Brexit Mixed, Dollar Falls Amid Poor Retail Sales Data

Brexit
continues to be the main driver for the market as uncertainties remain on
whether or not a deal will surface during the European Council meeting on 18
and 19 October. The pound underwent large fluctuations on Wednesday following
mixed news in the market. Earlier yesterday, reports showed pessimism in
reaching a Brexit deal with DUP unlikely to accept anything that is negotiable.
However, sentiment in the market changed soon after DUP was reported to take
the latest proposal, which caused investors to buy back into the pound market.
The day ended with no apparent deal, while talks are expected to resume later
today to reach a consensus before the EU meeting.         

The dollar
index fell below its 98.00 level on Wednesday following the release of weak
Retail Sales data. US Retail Sales declined for the first time in seven months,
from 0.6% to -0.3%. The slump in sales indicated a weaker consumer sentiment
while hinting that the economy is bracing for a slowdown and heightening
concerns for a possible rate cut this month. Further pressuring the dollar was
euro and pound rally, which caused investors to shift their portfolio from the
dollar into the riskier markets. Investors will focus on today’s housing data
to further gauge the dollar’s movement.       

The safe-haven
gold managed to hold its grounds near its 1,490 level amid Brexit uncertainties
and weak US data. Investors are still holding on to their safe-haven assets as
a Brexit deal remained uncertain. Moreover, with US economic data still showing
bearish signs, investors are pricing in on a third consecutive rate cut by the
Fed later this month. According to the Fed Rate Monitor Tool, expectations for
a 25 basis-point cut now stood at 87%.        

Oil
prices were receiving upward support earlier yesterday amid a weaker dollar.
However, the black commodity pared most of its losses after reports showing a
significant buildup in the US inventory level. According to the American
Petroleum Institute, US crude inventory rose to 10.5 million barrels, further
worsen sentiment for the oil market. Oil bulls are struggling with recent
outlook all pressuring on oil prices, from concerns on lower global demand amid
a contraction in manufacturing sectors to US-China trade tensions. Investors
will now focus on today’s release of Crude Oil Inventories data by the EIA to
further determine the direction of oil prices.