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USD Declines and Gold Treads Water

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On Friday, the U.S. dollar index declined to its lowest level in a week vs. a basket of six major rivals as the Federal Reserve left rates unchanged. The U.S. dollar index rose slightly by 10 pips and settled at 95.40 pips at the end of last week’s trading session. 

On Friday, Gold traded flat, affected by USD and U.S. interest rates, but the precious metal was still on track for its biggest weekly gain in nearly two months.

The precious metal is sensitive to moves in U.S. rates, as a hike could lift the opportunity cost of holding non-yielding assets such as bullion. The yellow metal settled at $1,330 and could re-test such levels during the course of the day, before touching $1,350.

The Pound fell as much as 1% vs. USD and settled at $1.30, negatively affected by Theresa May’s remarks about Article 50. From a technical point of view, cable could trade under pressure during the course of the week and could decline further to $1.29.

Also on Friday, Japan's Nikkei share average settled down as traders took profits on financial stocks.

Despite, the greenback paring its losses vs. JPY, it failed to settle above ¥101. Technically, USD could decline to ¥100, during the course of the week.

On Friday, Oil prices fell as much as 4%, due to speculations that Saudi Arabia will not reach an agreement at talks next week, taking place among major crude producers aimed at freezing production. U.S. crude settled below $44.50 at the end of last week’s trading session. Technically, crude could trade with sharp fluctuations during the course of the day, in anticipation of the upcoming meeting in Algeria.

The most important economic events:

  • GBP CBI Total Dist. Reported Sales (SEP): (GMT 14:00) – Medium – Forecast (N/A) – Previous (17).
  • USD New Home Sales (MoM) (AUG): (GMT 14:00) – Medium – Forecast (-8.3%) – Previous (12.4%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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