DBG Markets: Market Report for Oct 21, 2024

Market Overview

Gold has reached an all-time high as tensions escalate in West Asia following an alleged assassination attempt on Israeli Prime Minister Netanyahu. Iran's recent announcement regarding the possibility of a regional war, its continued refusal to engage with the U.S., and the upcoming Israeli elections have created significant uncertainty. 

GOLD - While it is uncertain how much further gold will increase, the current momentum suggests continued upward movement, driven by recent developments in Israel. Investors are closely watching for price fluctuations to identify the next support level. Although some volatility is expected, the current conditions present a potential buying opportunity for gold.

SILVER - As anticipated, silver has also reached new highs. Investors are waiting for a minor dip to enter this trade. With the current momentum, silver is expected to continue rising, potentially reaching levels never seen before. This asset has significant potential, with its current price appearing more attractive compared to gold.

DXY - The dollar experienced a decline after last weeks trading, but this drop appears to be corrective in nature. Further growth in the dollar is expected, supported by current market momentum. Markets are currently pricing in a 91% chance that the Federal Reserve will implement a modest 25 basis point rate cut in November, with the possibility of skipping a rate cut in December. Political developments, such as the increasing likelihood of former President Donald Trump regaining the White House, are also supporting the dollar. His trade and tax policies are viewed as inflationary, which could keep U.S. interest rates elevated.

GBPUSD - Although there is limited discussion regarding BOE rate cuts, there is still potential for the market to decline further. Rate cuts are anticipated next month, following the European Central Banks (ECB) rate cut last Thursday. Technical charts also indicate ongoing selling momentum in this market.

AUDUSD - The Australian dollar is expected to decline further as the U.S. dollar strengthens. Continued selling is anticipated, especially after the price failed to break the resistance level of 0.67142.

NZDUSD - Similarly, the New Zealand dollar is expected to weaken. Markets are pricing in another aggressive rate cut for November. With inflation cooling, there is a potential for a 50-basis point cut. Current market growth is expected to face resistance at 0.60847.

EURUSD - The euro is currently testing a high swing level near its recent low. However, market conditions suggest a further decline, with bearish momentum continuing. Markets are also factoring in the possibility of additional rate cuts through March 2025. Despite this, a positive long-term outlook for the economy explains the recent rise in euro prices.

USDJPY - The yen has strengthened due to intervention by the Bank of Japan (BOJ). Further selling is expected after the currency broke below a previous low swing. The overall market structure has shifted to a bearish outlook, with more selling anticipated in the near term.

USDCHF - With ongoing geopolitical instability, the Swiss franc is expected to remain a strong currency during times of conflict. However, current market conditions suggest continued buying, driven by the dollars strength and expectations for that currency. Investors are cautious about entering the market too soon.

USDCAD - The Canadian dollar is showing weakness, driven by falling oil prices. Despite this, the CAD has broken through a previous high swing, indicating continued buying. This points to a bullish outlook for the Canadian dollar.