Fed Continues its Reverse Repo Operations
The Federal Reserve reported that it sold $75 billion in reverse repo agreements on Wednesday.
This comes as the central bank has been fighting to rein in short term interest rates.
The move also follows a liquidity crunch that started a week ago. In the second round held on Wednesday, banks requested nearly $92 billion in overnight repos.
The Fed’s reverse repo operations started on Monday, 23rd September. The Fed injected about $105 billion and a total of $278 billion into the financial system. The operations will continue through Monday, 30th of September.
German Consumer Confidence Rises on ECB Stimulus
Consumer confidence in Germany is set to improve in October. This comes following the stimulus measures announced by the European Central Bank.
Data from Gfk showed that the forward-looking consumer sentiment index rose to 9.9 in October. This was a slight increase from 9.7 in September. The data beat estimates which forecast a decline to 9.6.
EURUSD Under Pressure to the Downside
The pair continued to trade flat with price action mostly confined to the narrow range of 1.0944 – 1.0925. On a daily basis, with EURUSD closing flat, there is scope for a rebound.
This basis comes as the currency pair is trading at the support area. A short term rebound won’t do much as EURUSD will remain confined to the broader range of 1.1030 and the support area.
Oil Prices Maintain Bearish Trend
Crude oil prices continued to be pressured to the downside. This came after Saudi Arabia said that it expects oil production to resume ahead of schedule.
What once seemed like a major issue in the oil markets has now receded. Despite the declines, the pace has been somewhat limited for crude oil prices.
A weak economic sentiment from the eurozone continues to point to slower growth which could curb the demand for crude oil.
Crude Oil Likely to Test Lower Support
The momentum in crude looks to be stalling. However, prices managed to extend minor declines after closing with a doji pattern on Wednesday.
Currently, the bias remains to the downside, with the support area of 54.42 within scope. Near term correction will test the resistance level of 57.50.
Gold Slips as Investors Dismiss Impeachment Inquiry
The precious metal was trading subdued a day after it fell sharply. The decline in gold prices came as investor sentiment improved.
The investing community has largely brushed aside the threat of the US house opening an impeachment inquiry into President Trump. Meanwhile, Trump talking up the China trade deal also raised prospects that there would be some progress on the trade talks.
XAUUSD Holds the Support Line
The precious metal extended declines after forming a lower high than we were anticipating. However, the declines stalled near the support line of 1508. With the Stochastics oscillator currently oversold, the near-term momentum points to the upside.
However, it is unlikely to expect more gains if the upside momentum falls short of pushing gold prices above the recent highs of 1531.