On Friday, the Nigerian Naira (NGN) was the top-performing currency out of the 20 global currencies we track, while the Russian Ruble (RUB) showed the weakest results. The Euro (EUR) was the leader among major currencies, while the Japanese Yen (JPY) underperformed.
Gold Moves Higher as Political and Financial Instability is Growing
The price of gold rose by almost 0.70% on Friday as disappointing macroeconomic data and social instability in the U.S. brought the dollar down and pushed metals higher.
“Gold and silver are rallying on a wall of worry,” said Tai Wong, a New York-based independent metals trader. On Friday, the U.S. United Auto Workers (UAW) union started a strike at three factories in Detroit, marking the largest industrial labor action in decades. In addition, there are concerns about a possible government shutdown at the end of the month, fueling political concerns. Moreover, the Consumer Confidence Index published by the University of Michigan came out lower than expected, raising hopes that the Federal Reserve (Fed) won’t raise interest rates this year. The market is currently expecting only a 27% chance of a rate hike in November and less than a 40% probability of a rate increase in December.
The price of gold against the U.S. dollar (XAU/USD) was rising during the Asian session. Today’s economic calendar is relatively light, so gold probably won’t fluctuate much. However, traders may adjust their positions ahead of this week’s central banks’ decisions. Therefore, XAU/USD may possibly move towards $1,916. “Spot gold may test a resistance zone of $1,933–$1,935 per ounce, a break above which could lead to a gain into the $1,941–$1,943 range,” said Reuters analyst Wang Tao.
Strong Australian Economic Reports Failed to Boost AUD/USD
The Australian dollar (AUD) rose on Friday but failed to hold above the important 0.64700 level and dropped sharply, losing around 0.11% in a day.
The recent Australian macroeconomic data has been coming out better than expected. For example, the Gross Domestic Product in Q2 expanded faster than anticipated. Also, employment and labor participation rates exceeded analysts’ expectations last week. However, AUD/USD surprisingly continues to trade below 0.65500 and struggles to rise above 0.64500. The Reserve Bank of Australia (RBA) kept the base rate unchanged at the previous meeting but warned that further tightening might be needed to bring inflation down.
AUD/USD was rising slightly in the Asian session. Traders now await the publication of the RBA minutes from the previous meeting on September 19 at 1:30 a.m. UTC. “The minutes will suggest that the country’s economy is on track for a ‘soft landing,’ but could also repeat concerns about sticky services inflation,” wrote ANZ analysts in a note. If the RBA sounds hawkish, AUD/USD may finally break 0.64700 and target the key 0.65000 area.
