Dollar Lags as Soft Data Fuel Easing Prospects

USD

The dollar index, which measures the greenback against a basket of major currencies, finished the week on a weaker note at 98.84 weighed down by softer economic data. The ISM Manufacturing PMI dropped to a ten-year low of 47.8, and the ISM Non-Manufacturing PMI declined to 52.6, the lowest since September 2016. Moreover, the job creation in September was softer than estimates, and wages rose significantly less-than-expectations. The series of sluggish data raised the chances of an interest rate cut in the FOMC October 30 meeting from 39.6% to 80.7%. The US 10-year yields tumbled to 1.502%, the USDJPY declined to 106.48, and the EURUSD inched higher to $1.0999.

Metals

The recent developments on the US front lent the precious metal support to rise to an almost two-week high. Since June, Gold prices surged sharply on monetary policy easing prospects from central banks around the world. The recently-released soft US economic data increased the chances of further monetary policy easing by the Federal Reserve in the coming meeting, driving yields lower and gold higher. The price of a gold ounce is trading in a tight range between support of $1496 and resistance of $1515, the price of a silver ounce is hovering around $17.50, while palladium dipped to $1660.

Oil

Oil prices finished sharply lower for the second consecutive week amid rising woes over the global economic outlook. The slowing manufacturing activity around the globe put the future demand for oil in question. Moreover, market participants are afraid that the US-China trade talks fail later this week, which would add further downside risks to the economic outlook. Oil benchmarks recovered slightly on Friday after testing a two-month low but remained significantly lower on the week. The West Texas Intermediate crude future traded and Brent futures traded at $53 and $58.40, respectively.

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