The heightened expectations of a US interest rate hike in December has empowered the Greenback against a basket of currencies with prices currently hovering around 101.40 as of writing. Sentiment is firmly bullish towards the Dollar with the currency on track for its strongest two-month gain since early 2015 amid the Trump effect. With optimism skyrocketing over president elect Donald Trump boosting infrastructure and cutting taxes, speculations have mounted towards an improvement in US growth which could spur inflation. Although a strong rise in inflation could be the catalyst needed for the Federal Reserve to repeatedly raise US rates in 2017, investors may have to wait till December’s Fed meeting which should offer further clarity on this hawkish idea.
Much attention may be directed towards the U.S third quarter GDP and consumer confidence which could provide a clear picture of how the world’s largest economy is faring. The overall trend for growth in the States has followed a positive path this year and such could be reflected if the revision for the third quarter GDP exceeds the 2.9% estimates.
The Dollar Index remains firmly bullish on the daily timeframe as there have been consistently higher highs and higher lows. Previous resistance at 101.00 could transform into a dynamic support which opens a path towards 102.00 and potentially higher. Bulls remain in firm control above 100.00.
Sterling bulls strike
The looming OPEC meeting combined with anticipation ahead of Friday’s NFP have taken Sterling slightly off the radar with bulls exploiting this opportunity to attack. Regardless of the short-term gains, Sterling remains trapped by the messy Brexit scenario with uncertainty sabotaging any upside gains. The ongoing battle of words between financial heavyweights on the Brexit topic coupled with the many unanswered questions on the government’s game plan for Brexit have soured investor attraction towards Sterling.
A market shaking selloff could be pending on the GBPUSD with Dollars resurgence acting as a catalyst for bears to drag prices lower. Sellers need to conquer the stubborn 1.240 support on the GBPUSD which could open the path towards 1.220 and potentially lower.
Oil volatility intensifies
WTI Crude was placed on a messy rollercoaster ride this week with prices violently swinging between losses and gains as expectations fluctuated over OPEC securing a freeze deal at Wednesday’s formal meeting in Vienna. Reports of Russia not attending the OPEC gathering has dented hopes of a meaningful deal while concerns of Iran, Iraq and Saudi Arabia failing to bridge their differences continues to encourage sellers to attack oil. The oversupply woes have heavily eroded buying sentiment towards this commodity while fears of a decline in demand amid slowing global growth has capped upside gains. OPEC’s situation is getting quite messy and this could expose oil to major downside risks if investors are left empty handed once again. From a technical standpoint, a breakdown below $45 could trigger a steeper selloff towards $43.