Can the American Dollar Maintain Its Dominance Throughout October?
03 October 2023
The financial markets on this second trading day of October are bustling with activity and interesting shifts, particularly spotlighting the dominance of the American dollar. From its impressive performance against other currencies to its influence on commodity prices, the dollar is steering a compelling narrative in various market segments.
Starting with currencies, the dollar has showcased unparalleled strength, positioning itself as the strongest currency both yesterday and today, with the Japanese yen securing second place on both occasions. A few snapshots of its robust performance are visible in various currency pairs. EURUSD finds itself languishing at new long-term lows, while USDJPY scales new long-term highs. The USDCHF and USDCAD pairs also mirror this upward momentum, climbing steadily upwards.
Peering into commodities, the dollar’s influence persists. The general direction for commodities like gold, silver, and oil has become conspicuously downward. Gold finds itself targeting lows not seen since February, while silver, seemingly in freefall, aims for lows reminiscent of early March. Oil, too, is on a southward journey, targeting its mid-term uptrend line.
On the indices front, a variety of movements are noted. The U.S. indices are trekking downwards, while in Asia, the Hang Seng Index from Hong Kong closed with a steep decline of 3%, primarily due to hurdles in the real estate and energy sectors. American futures and indices are also on a descent, with the DAX teetering dangerously close to establishing new mid-term lows.
In terms of economic data and calendar events, the recently unveiled interest rate decision from Australia held no surprises, maintaining rates at 4.1%. Eyes are now on Switzerland, where inflation numbers (CPI) are anticipated to hold steady at zero. And in the United States, job opening data, anticipated at 8.81 million, awaits release. It will be intriguing to observe if these data releases incite significant market movements. Yet, given the currently lively market condition, underscored by remarkable technical patterns and setups, it's plausible the market may continue its dynamic movements without requiring additional stimulus from economic data releases.