US Dollar Continues To Drive All Markets

The US Dollar saw a hiccup in its six-day-long trend yesterday - a phenomenon also seen in the US stock market. Over the past six days, the US Dollar increased in value from anywhere between 4% and 8% depending on the currency pair. Of course, traders are aware that trends do not continue without pullbacks such as retracements.

The stock market had originally seen a decline earlier within the day and taken the price to a new low. However, the price movement was rejected, potentially due to the support level which may have acted as a psychological level for traders. As we approached the US session the stock market gained momentum with the S&P 500 seeing the strongest increase followed by the DowJones. The S&P 500 ended the day 1.75% higher than the daily price open.

Gold, on the other hand, is seeing two very interesting movements. The price increased by almost 2.90% within 8 days as a reaction to the USD declining. However, this morning the price is seeing a clear attempt to correct back downwards.

EUR/USD

EUR/USD saw a very similar price movement to gold, indicating that the price is most likely being driven by the USD, rather than the Euro. The US Dollar is significantly lower this morning compared to previous days. However, the US Dollar Index has increased by 0.85% this morning which is a strong price movement, that is reflected in the EUR/USD chart.

EUR/USD 1-hour chart on September 29th

When looking at the price on a 4-hour chart we can see the instrument has now approached the 15 Exponential Moving Averages which has normally acted as a support/resistance point after the first price breakout. Traders will be taking this into consideration as well as if the asset sees moving averages crossover downwards, which would potentially indicate further downward price movement. Traders should keep in mind the support level at 0.9533.

Throughout the day, investors will mainly be focusing on speeches and interviews scheduled with members of the Federal Reserve. This afternoon FOMC members Mr. Bullard and Ms. Mester are expected to give a speech. The speech will also be followed by questions, and the members will most likely comment on inflation, employment, and the Fed’s monetary policy.

Investors will also monitor the release of the US final Gross Domestic Product figure and Unemployment Claims.

Crude Oil

Over the past 24 hours, commodities have seen similar price conditions due to correlations with the US Dollar. The price of oil had significantly increased during yesterday’s session but has now reached a resistance leveland traders are keen to see how the asset will react at this level now the USD is rising again.

Crude Oil 4-hour chart on September 29th

The price of crude oil has been influenced by 3 major factors over the past 24 hours. Yesterday, two reports were released regarding inventories and supply. Crude oil inventories were reported at a neutral level of -0.2 million barrels. It’s lower than what was expected, which is positive for the price. However, the American Petroleum Institute reflected an increase in the index by over 4 million barrels, seriously exceeding the forecast of 333,000 barrels.

Nonetheless, the price increased despite the higher level of supply. This may have been a reaction to the latest hurricane in the Gulf of Mexico which led to a halt in the production of oil in certain regions. Some reports have advised that this may lead to a decrease in supply by up to 190,000 barrels per day.

Quick Summary:

• US Dollar Index declined on Wednesday but is on the rise again this morning.
• S&P 500 ended the day 1.75% higher but is again declining during this morning’s futures market.
• Investors are waiting for the scheduled FOMC speeches and the latest US Unemployment Claims.
• Hurricane may lead to an oil production decline of up to 190,000 barrels per day.