Currencies: Euro and Aussie continued to be the preferred currency alternative to the Dollar as there increasing speculations that Fed will carry out Quantitative Easing. The poorer-than expected Non-farm payrolls on Friday continue to give us confirmation that the US economy is far from recovering.
For the week ahead, we continue to see the possibility of Euro and Aussie gaining in favour of the Dollar. We also await in anticipation the Fed meeting minutes on Tuesday as the minutes will likely give us latest insight on Fed’s strategic direction in the global economy. The established resistance for EURUSD and AUDUSD is established at 1.4100 and 0.9950 respectively.
Market Summary
Precious Metals: Gold prices continued to rise last week, advancing 2.2%. Spot gold reached an intra-day high of $1364 last Thursday. This is the fourth consecutive weekly rise for both gold and silver. Disappointing payrolls report increased the likelihood of the Federal Reserve restarting asset purchases as early as its Nov 2-3 meeting. Silver outperformed gold as investment interest in the metal surged. Holdings at the iShares Silver Trust hit fresh record high at 10085.62 tonnes.
Crude Oil: Crude oil advanced for a third straight week, settling above $82 a barrel on Friday. Crude oil was supported by a weaker dollar and strikes at France’s top oil port that entered its 12th day, threatening to cut output of European oil products. Still, inventories of crude oil remain elevated with the Energy Information Administration reporting that crude oil inventories rose 3.1 million barrels. Money manager’s net long crude oil positions on the NYMEX rose to the highest level since April in the week through Oct 5. The key speculator group held 165,113 net long positions.
Currencies: The Dollar touched a 15-year low against the Yen on speculations that Federal Reserve will signal this week their willingness to buy more government debt to support economic growth. The greenback fell for a second day versus the euro after a US report last week showed job cuts were bigger than expected. The Australian dollar traded near a record high on prospects that investors will buy higher-yielding assets.
Indices: US stocks advanced this week, sending the Dow Jones Industrial Average above 11,000 for the first time since the May 6 crash, on speculations that the Federal Reserve will buy more debt to boost the economy. Alcoa gained 5.4% after reporting third-quarter earnings that bettered estimates. Exxon Mobil and Chevron rose at least 2.4% as commodity producers rallied on bets the Fed will increase asset purchases to pump more cash into the economy. J.C. Penney jumped 18% after William Ackman’s hedge fund announced it had bought a stake.
