Currencies have been trading within a tight range since the beginning of this week, despite the fact that there were many economic releases across the board.
Yet, this is all about the Federal Reserve decision later tonight, which likely to have a notable impact on the markets, especially if it comes with a dovish surprise.
For now, estimates point to no change when it comes to the Fed Fund Rate.
Volatility Shifts To Commodities
Despite the low volatility in currencies, commodities volatility is on the rise since the beginning of this week, including Gold, Silver and Crude Oil.
Gold remains within the same range for the past five sessions, while Silver is hovering around $17 since last week’s trading.
Yet, Crude Oil is enjoying one of the best weeks of this year. Brent Crude is trading near $62, reaching the highest level since July of 2015, while WTI Crude Oil trading at the highest level since February of this year.
Crude Oil Inventories Later Today
Yesterday, API data showed a possible decline of 5.1M barrels last week, while Gasoline posted one of the biggest decline this year, declining by 7.7M barrels.
Today’s estimates shows only a slightly decline of -1.5M barrel last week, compared to a rise of 0.9M barrel the week before, which was the first increase in inventories in four weeks.
UK Manufacturing Rises in October
The UK Manufacturing PMI rose to 56.3 in October of 2017 from an upwardly revised 56 in September, beating market expectations of 55.8.
Production and new orders continued to rise, as companies benefited from strong domestic market conditions and rising inflows of new export business from the US, Europe, South America and Australia.
Also, job creation was the highest in 40 months. On the other hand, both input and output inflation accelerated and stayed well above historical averages.
GBP Reaction
The British Pound recovered some of its early declines, trading around 1.33. However, volatility it low today as all eyes are on the Federal Reserve decision later tonight in addition to the ADP Non-Farm Employment Change in few hours.
Yet, GBP spiked to four months high against the Euro. EURGBP declined all the way back to 0.8744 until this report is released.
Kiwi Jumps On Positive Jobs Report
The best performing currency for the day is the New Zealand Dollar, which spiked by more than 0.8% across the board, following a record jobs report for the third quarter of this year.
Unemployment Rate ticked lower to the lowest level since 2008, while the participation rate spiked to record high. Moreover, wages showed a notable improvement as well.
So far, NZDUSD has been trading within the same range since the beginning of the year. after the recent decline due to the political change in New Zealand, the pair managed to get some support from 0.68 area, before today’s jump.
For now the pair already retraced by 23.6% from the recent leg lower, trading around 0.6910 until this report is released. However, further gains could be seen in the coming hours, and might test 0.6940 resistance area, followed by 0.6970, which represents its 38.2% Fibo retracement as shown on the chart.
Edited by:
Nour Eldeen Al-Hammoury
Market Analyst
