Global risk sentiment has swung back and forth this week as investors dealt with ongoing trade tensions, Brexit-related uncertainty, slowing global growth fears and depressed Oil prices.
The overall market mood remains cautious with investors on guard, and this sentiment continues to be reflected across global equity markets. Asian stocks closed mostly lower today thanks to lingering concerns over the US-China trade dispute while European markets are trading cautiously higher amid positive Brexit developments. With a strong sense of anticipation mounting ahead of the G20 summit next week, Wall Street may trade lower this afternoon as investors stroll to the side lines.
Dollar Index eyes 97.00
The Dollar is staging an impressive rebound against a basket of major currencies with prices trading marginally above 96.85 as of writing.
It seems bulls have shrugged off recent dovish remarks by Federal Reserve officials and speculation over the Fed raising rates slower than expected in 2019. The primary driver behind the Dollar’s appreciation is likely based on confidence over the US economy and the fact that the Fed remains as one of the more hawkish major central banks. With interest rate differentials in favour of the Dollar and safe-haven demand supporting upside gains, the outlook remains fundamentally bullish. In regards to the technical picture, the Dollar Index is bullish on the daily charts with 97.00 acting as the first point of interest.
Oil tumbles to one-year low on oversupply concerns
It has been a brutally bearish trading week for Oil prices with Brent Crude and WTI Oil both crashing to a fresh yearly low this morning thanks to oversupply concerns and global growth fears.
The truth of the matter remains that rising global Crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the Oil markets. With an appreciating Dollar rubbing salt into the wound, the outlook for Oil prices points to further downside. Although OPEC is expected to cut Oil production at its meeting in early December, Oil bears are clearly unfazed and this continues to be reflected in price action. Focusing on the technical perspective, WTI Oil has scope to depreciate towards $50 a barrel in the near term.
Commodity spotlight – Gold
Gold experienced a heavy depreciation during Friday’s trading session mostly due to an appreciating US Dollar.
The price action witnessed in recent weeks confirms how the Dollar always has the final say in where the yellow metal trades. Although the unfavourable market conditions and geopolitical risk factors have attracted investors towards safe-haven Gold, the precious metal remains governed by King Dollar. When taking a look at the technical picture, there is a strong resistance at $1,228. Sustained weakness below this level could inspire a move back down towards $1,218.
