Market dynamics: currencies and commodities (October 28 — November 1)

Market dynamics: currencies and commodities (October 28 — November 1)


Here’s what happened on forex and commodity
markets last week and our weekly wrap of major economic developments in the coming days. The US dollar dropped last week after data
showed a mixed view on the US economy, and as optimism that the United States and China
will reach a deal to end their trade war reduced safe-haven demand for the greenback. The dollar initially gained after US jobs
growth slowed less than expected in October, but was unable to hold onto the gains, and
was further dented after the Institute for Supply Management (ISM) said the US manufacturing
sector contracted for the third month in a row in October. The US dollar index against a basket of six
major currencies fell to 97.12, down by 0.18% on the day. For the week, the index fell by 0.6%. The greenback has weakened since the US central
bank cut interest rates on Wednesday and indicated that it may now be planning a pause. Concerns about a slowing US economy are weighing
on the dollar, with the US Federal Reserve expected to resume rate cuts if needed. In what is set to be a quiet week on the US
economic data front, investors will be focusing their attention on the Federal Reserve speakers. There are at least seven Fed speakers set
to speak this week. US-China trade developments will also continue
to remain in the spotlight, amid persistent concerns over the effect of trade tensions
on the global economic outlook. Meanwhile, the euro has been indecisive during
the trading session on Friday. The common currency was 0.13% higher against
the greenback on Friday, closing with a weekly gain of 0.6%. Christine Lagarde will provide an insight
into how Germany is doing this week, with the release of factory orders and industrial
production. The European Commission will unveil its outlook
for the region. Meantime, the British pound was little changed
on Friday, but still ended the week 0.7% higher. Sterling remained supported at 1.2935 as investors
believed there was less risk of a hard Brexit now as an election campaign was underway. The Bank of England’s Monetary Policy Report
is out on Thursday. No change in interest rates is expected, so
the focus will be on new economic predictions and Governor Mark Carney’s press conference. Brexit uncertainty is still the big factor
for the outlook. Meanwhile, in the crypto market, Bitcoin exchanges
never seem far from scandal. Now, Seychelles-based bitcoin futures exchange
BitMEX has sparked panic among bitcoin investors after accidentally exposing thousands of its
users’ emails. The bitcoin price, which is still choppy after
a roller-coaster October, barely reacted to the news of the leak, closing steady at 9,289.1
on Friday. For the week, it gained 24.6%. Speaking of commodities, oil prices jumped
by more than 3% on Friday after the world’s top two economies said they had made progress
on trade talks. Brent crude for January finished the week
at $61.69 a barrel, with a slight 0.03% gain for the week. Meanwhile, WTI closed the week at $56.2 dollars
a barrel. Friday’s move higher was unable to cover
the earlier losses, with the contract posting a 0.05% weekly decline. Meantime, gold is keeping above the key $1,500
an ounce level despite the Federal Reserve’s signal to pause its rate cuts. This could mean the metal is ready for the
next spark, according to analysts. December gold futures closed at 1,511.40 on
Friday, down by 0.2% on the day and up by 0.4% week-on-week.

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