XAU/USD drops after crucial U.S. economic data releases
() dropped yesterday after the release of the (PCE) Price Index and reports. XAUUSD finished the session with a 1.56% decline. On Thursday, the U.S. Bureau of Economic Analysis revealed that PCE figures increased 2.1% annually last month, lower than a 2.3% rise in August but in line with expectations.
The PCE Price Index is the Fed’s favorite measure of inflation, and it’s the first of two important economic releases before the central bank’s policy meeting on 7 November. The second release will be today’s (NFP) report.
Meanwhile, the U.S. Initial Jobless Claims report data was lower than expected and supported the . The economic data remains mixed, but the market believes the (Fed) will cut interest rates by 25 basis points next week. Still, U.S. political uncertainty supported gold.
The prospect of another Donald Trump presidency raised expectations for expansionary fiscal policy and higher tariffs, prompting investors to hold gold as protection against long-term inflation risks.
Additionally, the ongoing tensions in the Middle East and the war in Ukraine further enhanced gold’s appeal as a safe haven asset.
XAUUSD has been trading bullish during Asian and early European trading hours. The pair has found support at a $2,730––$2,740. Today, the nonfarm payrolls report will be published at 12:30 p.m. UTC. Higher-than-expected data may trigger bearish momentum in precious metals, while lower figures may support gold.
EUR/USD rises as inflation accelerates and USD weakens
The euro () gained 0.25% against the U.S. dollar (USD) on Thursday as the greenback weakened ahead of the U.S. presidential elections.
Yesterday’s Personal Consumption Expenditure (PCE) Price Index report indicated easing U.S. price pressures in September, supporting the view that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) next week. The latest may have put additional bearish pressure on the U.S. Dollar Index (DXY) even as weekly jobless claims were stronger than expected.
At the same time, investors consider the upcoming U.S. presidential elections a high-volatility event with uncertain outcomes. Thus, some market participants may have preferred to exit the market entirely before the results announcement, pushing the DXY lower and supporting the upward trend in EURUSD.
Meanwhile, has picked up again, reducing the probability of rate cuts by the (ECB). Yesterday’s Harmonized Index of Consumer Prices (HICP) indicated that inflation accelerated more than expected in October and rose towards 2%, up from 1.7% in September.
The data bolsters the case of ECB hawks, who say that inflation is still too fast and the central bank needs to cut the rates cautiously. Still, the market continues to price in a 25-bps rate cut in December.
EURUSD was falling during the Asian and early European trading sessions. Today, all eyes will be on the U.S. nonfarm payroll (NFP) report due at 12:30 p.m. UTC. The data may influence interest rate expectations and investor sentiment, so we expect sharp price movements in various financial instruments, including EURUSD.
The market expects the number of jobs created to increase by 113,000 in October and hourly earnings to grow by 4% annually. Stronger-than-expected figures will put downward pressure on EURUSD, potentially pushing the pair below 1.08200. Otherwise, the euro may rise above the 1.09200 level.
Recent economic events like the Boeing (NYSE:) strike and hurricanes will likely affect the NFP report. Therefore, even if the figures are weaker than expected, the bullish reaction in EURUSD may be limited.
Bitcoin is correcting ahead of U.S. election results
Yesterday, Bitcoin () retraced after approaching its recent highs near the resistance at $73,500 and declined by 2.94%. The correction continues, although there are indications of further growth potential.
Two key factors driving this rapid rally: seasonality—the second half of October is typically a period of strong BTC performance—and the final stages of the U.S. election. According to Sean Farrell, a digital asset strategist with Fundstrat, investors are ‘voting with their buy orders’.
Much of the current sentiment towards Bitcoin depends on the outcome of the U.S. presidential election, with particular attention on the victory or defeat of Republican candidate Donald Trump. Trump has made several promises regarding the crypto industry, including the appointment of a presidential advisory council for cryptocurrencies, the dismissal of one of the most prominent opponents to the industry—Gary Gensler, and the creation of a ‘strategic national Bitcoin reserve’ with the assistance of Congress.
In response, Democratic candidate Kamala Harris promised to establish a regulatory framework for cryptocurrencies and other digital assets as part of her efforts to support African-American communities. According to statistics, approximately one in five African Americans owns or has previously owned cryptocurrency. Overall, many industry representatives expect a more favorable regulatory environment for cryptocurrencies in the coming year.
The nonfarm payroll (NFP) report will be published at 12:30 p.m. today, which could significantly impact market conditions. The price of Bitcoin is near the $69,000 support level. If the NFP figures match expectations, investors expect the BTC/USD price to increase towards $71,000.
