of a rate hike in December are at approximately 19.5 down from 29.1% yesterday.
Following a high of $35,259 reached earlier this week, the Bitcoin has traded within a tight range between $33,720 and $35,175 in the past two sessions. For Thursday, a moderate decline of 1% was seen in Bitcoin while Ethereum gained 1% to hit its highest level since August. The overall cryptos market cap remains elevated at around 1.300 trillion as seen early on Friday. Weakness in recent earnings reports from mega cap technology companies seems to be providing support to the main cryptocurrencies.
Gold prices are seen moving higher since the events of October 7th took place in Israel, with the precious metal adding 7.6% to its value so far this month and currently trading right below 5-month highs reached earlier this week. The opposite impact was seen on the main stock market indices as US 500 US 30 and US tech 100 all plummeted by 3.4%, 2.27% and 3.79% respectively so far this month. Reports came out that the U.S. military struck Iran-linked targets in Syria, something that spurred a renewed rush for safe haven assets while the news pushed up concerns over a broader escalation in the Middle Eastern conflict, which could potentially draw in more Arab powers.
Among others, Exxon Mobil, Chevron and AbbVie will publish quarterly earnings figures today, but aside from earnings reports, the focus could shift to the Core Personal Consumption Expenditures (PCE) report which is due later today. The report is expected to show annual core inflation rising from a previous 0.1% to 0.3%.
The EUR/USD pair reached previous week’s lows after European Central Bank adopted a more dovish stance but rebounded after US Dollar failed to benefit from Better-than-expected US Growth data ending the session with minor losses of 0.02%.
As expected, the ECB kept its policy unchanged on Thursday. ECB President Christine Lagarde and the governing council maintained their stance that inflation remains high, reiterating that rates will remain elevated for as long as necessary.
Data released on Thursday showed the US economy expanding at an annual rate of 4.9% during the third quarter, surpassing expectations of 4.2%. Jobless claims jumped to 1.79 million, the highest point in months. The US Dollar failed to benefit from the positive GDP data as US Treasury yields posted a decline.
Gold ticked higher on Thursday as steady safe-haven demand fuelled by the Middle East conflict helped bullion weather pressure from strong U.S. data that quelled recession fears.
The U.S. economy grew at its fastest pace in nearly two years in the third quarter, again defying dire warnings of a recession issued since 2022. Gold has gained 9% over the past two weeks as investors sought refuge from the potential fallout of the Israel-Hamas conflict. But the lingering prospects of higher interest rates have softened any upside in non-yielding bullion.
Crude prices fell around 2% Thursday, reversing the previous day’s gain, on signs that Israel was acceding to international calls to hold back from a ground invasion of Gaza, as world powers worked to limit casualties and negotiate the release of some 200 Israeli hostages held by Hamas.
Oil prices have been boosted recently by fears of a spillover affecting global crude supplies from the conflict between Israel and Palestinian militant group Hamas, which could embroil Iran and its allies in the region.
U.S main indexes posted minor losses on Thursday with US 500 and US Tech 100 ending the day 0.29% and 0.21% lower respectively while US 30 ended the session with losses of 0.41%.
Meta Platforms fell more than 3% after it flagged weaker advertising demand seen in the fourth quarter so far. Concerns about slowing growth overshadowed Q3 results that beat analyst estimates on both the top and bottom lines amid cost-cutting measures that boosted margin. International Business Machines jumped more than 5% after its Q3 results topped Wall Street estimates.
Later today market participants will be closely monitoring PCE price index data, personal income and spending, Michigan consumer sentiment and expectations as well as a speech from Fed Vice Chair Barr.
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