Weekly oil rally on track to be biggest since March, US job reports in focus

On Friday, Asian equities and futures indices fell as hawkish comments from US Federal Reserve officials reinforced the central bank's intention to hike interest rates. Several Fed officials emphasized their commitment to reining in rising inflation, vowing to push through with what is considered to be the most aggressive rate hike campaign in decades.

The US economy may be feeling the effects of aggressive tightening. However, other data backed the need for more rate increases over the next few months despite some soft economic numbers this week. US weekly jobless claims were up slightly more than expected on Thursday, indicating some labour market softness. Investors are shifting to safer havens like Treasury bonds due to rising inflation, rising US interest rates, and slowing global growth.

In the wake of many Federal Reserve officials stating that a dovish pivot was unlikely in the near future, the greenback rose overnight. Despite recent losses, the dollar index recovered and traded flat around 112, as did dollar index futures.

The world's largest economy is now eagerly awaiting the non-farm payroll report later in the day, along with the September inflation report next week, which could provide more clues about the Fed's outlook. As per Dow Jones' survey of economists, September payrolls are expected to grow by 275,000 and unemployment will remain at 3.7%.

Gold prices

Gold price is moving back and forth in a narrow range above $1,700, struggling for a clear directional bias. Investors are cautious as the US dollar holds onto recent gains along with Treasury yields ahead of NFP. The flattening 50-Day Moving Average (DMA) continues to hold the gold price at $1,712. Following the recent consolidation earlier this week, the rally to three-week highs has shaped up a bull pennant on the daily chart. The bullish continuation pattern needs to be confirmed by a decisive break above the significant resistance zone at around $1,722. This resistance level is composed of the 50 SMA as well as the falling trendline resistance level.

Crude oil

OPEC+ put the market on course for further tightening ahead of winter, and as a result, oil prices gained the most in a week since early March. On Friday, West Texas Intermediate futures were trading near $88 a barrel, a gain of approximately 11% over the last week. There have been signs of supply scarcity before the producer alliance announced its biggest cut in output since the outbreak. As a consequence, the market will be squeezed even more. The tightening outlook has halted the decline in oil prices that had been weighed down by fears over an economic slowdown. In addition, central banks have aggressively hiked rate hikes by central banks in recent months. A Russian official has also reiterated this week that he will not sell oil to countries that adopt a US-led price cap. According to the Organization of Petroleum Exporting Countries and its allies, from November onward, the production of oil will be reduced by 2 million barrels per day. Saudi Arabia's oil minister, however, has said that the real-world cut will likely be between one and 1.1 million because some members are pumping well below their quotas.