Global Markets and Economies Stumble as USD Climbs Again

The US Dollar Index reaches a weekly high and has been able to maintain a price above 113.00. The price has been supported by more positive employment figures and investor confidence while other economies continue to struggle. The GBP is again on the backfoot as it tries to stabilize after the Prime Minister resigns only after 44-days. The Eurozone is still experiencing increasing inflation and super expensive energy costs. While the Japanese Yen is still under pressure from its inadequate monetary policy. This has, in general, increased confidence in the US Dollar and is triggering its “safe haven” status again.

Gold

As the price of the US Dollar has been driven higher by demand again, it, of course, has resulted in a bearish market for gold. Over the past 24-hours, the USD has also found support from a lower-than-expected Unemployment Claims figure. Gold is now at $1,619, having declined by almost 4.60% over the past 2 weeks. Though traders should remain cautious as the price is now hovering at a potential previous support level which formed on the 27th of September. The US Commodity Futures Trading Commission (CFTC) confirmed in their latest report that the number of short contracts have increased.

XAU/USD 8-hour chart on October 21st

British Pound

The Prime Minister had given in to pressure yesterday afternoon and decided to resign. The resignation was expected as the PM was unable to stabilize markets or win back investors’ trust. Currently the two frontrunners to be the next UK Prime Minister are ex-PM Boris Johnson and Rishi Sunak, who had previously lost to Truss. More or less all of Tuss’s policies have either been rejected or deemed disastrous leading to minister resignations. The resignation resulted in the GBP declining by almost 1% against the Euro and almost 2% against the US Dollar.

Cryptocurrency Market

The cryptocurrency market has experienced a lower level of volatility over the past week compared to other markets, which is uncharacteristic. Some analysts have expressed their belief that this is positive and shows that large investors are holding onto their positions. Bitcoin has declined by 1.77% over the past 5 days but has seen its market share increase to almost 42%. However, the total market capitalization has declined to $911 billion, down from $940 billion.

US Indices

The US stock market started the week strong with positive earnings reports. All three of the main indices opened on a bullish market gap and increased to a “higher high”. However, the market has since lost momentum and declined for 3 consecutive days, including this morning’s futures market.

NASDAQ, S&P 500 and DowJones are all declining this morning by 0.74- 0.91%. The DowJones is the only index which has seen the decline gain momentum while the S&P 500 has maintained similar momentum to previous days. When looking at technical analysis we have clear signals from indicators that the price will potentially decline. The only concern for traders is that the price is still within a “higher high and higher low pattern”. If the price breaks the $3,574 swing low, the pattern will change in favor of a downward trend. The $3,574 is also a possible support level.

Next Tuesday will be a busy and volatile day for the US stock market with 5 major companies releasing their earnings report. This includes Twitter, Alphabet (Google), Visa, Coca-Cola, and Microsoft. NASDAQ is expected to see the highest volatility.

NASDAQ 1-hour chart on October 21st

Quick Summary:

• The US Dollar rises above 113.00 again supported by positive employment figures.
• Gold struggles while the Dollar remains a favorite amongst investors looking for more conservative investment options.
• The total market capitalization of the cryptocurrency market fell to $911 billion.
• Short positions amongst gold traders increased over the past week, according to latest US reports.
• Index traders await the release of major earnings reports next week.