The U.S. dollar (USD) continued to decline on Thursday, reaching lows not seen in several days as investors considered the likelihood of rate cuts from the Federal Reserve and the economic consequences of a potential government shutdown in the U.S.
Here’s what to expect on Friday, October 17th.
The U.S. Dollar Index (DXY) dropped further, hovering around the 98.30 mark, which reflects recent lows. This decline correlates with a notable decrease in U.S. Treasury yields and ongoing worries about how a government shutdown could affect the economy. Attention is now also shifting to the long-term TIC flow, while remarks from Federal Reserve officials like Mr. Kashkari and Mr. Mussalem seem to be providing some support.
The EUR/USD pair climbed to a seven-day peak, edging closer to the 1.1700 level, primarily influenced by the ongoing weakness of the dollar. The final inflation rate release in the eurozone will be a pivotal event in the domestic agenda, with ECB’s Donnelly also slated to speak soon.
GBP/USD increased from Wednesday’s performance, moving above 1.3400 and approaching the interim 55-day SMA around 1.3460. Remarks from BoE’s Pill and Breeden are anticipated amid the quietness in the UK minutes.
USD/JPY fell to a seven-day low, trading just under the significant 150.00 figure, marking its third consecutive day of declines. Upcoming weekly foreign bond investment statistics are expected to tie in with a speech from Bank of Japan Governor Uchida.
AUD/USD experienced volatility, finding some support near 0.6470 but gently declining during the day. Eyes are now on RBA’s Jones’ upcoming speech on October 21st.
WTI crude oil prices remained under pressure on Thursday, dropping to a five-month low around $57.40 per barrel. This decline followed reports that India could potentially stop importing Russian crude. Though geopolitical worries have somewhat mitigated the losses, a larger-than-anticipated increase in U.S. crude oil inventories reported by the EIA added to the negative sentiment.
Given the geopolitical tensions, rising expectations for Fed rate cuts, and ongoing uncertainty surrounding the U.S. government shutdown, gold prices surged on Thursday, nearing an unprecedented $4,300 per ounce. Silver also continued its upward trend, reaching an all-time high of just over $54.00 per ounce.
