Week ahead forecast Oct 9-14th: US dollar, Gold and Hang Seng Index

US dollar

The dollar strengthened at the start of the trading week in response to the geopolitical tensions in Israel. Despite experiencing a sharp decline last Friday, the US currency, historically viewed as a safe haven during times of turmoil, began the week on a higher note. Meanwhile, 10-year Treasury yields appeared to stabilize at 4.8%, while 30-year yields remained steady at their 16-year high, above 5%.

The upcoming week will shine a double spotlight on the greenback. On one hand, the geopolitical turmoil has prompted investors to seek the shelter from a strong dollar, and keep bolstering higher bond yields. On the other hand, the forthcoming release of the FOMC meeting minutes, along with inflation indicators, is expected to fuel new round of discussions about inflation and its impacts on the rates.

From a technical perspective, although the US dollar is on the verge of breaking out from the ascending tunnel, it currently remains above the 20-day moving average (MA), which is acting as a robust support level at 105.67. As previously mentioned, if the demand for safe-haven assets continues to rise, it has the potential to push the greenback towards its immediate resistance at 106.23.

Gold price

As another key member in the safe-haven camp, the yellow gold has regained its luster in response to geopolitical uncertainty, surging by as much as 2% over the past weekend. The price gap left between 1833 and 1844 is now serving as a near-term support for precious metal.

However, taking a long-term perspective, the price of the shining metal continues to face pressure from a robust US dollar. Therefore, it may be premature to anticipate a significant turnaround for gold, especially given the formidable resistance it is likely to encounter in the 1880-1888 range, where the 20-day moving average and the August low converge.

Hang Seng Index

The Hang Seng Index had a rollercoaster ride last week. It suffered a 2.6% decline on the first day back from the golden week holiday but ended up with a 1.6% surge in the final session of the week.

Looking ahead to the coming week, the critical focal point for the Hang Seng Index will be China's inflation data, scheduled to be released on Friday, October 13th. Traders are anticipating signs of further improvement in the consumer price index, which will be perceived as much-needed evidence to support the notion that the challenging period for China's lackluster reopening economy is behind us.

According to daily chart, the Hang Seng Index appears to be approaching a potential turning point this week. If the HSI manages to break through its current moving trajectory and the 20-day moving average, which is currently around 17622, it could signify a shift in sentiment, dispelling the clouds that have been looming since early September. A breakout from this level would set the stage for the next major test at 18113.