Asset Summary – Tuesday, 7 October
GBPUSD is facing downward pressure due to a confluence of factors. The dollar’s resurgence, fueled by political instability in France and Japan’s potential for increased fiscal spending, is weighing on the pair. Domestically, the UK’s persistent inflation, particularly in essential sectors like food, energy, and housing, is delaying anticipated interest rate cuts by the Bank of England, further diminishing the pound’s appeal. The combination of a strengthening dollar and a less dovish Bank of England outlook is creating a challenging environment for the GBPUSD.
EURUSD is likely facing downward pressure as political instability in France weakens the Euro. The resignation of the French Prime Minister, coupled with the potential for contentious budget negotiations involving unpopular austerity measures, is creating uncertainty. Investors may perceive this as a negative signal for the Eurozone economy, leading them to sell Euros and consequently, pushing the EURUSD pair lower. The combination of a large deficit and the difficulties in implementing fiscal reforms further contributes to a bearish outlook for the currency pair.
DOW JONES faces uncertainty as a government shutdown lingers, raising concerns despite positive momentum in the broader market. Although the S&P 500 and Nasdaq reached record highs, the Dow experienced a slight dip, interrupting its recent upward trend. While advancements in AI, demonstrated by AMD’s surge due to its OpenAI deal, and anticipation of a Federal Reserve rate cut are boosting other sectors, the political gridlock presents a headwind for the Dow, potentially offsetting gains from positive technological and economic developments.
FTSE 100 experienced minimal movement following recent record highs, influenced by broader European market concerns stemming from political instability in France. A significant drop in Mondi’s share price, triggered by a pessimistic trading outlook, negatively impacted the index. Conversely, gains in BP and Shell, driven by OPEC+ production decisions and rising crude prices, provided upward momentum. Additionally, increases in gold miners like Fresnillo and Endeavour, fueled by record gold prices and anticipation of US Federal Reserve rate cuts, contributed positively. The upcoming Shawbrook IPO adds a new element to the London Stock Exchange landscape that might further influence investor sentiment.
GOLD is experiencing upward price pressure, fueled by a confluence of factors. The ongoing US government shutdown creates economic uncertainty, hindering data collection and potentially prompting the Federal Reserve to implement further interest rate cuts. Market expectations of these rate cuts, coupled with political instability in France and Japan, are driving investors toward gold as a safe haven. Consistent gold purchases by China’s central bank further solidify its value. Supported by increased ETF inflows and a weaker dollar, the overall outlook for gold remains positive, indicating potential for continued price appreciation.