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Strong U.K. Retail Sales Fuel Currency Movements

Strong U.K. Retail Sales Fuel Currency Movements

Strong U.K. retail sales rose 0.3%, boosting the GBP. The U.S. Dollar Index faces volatility ahead of Fed speeches that will impact currencies and commodities.

In a surprising turn of events, the U.K.’s consumer spending rose by 0.3% month-on-month in September, defying forecasts of a 0.4% decline. Key contributors to this growth included robust sales in non-food retail, particularly in sectors like computers and telecommunications, alongside a surge in online shopping. Year-over-year, retail sales have increased for the third consecutive month, climbing by 3.9%, exceeding expectations of 3.2% and marking the highest growth rate since February 2022. This positive news buoyed the British Pound (GBP), which initially jumped from 1.3023 to a peak of 1.3070 before settling at 1.3049 as markets closed on Friday.

Implications for the Asia Session

The Australian Dollar (AUD) will likely feel the effects of remarks from RBA Deputy Governor Andrew Hauser, who will speak at the Commonwealth Bank of Australia Global Markets Conference in Sydney. The AUD sharply declined by 2.9% over the past three weeks, dropping more than 220 pips, and rose towards 0.6730 at the start of the Asian trading day.

The Dollar Index (DXY)

Key News Events Today:

  • FOMC Member Logan Speaks (12:55 PM GMT)
  • FOMC Member Kashkari Speaks (5:00 PM GMT)
  • FOMC Member Schmid Speaks (9:05 PM GMT)

Market Expectations for DXY: Today, three Federal Reserve officials will deliver speeches, likely heightening market volatility. Dallas Fed President Lorie Logan will participate in a discussion at the Securities Industry and Financial Markets Association Annual Meeting, while Minneapolis Fed President Neel Kashkari and Kansas City Fed President Jeffrey Schmid will address audiences in their respective locations. These speeches could influence market sentiment regarding U.S. monetary policy.

Central Bank Notes:

  • The Federal Funds Rate was cut by 50 basis points to a target range of 4.75%-5.00% on September 18, with Governor Michelle Bowman on September 18The Committee expressed confidence in achieving its inflation target of 2% while monitoring economic conditions closely.

Next 24 Hours Bias: Medium Bearish

Gold (XAU)

Key News Events Today:

  • FOMC Member Logan Speaks (12:55 PM GMT)
  • FOMC Member Kashkari Speaks (5:00 PM GMT)
  • FOMC Member Schmid Speaks (9:05 PM GMT)

Market Expectations for Gold: With three Federal Reserve officials speaking today, analysts expect gold prices to experience volatility. Moreover, the market will be keenly watching for any indications of future monetary policy shifts that could impact gold’s appeal as a haven.

Next 24 Hours Bias: Medium Bullish

Strong U.K. Retail Sales Fuel Currency Movements

Australian Dollar (AUD)

Key News Events Today:

  • RBA Deputy Gov Hauser Speaks (1:00 AM GMT)

Market Expectations for AUD: Hauser’s comments could provide insights into the RBA’s outlook on interest rates and inflation, potentially influencing the AUD’s trajectory. Furthermore, the currency has rebounded slightly from its recent lows and may find support around the 0.6730 level.

Next 24 Hours Bias: Medium Bullish

Kiwi Dollar (NZD)

Key News Events Today: None

Market Expectations for NZD: The NZD has faced significant downward pressure, losing 4.3% in the past three weeks. However, the currency stabilizes at around 0.6050; the expectation is to trade between this support level and the resistance level at 0.6120.

Next 24 Hours Bias: Medium Bullish

Japanese Yen (JPY)

Key News Events Today: None

Market Expectations for JPY: The JPY has declined against the USD, with USD/JPY sliding towards 149 after a high of 150.32. So, The pair’s current trading range is between support at 148.10 and resistance at 150.30.

Next 24 Hours Bias: Medium Bearish

Euro (EUR)

Key News Events Today: None

Market Expectations for EUR: The Euro has weakened significantly, losing 2.7% over the past three weeks. It has also shown some resilience, stabilizing around 1.0825. So, today’s trading range is set between support at 1.0825 and resistance at 1.0910.

Next 24 Hours Bias: Weak, Bullish

Swiss Franc (CHF)

Key News Events Today: None

Market Expectations for CHF: The USD/CHF pair hovers around 0.8650 after a brief rise last week. The currency may continue to grind higher, with support at 0.8610 and resistance at 0.8720.

Next 24 Hours Bias: Weak, Bullish

Pound (GBP)

Key News Events Today: None

Market Expectations for GBP: Following a strong showing in retail sales, the GBP has found stability, hovering around 1.3050. The expected support and resistance levels are 1.2980 and 1.315, respectively.

Next 24 Hours Bias: Weak, Bullish

Canadian Dollar (CAD)

Key News Events Today: None

Market Expectations for CAD: The CAD has also experienced a significant depreciation, pushing USD/CAD above 1.3800. Additionally, today’s support and resistance levels are 1.3750 and 1.3840.

Next 24 Hours Bias: Weak, Bullish

Oil

Key News Events Today: None

Market Expectations for Oil: WTI crude oil prices have dropped dramatically, plunging 8.5% last week to close at $69.53 per barrel. So, As the new trading week begins, traders expect oil prices to remain under pressure, trading around $68.70.

Next 24 Hours Bias: Medium Bearish

Also, as the Asian session unfolds, market participants will closely monitor central bank communications and economic indicators that may influence currency movements and commodity prices.

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