The US DOLLAR faces is exposed to great volatility this week ahead of Biden's nomination of a new Fed Chair. The only remedy for a strong dollar is if the old Chair Jerome Powell is retained which is less likely as a great support has been offered to Lael Brainard as likely to be nominated by the US president. Gold prices is expected to take advantage of the forecast for a weak dollar this week and might be testing $1900 immediately. Crude Oil on its part had been set to a sad journey towards discovering new lows especially as Us and China have teamed against OPEC's failure to cut down the prices of Crude and have therefore threatened to both release the country's reserve of Crude Oil as a means of devaluing oil and pushing down the price lower systematically.
Analysis and Forecast for US Dollar
The US Dollar which has shown considerable strength since September due to the increased expectations for an increase in interest rates based on withdrawal of tapering may reverse negatively in the coming weeks ahead of the nomination of a new Fed Chair by the US president – Joe Biden.
The choice of the new Fed Chair will definitely affect the outlook of the dollar strength in the coming weeks. While it is possible that Jerome Powell may retain his role, there are yet an increasing approval the nomination of Lael Brainard across the congress. Investors are more cautious this time as her nomination could then send front-end yields lower and longer-term rates higher. This will probably boost the stock and Crypto markets at the expense of the US Dollar. Biden will have to present his chosen candidate before the Thanksgiving holiday on November 25th. Dollar will definitely show some weakness this week and might continue till the new year if Jerome Powell is dropped and replaced with a new candidate.
Analysis and Forecast for Gold
Gold prices is currently sitting on a strong support from last week closure at $1845.70
However, the report from Personal Consumption Expenditure (PCE) Price Index to be released this week is expected to push the price of gold higher above $1900 this week. Equally Gold prices will further be favored by weak US DOLLAR this week especially as Biden proceeds to nominate the new Fed Chair.
Analysis and Forecast for Crude Oil
The price of Crude Oil had fallen last week after the United States and China obviously have channelled their efforts to fight against high oil prices.
This is based on the plans of both China and US to release state reserves of Crude Oil. This decision to do so was revealed immediately after President Biden met his Chinese counterpart President Xi in a virtual summit. They utilized it as a warning to OPEC to immediately cramp down the price of Crude Oil or face a systematic and prolonged devaluation by these two powers via releasing the country's respective oil reserves.
At present the price of Crude Oil is on its way towards discovering new lows. The next strong support for oil prices is at $69 per barrel. It is likely that the price will fall back to this region and next pick up from it in the coming weeks.
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