Weekly Outlook | Gold stealing the show, while geopolitical tensions remain a driving force

Last week, the most important news event came from the Bank of Canada. The Bank had cut the key interest rate by 50bps to 3.75%, indicating further reductions to boost economic growth. The Canadian Dolar has ever since started a decline against other currencies. On the other hand, Manufacturing PMI figures from the Eurozone increased to 45.9, a five-month high, surpassing forecasts of 45.3. This was positively surprising as in particular the German economic powerhouse has shown weaker numbers in recent months.

The rise in Gold prices to USD 2,740 is remarkable. The safe-haven demand amid geopolitical tensions and U.S. election uncertainties seems to drive prices. The upside looks promising, while retracements might be used as cheaper entry points.

Important events this week:

Japan Lower House Elections and Interest Rate – On Sunday last week voters selected 465 members for Japan’s Lower House, impacting government formation while on Thursday, October 31, the country will release its interest rate forecast, expected to be below 0.25%.

USDJPY’s bullish trend last week was fueled by rising U.S. Treasury yields strengthening the Dollar, while weak Tokyo CPI supported BoJ’s dovish stance. Technically, 151.90 has flipped from resistance to key support on the daily chart, suggesting a potential rally to 160.10 if it holds.

If the recent support zone will be broken, another attempt for a retest of the 149.25 area might occur. The upcoming data from Japan will likely be of importance here!

Australia Inflation Rate QoQ –  On Wednesday, October 30, 2024, at 02:30 CET, Australia will release its quarterly inflation rate, projected at 0.3%, following a 1% month-over-month rise in the Consumer Price Index in June 2024. As inflation figures have fallen recently, also the Aussi is losing momentum.

AUDUSD’s bearish trend last week stemmed from RBA Deputy Gov. Hauser’s hawkish comments on employment growth, hinting at no rate cuts, while USD strength was boosted by rising long-term Treasury yields. Technically, AUDUSD broke key support at 0.6620 on the 4-hour chart, signaling a potential drop to 0.6435.

United States Non Farm Payrolls –  On Friday, November 1, 2024, at 14:30 CET, the U.S. will release its Non-Farm Payroll (NFP) figure, projected at 111K, following a stronger-than-expected addition of 254K jobs in September 2024, surpassing the upwardly revised 159K in August and expectations of 140K. The economic development – at least on paper- remains strong there. USDCAD’s bullish trend, fueled by Canada’s rate cut and USD strength from rising Treasury yields, shows a potential upside breakout at key 1.3880 resistance on the weekly chart, signaling a possible rally toward 1.4390.

Vice versa, should the resistance area hold, the price might fall back into the recent sideways range.