The US Dollar continues to surge as impressive economic data bolsters confidence in the US economy. Retail sales in October rose 0.4% month-on-month, slightly exceeding the consensus forecast of 0.3%. September's growth rate was also revised upward to 0.8% from 0.4%, further emphasizing economic resilience. Although industrial production fell by 0.3% in October, it outperformed market expectations of a 0.4% decline. The standout performer was the NY Fed's Empire State Manufacturing Index, which soared from -11.9 to an astonishing +31.2, far surpassing the consensus of 0.0.
This strong performance keeps the US Dollar robust and Treasury yields elevated. Over recent months, market expectations for the Federal Reserve's rate cuts have shifted significantly. Earlier, markets anticipated a reduction in the Fed rate from 4.75% to 2.75% by December 2024. Now, the expectation is that the Fed rate may only bottom out near 4%, reflecting a much tighter monetary policy outlook.
Key data to watch this week includes flash PMI surveys for manufacturing and services, which could provide further direction for the Dollar and yields.
Gold Outlook:
Gold has rebounded from oversold levels, bouncing off the critical support near USD 2530, previously identified as a potential downside target.
Positional traders may consider long positions with a stop-loss below USD 2520 on the spot price. If gold falls below this level, it's prudent to exit long positions.
On the upside, the USD 2620-2630 zone presents stiff resistance. A failure to break above this range may warrant a shift from long to short positions.
A decisive break above USD 2630 would confirm a potential bottom and signal the start of a new uptrend.
Trader's Strategy:
Given the current environment, traders must remain agile. Monitor key levels closely and adapt positions swiftly to align with evolving market trends. A cautious approach with well-defined risk management is critical.
This strong performance keeps the US Dollar robust and Treasury yields elevated. Over recent months, market expectations for the Federal Reserve's rate cuts have shifted significantly. Earlier, markets anticipated a reduction in the Fed rate from 4.75% to 2.75% by December 2024. Now, the expectation is that the Fed rate may only bottom out near 4%, reflecting a much tighter monetary policy outlook.
Key data to watch this week includes flash PMI surveys for manufacturing and services, which could provide further direction for the Dollar and yields.
Gold Outlook:
Gold has rebounded from oversold levels, bouncing off the critical support near USD 2530, previously identified as a potential downside target.
Positional traders may consider long positions with a stop-loss below USD 2520 on the spot price. If gold falls below this level, it's prudent to exit long positions.
On the upside, the USD 2620-2630 zone presents stiff resistance. A failure to break above this range may warrant a shift from long to short positions.
A decisive break above USD 2630 would confirm a potential bottom and signal the start of a new uptrend.
Trader's Strategy:
Given the current environment, traders must remain agile. Monitor key levels closely and adapt positions swiftly to align with evolving market trends. A cautious approach with well-defined risk management is critical.
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