Markets remained cautious ahead of a barrage of central bank decisions during light trading on Monday despite the simultaneous Detroit strike continuing to take its toll. Meanwhile, the prospect of a government shutdown by the end of the month looms nearer. Gold and WTI continued to ascend.
Chart: XWTI
The UAW strike against the Big Three Detroit automakers continued, highlighting the unrest in the labour market as the FOMC prepares to wrap up its 2-day meeting where investors widely expect the Fed to keep rates unchanged. The 10-year dropped slightly, dragging the US index down to 105, which allowed the EUR/USD to accelerate over 0.30%, shy of $1.070. The next resistance is expected near $1.0730, with support at $1.066.
China’s central bank lifted short-term curbs imposed on gold imports in August to defend against a weakening renminbi, helping the precious metal secure a 3-day winning streak. The spread between Shanghai and London gold prices had hit a record high last Thursday but has contracted somewhat after the lift. Gold may have been slightly impacted by the latest rhetoric of a gov shutdown, along with the dollar’s drop on Monday, taking over $1930/oz and opening up $1940/oz next. Support can be seen near $1920 an ounce, with a red day ending the gold’s short-term ‘rush’.
Oil continued to rise in full force on Monday, recording a fresh November high past $92 a barrel as markets appear to still price in expected supply shortages. Extending its 5-day streak past $93.80/bbl may make triple digits possible unless bulls lose the $90 handle. Nigerian Qua Iboe and Malaysian crude trade over $100 a barrel.
Minutes of the RBA overnight showed that the bank had considered raising rates but decided to keep them unchanged due to risks associated with tightening. The RBA was concerned about a possible economic slowdown, weaker domestic consumption, and contagion from China. However, it noted that further tightening may still be needed if inflation persists. AUD/USD barely moved following the minutes’ release after closing relatively up on Monday. 0.6440 is short-term breakout resistance, with support above 0.6408 settled by 0.6429.