1. Forex Market Insight
The minutes of the September 21st to 22nd Federal Open Market Committee (FOMC) meeting released last night showed that “participants generally agreed that with the economic recovery still broadly on track, the appropriate approach would be to gradually reduce bond purchases until the end of the year around the middle of next year.
Participants pointed out that if the decision to initiate the reduction in bond purchases is made at the next meeting, it will likely begin in mid-November or mid-December.” Fed officials hinted last month that they were about to begin tapering their $120 billion monthly asset purchases, a process Chairman Jerome Powell told reporters could begin as early as November and end around the middle of 2022.
The minutes suggest that Fed officials are facing a high degree of uncertainty about both their mission to achieve full employment and price stability. Against this background, the dollar fell sharply yesterday, causing the euro to rebound in strength.
(EUR/USD 1-hour chart)
Today, we pay attention to the support of 1.1554. If the euro falls below the 1.1554-line, it will open up a further downside potential. At that time, we will pay attention to the support of 1.1501. On the top, focus on the suppression of 1.1622 and 1.1663. Once it breaks through the 1.1663 line, then it might probably open up a further upside potential.
GBP Intraday Trend Analysis
The U.S. announced that the increase in inflation in September reflected the rising food and housing costs. Meanwhile, indicators for the prices of used cars and trucks, apparel, and airline ticket have cooled.
The CPI data reflected the complex situation in the economy. Hotel prices fell, reflecting the impact of the Delta variant on travel, but inflation is expanding beyond the categories related to the reopening of the economy.
Rising housing prices are beginning to seep through the inflation data. Rents for major residences rose by 0.5%, the largest increase since 2001, while a measure of rent levels for homeowners posted the largest increase in five years. Housing costs are considered a more structural component of the CPI, accounting for about one-third of the overall index, and could be a more persistent driver of inflation.
The report could reinforce the Fed’s intention to start scaling back asset purchases soon, especially when the supply chain problems that plague businesses show little sign of abating.
Additionally, survey data released by the Federal Reserve Bank of New York on Tuesday showed that the U.S. consumers’ expectations for inflation continued to rise in September, with one-year and three-year inflation expectations rising to record highs. Under these circumstances, the pound rose sharply yesterday on the back of a falling dollar.
(GBP/USD 1-hour chart)
The pound today pays attention to the 1.3669 line. If the pound runs above the 1.3669-line, then pay attention to the suppression of the two positions 1.3721 and 1.3798. Once the pound runs below the 1.3669-line, pay attention to the support of the two positions 1.3574 and 1.3522.
2. Precious Metals Market Insight
Gold steadied after its biggest gain in seven months as markets weighed concerns around high inflation and impending reductions in stimulus measures. The U.S. consumer price index rose more than expected in September, resuming a faster pace of growth and underscoring the persistence of inflationary pressures in the economy.
The 10-year U.S. Treasury yields rose and then fell after Wednesday’s data, boosting demand for gold. Separately, minutes from last month’s Federal Reserve meeting showed widespread agreement among officials that they should begin tapering monetary stimulus during the pandemic in mid-November or mid-December.
The pandemic-era stimulus was one of the key pillars of gold prices hitting record highs last year. If high inflation continues, gold could start to see strong buying, a far cry from earlier this year when tapering fears overshadowed inflation fears. Historically, gold tends to do very well in an inflationary environment, so it makes sense for the market to turn bullish if inflation continues to outpace.
(Gold 1-hour chart)
Gold pays attention to the first line of 1782 today. If the price of gold runs above the first line of 1782, turn to the bullish trend. At that time, pay attention to the suppression of the two positions 1801 and 1807. Once it falls below the first line of 1782, pay attention to the support of the first line of 1768.
3. Commodities Market Insight
WTI Crude Oil
According to the monthly report released by the Organization of the Petroleum Exporting Countries (OPEC) on Wednesday, 15th October 2021, the organization lowered its forecast for global oil demand growth in 2021, while maintaining its forecast for 2022.
However, the organization said that the surge in natural gas prices may boost the demand for petroleum products. The demand for end-users is shifting to the use of refined oil.
OPEC currently predicts that oil demand will grow by 5.82 million barrels per day in 2021, which is lower than the previous estimate of 5.96 million barrels per day, and said that the reduction is mainly driven by data in the first three quarters of this year.
The organization maintained a demand growth forecast of 4.2 million barrels per day next year. However, OPEC said that record-high natural gas prices may boost oil demand growth as industrial users switch to refined oil.
OPEC said, “If this trend continues, fuel oil, diesel, and naphtha may be supported by increased demand for power generation, refining, and petrochemicals.”
In the report, OPEC will target them in 2021. The forecast for crude oil demand has been revised up by 100,000 barrels per day to 27.8 million barrels per day, and its crude oil demand forecast for 2022 has been revised upward by 100,000 barrels per day to 28.8 million barrels per day.
OPEC also said that according to second-hand sources, OPEC’s September production increased by approximately 490,000 barrels per day to 27.33 million barrels per day.
Plus, according to preliminary data, OECD commercial oil inventories in August decreased by 19.50 million barrels from the previous month to 2.855 billion barrels, showing signs of tightening of the oil market.
(Crude oil 1-hour chart)
Today, oil prices are focused on the 78.25-line. If the oil price runs above the 78.25-line, it will still maintain the trend of bullishness. With that, pay attention to the suppression of the 80 and 81.33 positions in turn. If the oil price drops below the 78.25-line, it will open a further downside potential. At that time, pay attention to the strength of support at 76.89 and 75.04.
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