The US dollar was under pressure this week, as inflation for the US was lower than expected, giving the markets a glimpse of hope. As a result, Nasdaq gained over 1.5% for the week, while the US dollar had massively plummeted against all currencies, including Japanese Yen and Swiss Franc .
Traders re-evaluate their hawkish bets, as Fed fund futures discount the decreasing probability of monetary tightening for the end of this year. As a result, the US dollar declined, and Crude oil rallied along with Gold.
Another bullish factor boosting risk appetite is the beginning of the new earnings season: this week traders will monitor for publication of earnings for large financial companies, such as JP Morgan (NYSE: JPM ), Wells Fargo (NYSE: WFC ), Blackrock (NYSE: BLK ), and others.
Corporate profits in the financial sector may give another indication of economic growth or weakness, so markets will carefully listen to earnings calls and look into the numbers.
A weakening dollar narrative drives gold, though, there’s not much strength visible behind the price action. Positions for commercial traders for Gold futures don’t show any meaningful increase. That’s why, for Gold, the 1950-1960 area would be crucial for understanding the further dynamics. Odds for the rise have grown, though, should the US dollar pull back, Gold can quickly plummet back to the support as shown in the chart.
WTI Crude oil is gaining momentum, and is heading towards $80: the consensus forecast from the Energy Administration of the US. Easing inflation and recession fears make energy traders reevaluate their estimates about the recession, including price projections for major contracts for Crude Oil and Natural gas . Keeping that in mind, USOIL may achieve $80 pretty soon, as shown at the chart below.
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