DBG Markets: Market Report for Oct 9, 2024

Market Overview

GOLD - GOLD has broken out of its previous range, hitting new lows after weeks of flat trading. The decline was triggered by reduced expectations for a 50-basis-point rate cut from the Fed in November. Instead, markets are now anticipating an 89% probability of a smaller 25-basis-point cut, down from the 100% certainty seen a few weeks ago.

This shift is largely due to rising geopolitical instability in West Asia and concerns over oil inflation. However, over the long term, GOLD is expected to recover and rise.

SILVER - SILVER, contrary to earlier predictions, has fallen below key support levels, reaching new lows. With a bearish momentum in play, we are looking at potential further declines, with a key target around 29.900.

DXY - The U.S. dollar has remained flat over the past few days, but there are expectations of a stronger performance in the near term. This Thursdays release of CPI and PPI data will likely be crucial in shaping market sentiment. Until then, consolidation is expected, but a move toward 102.775 is possible.

Analysts at Westpac IQ noted, “U.S. inflation data this week and upcoming corporate earnings will be critical in sustaining the U.S. dollar rebound, reinforcing the narrative of U.S. exceptionalism.”

GBPUSD - The Pound is also flat, depending on U.S. dollar strength and upcoming economic data. After a sustained period of selling from 1.31097, it is more likely to decline toward 1.29966.

AUDUSD - The Aussie dollar continues to show weakness amid rising global insecurity. The Reserve Bank of Australia is expected to hold rates steady at 4.35%, though futures markets suggest a 50% chance of easing by December. For now, we expect further declines in this market.

NZDUSD - Kiwi recently cut rates to 4.75%. Markets had already priced in a near 100% chance of a half-point cut and are anticipating another rate reduction in November, with an 80% probability. Rates are projected to fall to 3.0% by the end of 2025. The RBNZ dropped its prior statement on maintaining restrictive policies for an extended period. Current conditions suggest continued downward momentum.

EURUSD - The euro remains in consolidation, with no clear direction. Further selling is expected, though we await more clues from the market.

USDJPY - The yen is consolidating as well, awaiting key policy decisions from the government. Although we anticipate further growth, a potential sell-off could follow depending on upcoming actions.

USDCHF - No major shifts have occurred in the franc, which has rebounded from 0.85541 and is returning to its structure. While a breakout is possible, the market overall remains in consolidation. A failure to break the supply and demand zone around 0.806060 may lead to further selling.

USDCAD - The Canadian dollar continues to weaken despite a recent spike in crude oil prices to $78.45 per barrel. Tony Sycamore, a market analyst with IG, pointed out that uncertainty over Hurricane Milton's impact on oil infrastructure and the potential timing of Israel‘s response to Iran’s missile attack may have established a new higher trading range between $72.50 and $77.50. For now, CAD growth remains muted, with bearish expectations persisting.