- The dollar started to turn lower. The slowdown in PPI (MoM) yesterday did not bode well for the upcoming CPI today.
- Gold extended rally to 1288.5. However, it fell back quickly early this morning. Wait and see if it could sustain recent uptrend.
- Oil fell back below its previous range to a low of 48.33 after shooting up on Thursday as Russia was considering increase output when the current supply-cuts deal expires. In addition, OPEC members increased crude oil supplies in July.
The dollar turned lower against a basket of foreign currencies and broke below its trading range on Thursday (10 August) after moving up again towards a relative high on the week. The report released last night showed the number of initial claims and continuing claims modestly increased last week weighed on the dollar, watching the overall market impacts of U.S. July CPI and its core measure closely.
The dollar index (DXY) turned lower again after failure at a resistance. The follow-up selling in European and New York session brought the index below its previous trading range. Its short term moving averages crossed quickly below its long term moving averages after turning lower in a state of diverging while the latter group contracted rapidly and started to turn lower. Keep an eye on U.S. inflation measure tonight and see if the dollar would slip further as a result of the data.
（DXY H1 chart）
As to non-U.S. currencies, the euro rallied above H1-period EMA60 after hitting a low. As I mentioned yesterday, the single currency broke above resistances on its 1 hour chart, indicating a break in the market structure, potentially could re-establish its uptrend on the day. The sterling maintained near-term downwards move within a range-bound trading on its 4 hour chart, with downside support at 1.3 and upside resistance at 1.3050. The commodity currency Aussie dollar has been in declines from New York session till Asian session today and hit a new recent low after its rebound failed to decisively stand above H1-period EMA60.
（AUD/USD H1 chart）
Turning attentions to precious metals, gold moved up strongly all the way on its 4 hour chart. The price dropped early this morning after reaching 161.8% Fibonacci retracement level of the decline from 1 August high to 8 August low. Could we see the gold stage its overdue correction as its moving averages currently in the correct order. In the meantime, keep an eye on U.S. July CPI tonight.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.