- US dollar poised for the biggest gain in months.
- GBPUSD slumps to 11-month lows, more losses eyed.
- EURUSD is under pressure at 16-month lows on EUR weakness.
- Oil prices retreat on dollar strength.
- Bitcoin and Ethereum rally stalls.
The US dollar is on course for its best week in five months after gaining more than 1.05%. The dollar index, which measures the greenback strength against the majors, has risen to 16-month highs, affirming USD strength across the board.
US dollar sentiments have been bolstered by growing expectations that the US Federal Reserve will be forced to hike interest rates to combat inflation that has risen to 31-year highs. Surging US treasury yields also continue to offer support to greenback strength.
GBPUSD sell-off
With the dollar poised for its biggest weekly gain in months, a good number of the majors are under immense pressure plunging to levels not seen in months. GBPUSD is one of the pairs under pressure having slid to 11-month lows of 1.3367.
At 1.3367, GBPUSD is trading in a critical support level below which it could plunge to 12-month lows of 1.3180. On the flip side, the pair needs to bounce back and find support above 1.3471 to avert further sell-offs.
The sell-off in the GBPUSD comes at the backdrop of strong demand for the greenback. The Bank of England hinting it is not close to hiking interest rates has also weighed heavily on the pound sentiments. Downbeat UK Q3 GDP data has also averted any possibility of the central bank hiking interest rates in December.
In addition, optimism on the Brexit talks has failed to shrug off any dollar strength, resulting in further sell-off of the GBPUSD. The market has so far stayed clear on placing any bets on the British pound even as it appears to be oversold, wary of the outcome of upcoming Brexit talks.
EURUSD under pressure
Meanwhile, EURUSD is another pair under pressure after plunging to 16-month lows on dollar strength across the board. While the pair is trading at 1.1440, it remains vulnerable to further losses to lows of 1.1400 levels, given the strength of the downward pressure.
EURUSD’s sell-off has been fuelled by dollar strength as well as the European Central Bank rejecting chatter for rate hikes citing downbeat economic forecasts. The EUR Commission revising economic projections downwards has continued to fuel sell-off in the EURUSD.
In contrast, the Canadian dollar has so far remained resilient against the US dollar, with the USDCAD pair struggling to power through the 1.2600 level. The CAD has held firm well supported by rising oil prices which is Canada’s biggest export.
Oil prices retreat
In the commodity market, oil prices remain under pressure, hurt by dollar strength across the board. US West Texas Oil is pressured near the $80 a barrel level. Brent crude, on the other hand, slipped 0.81% to about $81.90.
Amid the slip, the oil market remains in a finely balanced situation. Strong demand for goods continues to fuel demand for the black gold sending prices higher. Economic recovery from the pandemic is no longer the only factor driving prices higher.
US indices near record highs
In the equity markets, major benchmark indices continue to hold on to gains near record highs. Investors keep shrugging off concerns that rising inflation could trigger rate hikes. The S&P 500 has since recovered from two days of losses gaining 2.56 points on Thursday to 4,649. The NASDAQ gained 0.52% to 15,708 as the Dow Jones industrial slipped 0.4%.
The indices remain near an all-time-highs, well supported by solid third-quarter earnings that saw stellar profit margins amid rising input costs. The big question is whether the rally will continue amid a push for higher interest rates to combat inflation.
Cryptocurrency rally stalls
In the cryptocurrency market, exhaustion is slowly kicking in after weeks of significant price gains. BTCUSD is in a four-day losing streak after getting rejected at $68,357. The pair has pulled back to $64,530 levels and starting support near the 62,000 level.
Ethereum is also struggling for direction near record highs after failing to power through the $4,900 level. The pullback is staring at support near the $4,500 level.
The pullback in Bitcoin and Ethereum from record highs could be attributed to traders taking profits after weeks of price gains.
