The main focus for the day is going to be the US Retail sales and Consumer Confidence as well as Janet Yellen’s speech. The market will be looking for cues from Yellen regarding a possible rate hike in December from the Fed. However, unless the numbers surprise significantly on the upside and/or Yellen is really hawkish the market is not likely to react extremely positive in favor to the USD as a lot is priced in right now.
Currencies: The USD rally reversed yesterday after the USD breached many important support levels. EUR/USD briefly broke 1.1000 to 1.0985 posting a 2.5-month low, but bounced back up to over 1.1050. GBPUSD bounced from its 31-year low set earlier this week, but remains 1.8% down on the week, trading around 1.22. AUDUSD (0.7603) has bounced back sharply from the lower end of the range 0.75-0.77 as expected and now may rise to 0.7670-90 in the next week. USD looks fatigued in general and a short term top cannot be excluded. The Dollar Index, which tracks the value of the Dollar versus 6 major currencies, is set to close the week with weekly gains, however traders are now speculating on a small correction. The probability for a December rate hike, slightly decreased from yesterday to 69%.
Stocks: The overall mood in stock markets yesterday was negative. European indices opened yesterday with a gap and closed the day in excess of 1% losses. US stocks markets suffered significant losses, with October looking to be the 3rd straight month of declines in stock markets prices. Today, Asian stocks closed slightly higher. Overall, there is a delicate balance in stock market sentiment with many traders expecting a crash in the near future.
Oil and Gold: Oil prices edged up on Friday, pushed by a tighter U.S. fuel market and as technical indicators attracted buying from financial players. After falling below $50 a barrel on Thursday, WTI was trading at $50.63 per barrel, up 19 cents from the last close. GOLD still continues to hover around $1255.