The US Dollar Tightens Ahead of FED

The new week in the financial markets had started with the new earnings season for US stocks. The first reaction was negative as Meta sunk 4% after disappointing guidance amid concerns about ads, though earnings numbers were quite decent. That also affected Google and other tech giants. US stocks are in the bear phase right now, even though, from seasonal standpoint, October and November are usually associated with the bullish phase for stocks.

Currently, Gold and Crude Oil are on the radar of traders, as tensions in the Middle East escalate: commodity markets get in play, with open interest for Gold increasing. The US dollar remains to stay strong, as yields of US treasury bonds stay high.

Investors are looking forward to next week’s FOMC meeting, which is expected to shape the market sentiment for the rest of the year. Probabilities of the interest rates, according to the CME’s Fedwatchool, point to the interest rate staying at the 5.5% level.

Natural gas rallies, as the open interest for natural gas futures drives to the high. The winter period for natural gas is known as a withdrawal period when demand usually exceeds the supply.

However, the main anticipated event for the US dollar in the market is the upcoming interest rate decision from FOMC from Nov 1-2. Another important publication is NFP publication next week, along with the ISM manufacturing index for the United States.

XNG/USD

Natural gas had broken the trading range and achieved $3.6 per contract. Given the situation in the commodity markets, natural gas may continue moving higher after testing the $3.2-$3.4 level.

EUR/USD

The US dollar remains strong with the restrictive monetary policy from FED. The current pullback may turn into another bearish swing after the speech of Jerome Powell next week during the FED’s press conference.