The dollar index was flat in Asia, but stays near nine-month high at 99.08, reached on Tuesday. The greenback remains underpinned by expectations US rates will rise by the end of the year, with CME FedWatch program pricing over 78% chance that the Fed would raise rates in December.
The brief pause in dollar’s bulls, seen on pullback from fresh highs, pushed its major counterparts higher in late Tuesday / early Wednesday’s trading.
The Euro retested strong barrier at 1.0900 after posting new low at 1.0849 on Tuesday, showing hesitation on approach to its next target at 1.0820.
Sterling recovered the biggest part of Tuesday’s sharp fall that marked total loss of 1.24% but quick bounce and Tuesday’s close around 100-pips above daily low, partially offset strong negative impact. The pair was down 0.38% for the day that still shows strong bearish bias, especially that Tuesday’s sharp bearish acceleration cracked strong support at 1.2087, the last obstacle on the way to key 1.2000 support zone.
The Australian dollar was top performer among major currency pairs in Asia, gaining 0.85% for the session. The pair hit session high at 0.7707, just tick ahead of initial target at 0.7708, showing scope for full retracement of recent 0.7732/0.7585 fall.
Upbeat Australian inflation data rose by 0.7% in Q3 against 0.5% forecast and 0.4% in Q2, showing stronger than expected rebound that boosted the Aussie dollar. Strong inflation numbers lead investors to price out almost any chance of interest rate cut in the near term. Reserve Bank of Australia holds its monthly policy meeting next month and is widely expected to keep rates at a record low 1.5%.
The US dollar is lower against Japanese yen on Wednesday, after hitting new three-month high at 104.86, on rally that cracked series of strong barriers. The pair is still holding above 104.00 handle, bu Tuesday’s quick reversal and close well below pivotal barriers signals that the pair is looking for further consolidation, before final probe through psychological 105.00 barrier.
Spot gold remains firm on Wednesday, after strong rally a day earlier, when it eventually broke above near-term congestion and hit fresh high at $1276. The yellow metal was supported by stronger physical demand, ahead of late-October festival season in India that so far offsets impact of strong dollar.
Oil prices extended pullback from recent highs and fell 2.3% on Tuesday, after API report showed a surge in US crude stocks and renewed concerns about a global supply glut.
US Crude oil trades above fresh low at $49.20 in early Wednesday’s trading and awaiting crude oil inventories report from Energy Information Administration, due later today.
Asian stocks were lower, following Wall Street weaker sentiment on disappointing earnings.
MSCI index was down 0.7%; Japan’s Nikkei225 has managed to recover earlier losses, boosted by stronger yen and came up 0.15% in late Asia.
Australia was down 1.5% for the session; South Korea slid 1.25%, while Shanghai Index was down 0.5% and Hong Kong Hang Seng lost 0.8%.
European shares had a weak start on Wednesday, continuing negative sentiment from previous sessions.
Britain’s FTSE100 was down 0.16%; German DAX slid 0.38% and French CAC40 opened with gap-lower on Wednesday, down 0.22% from Tuesday’s close and down 0.24% for the session.

Highlights of the day

Europe
German Import prices came as expected on m/m release at 0.1%, while y/y numbers beat the forecast in September, coming at -1.8%, which is also well above Aug -2.6% release.
German Gfk consumer climate disappointed in November, coming at 9.7 vs consensus at 10.00 that is also release of Oct.
America
New Home Sales data that show the number of new single-family homes that were sold during the previous month, is forecasted at 600K in Sep, which is slightly below Aug’s release at 609K. Data is due at 14:00 GMT.
US weekly crude stocks release is due at 14:30 GMT, with forecast for the previous week showing build of 1.6 million barrels, against previous week’s surprise draw of crude stocks by 5.2 million barrels.

Important levels
AUDUSD
The pair was the top performer of Asian session. Fresh strength that broke above three-day 0.7585/0.7650 range, surged to 0.7708, meeting initial target (former high of 29 Sep) and eyeing key barriers at 0.7734/58. Bullish technicals support scenario, with initial support at 0.7677, followed by 0.7658 and 0.7628.

USDJPY
The pair shows strong hesitation at key barriers at 104.62/75 which were cracked on Tuesday’s surge but quick reversal and daily close well below these barriers, sidelined immediate bulls. Failure on initial attempt through these resistances could result in prolonged consolidation. Psychological 104.00 support holds for now, but deeper dips cannot be ruled out. Next good support lie at 103.70 and guarding key n/t support at 103.50 (daily cloud top).

GOLD
Gold regained strength and rallied strongly on Tuesday. Fresh high was posted at $1276, with n/t focus shifted towards pivotal $1280 barrier. Firm break here would open next targets at $1287 and $1292.
Broken 200SMA now offers solid support at $1269., Market Analysis