Commodity prices surges as inflationary pressure mounts

Midday Update

It’s been a quiet start to Monday as the Dollar extends gains after an eventful week close on Friday with surprising strong US employment data. The ISM Purchasing Manager’s Index was quite positive and a big increase on hourly earnings report for January indicates economic growth for the US and reinforces rate hike prospects for March.

The Dollar Index found a near-term support at 95.143 and the current trend faces a near-term resistance at 95.70. The EURUSD slightly edged lower during European Session shading off some of its last week’s gains due to the positive US employment data report released on Friday.

The EURUSD pair is faced with a near-term barrier at 1.1480 which coincides with 2 months high and a break above that region could motivate bullish participation that could reclaim 1.15000 in the near-term.

The bulls remain confident in the short-term due to the hawkish shift from ECB president Lagarde. However, a failure to break above that resistance could cause a temporary bearish profile and a retest of 1.1400 is possible. President Lagarde will be speaking later today in the New York Session and traders should be cautious as volatility is expected.

During European Session open the GBPUSD traded lower as the pair continues to suffer selling pressure in the near-term. Despite the BoE raising interest rates by 25bps last week, there is a general weakness in the Pound in the near-term as the monetary policy committee raises concern of inflation in the near-term and they could hike rates again before end of first quarter.

The FTSE 100 bulls reclaimed gains as they found an immediate support at 7500. The Index is leveraged by a rally in oil prices and thriving banking sector stocks. The index rose 0.37% during European session while the Dow Jones traded slightly lower loosing 0.06%.

US Oil spiked to $93.18 per barrel on Friday before retracing back to 90.81 near-term support. During European session open, crude oil has gained 0.76% amid fear of supply disruption due to geopolitical tensions between Ukraine and Russia and, rising demand of fuel as COVID-19 restrictions loosens.

Oil traders await BP 4^th Quarter earnings outlook due for release early Tuesday morning. BP is one of the six largest oil companies in the world and a positive report could push oil stocks higher in the near-term.

Gold breaches last week’s high due to rising inflationary pressure from the US. Monday morning, the yellow metal was trading at 1813.45 after beaching the 1810 resistance and the outlook remains bullish in the near-term.

Last week’s positive United States Consumer Price Index for January indicates rising inflation in the US which is pivotal to the FOMC rate hike decision in March.

Bitcoin continues to surge high after reclaiming the $40 000 near-term psychological barrier. A break above $44 400 could reinforce bullish outlook in the near-term.