Another eventful trading week is slowly coming to an end with global stocks mostly mixed today, as investors sit on their hands ahead of the weekend.
Asian markets closed mostly mixed on Friday, while European stocks struggled for direction after the Thanksgiving holiday in the United States on Thursday. Although Wall Street will be open this afternoon, a subdued session is expected thanks to the lingering holiday mood.
Dollar in the dumps
It has certainly been another painful week for the U.S. dollar which has found itself at the mercy of low inflation concerns.
The dollar sulked against a basket of major currencies on Friday with prices trading towards 93.00, after the minutes from the latest FOMC meeting expressed concerns among some policymakers over stubbornly low inflation. With uncertainty likely to mount over the U.S. rate outlook beyond 2017, amid Fed inflation concerns, it could translate into more pain for the dollar. Taking a look at the technical picture, the dollar Index is under extreme pressure on the daily charts with the next levels of interest at 93.00 and 92.80, respectively.
Sterling offered shaky lifeline
Sterling bulls have found support this week in the form of a vulnerable U.S. dollar. Although the GBPUSD is currently trading above 1.3300 as of writing, investors should keep in mind that this has nothing to do with a change of sentiment towards the Sterling. With the Office for Budget Responsibility (OBR) downgrading growth this year as well as coming years through 2022 and Brexit uncertainty weighing on sentiment, Sterling bulls are trapped. It may take more than a vulnerable dollar to sustain the current uptrend, with technical traders paying close attention to how prices behave around 1.3300. A breakdown below this level may encourage a further decline towards 1.3230 and 1.3150 respectively. Alternatively, if the current upside holds above 1.3300, then 1.3340 and 1.3370 will act as levels of interest.
Commodity spotlight – Gold
Gold hovered above $1,289 during Friday’s trading session on the back of a depressed U.S. dollar. With concerns over prolonged periods of low inflation weighing on the prospects of higher U.S. rates beyond 2018, the zero-yielding metal could receive a boost. Taking a look at the technical picture, prices are trading above the 50 Simple Moving Averages, while the MACD has also crossed to the upside. Previous resistance at $1289 could transform into a support that encourages a further incline towards $1,300. Alternatively, a failure for bulls to keep above $1289 should open a path back towards $1,280.
U.S. oil prices sprint to two-year highs
The shutdown of a major crude pipeline from Canada to the United States has instilled WTI crude bulls with enough inspiration to send the commodity to its highest level in more than two years - above $58.50. Optimism over OPEC members extending production cuts beyond March 2018 has also played a role in oil’s incredible resurgence. While further upside could be on the cards short term, it will be interesting to see how markets react to the rising output from U.S. shale in the longer term.