US dollar retreats ahead of the September retail sales release

The US dollar declined in overnight trading as the market reacted to rising jobless claims data. According to the Bureau of Labour Statistics (BLS), close to 900k Americans applied for initial jobless claims last week. That was higher than the previous week’s increase of 845k. It was also the highest reading since mid-August. The continuing jobless claims fell from 11.1 million to 10 million. Meanwhile, data from the New York Fed showed that the state’s manufacturing index fell from 17.0 to 10.5. In Philadelphia, the manufacturing index rose to 32.3 from 15.0. Later today, the dollar will react to the September retail sales and industrial production numbers.

The price of crude oil rose as the market reacted to the US inventories data. According to the EIA. The number of oil inventories fell by more than 3.8 million barrels last week. That was a bigger decrease than the 2.8 million that analysts were expecting. It was also a reversal from the previous week’s increase of 0.501m. Cushing inventories rose by more than 2.9 million barrels while natural gas storage fell from 75 billion to 46 billion barrels. Later today, the price will react to oil rigs data by Baker Hughes. It will also react to new data about Covid-19 infections. 

Global equities dropped yesterday as investors remained pessimistic about the state of the economy as the number of infections continued to rise. In the United States, the Dow Jones and Nasdaq 100 lost 20 and 55 points, respectively. Similarly, in Europe, major indices like the German DAX and FTSE 100 fell by more than 2%. Today, the situation is changing as American and European futures are pointing upwards. Today, the indices will react to new data on the infections. Further, they will react to European car registration data, European inflation numbers, and US retail sales data.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1687, which was its lowest level since October 2. On the four-hour chart, the price is below the 14-day and 28-day exponential moving averages. It also appears to be in a slow downward trend after it reached a high of 1.1828 on October 9. As a result, the RSI has moved from the overbought level of 70 to the current 35. The Average Directional Index (ADX) has also risen to ~35. Therefore, the pair is likely to continue falling as bears aim for the support at 1.1600.

GBP/USD

The GBP/USD price dropped to an intraday low of 1.2883. On the hourly chart, the price has fallen below the ascending channel shown in pink. The downward trend is supported by the 25-day moving average and higher trading volume. The RSI has also moved from the overbought level of 70 to the current 35. Therefore, the price is likely to continue falling as bears aim for Tuesday’s low of 1.2863.

XBR/USD

The XBR/USD pair is down slightly and is trading at 42.88. On the four-hour chart, the price remains above the short and medium-term moving averages while the RSI is at the neutral level of 50. Also, the price is below the important resistance level of 43.70. Therefore, for today, with no major data expected, the price will likely remain near the current price range.