WIKIFX REPORT: Daily summary: Dollar regains upper hand

Gold fell more than 1% on Wednesday as the dollar regained traction and made bullion less appealing for other currency holders, while markets looked ahead to U.S. jobs numbers for clarity on the Federal Reserves rate hike path.

• European indices snapped a three-day winning streak on Wednesday, with German DAX falling 1.21% following another slew of weak economic data.

• Revised PMIs for major European economies pointed to bigger contractions in services and private sector activity in September. At the same time, Ifo data showed more German companies are planning to hike prices in the coming month, signaling further increases in inflation.

• The European Union approved a new package of sanctions against Russia, including a price cap on Russian oil shipped to third countries and mechanisms to avoid circumvention of sanctions.

• Wall Street indices took a hit early in the session as upbeat ADP and ISM services PMI for September pointed to strong labour market and resilience of the US economy further lowering expectation for dovish twists from FED. Nevertheless moods improved later in the session and buyers managed to push indices near opening levels. The next big catalyst this week will be the NFP report on Friday which may provide a more clear update on the labour market strength and wage pressures.

• Oil prices rose nearly 2.0% as OPEC+ agreed to cut production by 2 million barrels per day, the most since the Covid-19 pandemic. In response, White House announced that president Biden will continue to direct SPR releases as appropriate. Meanwhile US crude oil inventories unexpectedly fell by 1.356 million barrels and gasoline inventories decreased by 4.728 million barrels to the lowest since November 2014, which also supported todays upward move.

• During today's session on the forex market, the US dollar stood out positively, while the British pound was lagging behind. The USD gained 1.5% against the GBP as well as 1.2% against the EUR and 1% against CAD. The US currency also appreciated around 0.5% against the CHF, AUD and NZD and 0.3% against the JPY.

• Downbeat moods prevail on the precious metals market partially due to dollar strength and higher yields. Gold pulled back from resistance at $1730 and is currently trading around $1710 level. Silver at one point fell 5.0%, however sellers failed to break below key support at $20.00.

• Major cryptocurrencies launched today's session lower, however buyers managed to regain control in the evening and erase majority of the early losses. Bitcoin is trading around $20,200 while Ethereum is once again approaching resistance at $1360.

While Goldpulled back sharply early in the session, however despite negative sentiment buyers appeared around $1707 level, which is marked the lower limit of the 1:1 structure. According to the Overbalance methodology, as long as price sits above, the upward trend is maintained at least in the short term.