Commodities prices continue to fall under pressure of a possible rate hike from the United States as early as December. Gold prices crashed to yearly low at $1074 erasing the previous yearly low in July at $1076 an ounce. Copper also made a new yearly low at $4802 erasing the previous low at $4810. Oil prices dropped to $41.25 which is the lowest price since September, this is due to an increase in oil inventory data that was released yesterday , it shows crude inventory has gone up by more than 4 million barrels above 1 million barrel expected . Stock market also recorded a massive sell off across the board because of weaker than expected industrial production figures from Eurozone economy and also fear of rate hike from the US economy. German DAX plunged by more than 1%
Mario Draghi in his speech yesterday, highlighted some uncertainty in the Eurozone economy and justified the need for increasing the ongoing monetary stimulus. He made mention of weaker inflation outlook which explains why inflation in the Eurozone is below the 2% target but mostly due to weaker commodity prices especially energy prices. On the back of this statement, German DAX rallied to test 10958 level while Eurusd dropped to 1.06911 level but later rallied back to 1.0827 while DAX plunged all the way to 10781 which is a support level holding and could take prices back to 11000.
Australia yesterday saw a massive growth in their labour market as the economy added more than 58,000 jobs which is above the 15,000 jobs expected and also unemployment dropped from 6,2% to 5.9%, labour rate participation also increased from 64.9% to 65.0%. Aussie rallied across the board on the back of the fundamental news.
Furthermore, it’s going to be a busy Friday before the markets close for the weekend. Firstly, the market will be expecting the Eurozone GDP in the morning, the figures expected is 0.4% (QoQ) and also 1.7% (YoY) an increase from 1.5% of previous quarter .later in the day, US core retail sale figures will be the major data to watch in the afternoon. This is a very important data to watch as it will further confirm the possibility of a tare hike in December. Market is expectation core retail sales (MoM) figure at 0.4% above previous month at -0.3%, Retail sales (MoM) is also expected at 0.3% above the previous month at 0.1%. PPI is also expected at 0.2%.
A strong data today will increase the current odd of rate hike in December which is currently above 70%. Commodity prices are more likely to further dip to the downside and USD will rally across the board. But a disappointing figure will bring back commodity prices from the pit to rally back up.