Posted at 11 October 2022 / Categories Market Roundups
Market Roundup
• World Bank, IMF see rising risks of global recession
• US indexes: Dow up 0.1%, S&P 500 down 0.7%, Nasdaq down 1.1%
• BoE's Bailey tells pension funds they have 3 days to rebalance
• Market awaits Thursday's U.S. inflation data
• US Redbook (YoY) 8.3%, 12.3% previous
• US IBD/TIPP Economic Optimism 41.6 ,40.5 forecast, 44.7 previous
• US 6-Month Bill Auction 4.030% ,3.850% previous
• US 3-Month Bill Auction 3.510% ,3.340% previous
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Aug Core Machinery Orders (YoY) 12.6% forecast, 12.8% previous
•23:50 Japan Aug Core Machinery Orders (MoM) -2.3% forecast, 5.3% previous
•03:35 Japan 30-Year JGB Auction 1.235% previous
Looking Ahead - Economic Data (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro was little changed against dollar on Tuesday after a top Bank of England official reiterated that the central bank will end its bond-buying program on Friday and told pension fund managers to finish rebalancing their positions within that time frame.That fuelled concerns that the BoE's withdrawal could re-ignite market volatility around the world and cause financial instability. Trading was volatile, with investors cautious ahead of key U.S. inflation data and the start of third-quarter earnings later this week. Thursday’s U.S. inflation reading is expected to remain stubbornly high and cement the Fed’s hawkish rhetoric on monetary policy. The euro was little changed at $0.9706, after four days of losses that have seen the currency drift toward the 20-year low of $0.9528 it touched on Sept. 26. Immediate resistance can be seen at 0.9766(5DMA), an upside break can trigger rise towards 0.9843 (38.2%ib).On the downside, immediate support is seen at 0.9668(23.6%fib), a break below could take the pair towards 0.9571 (Lower BB).
GBP/USD: The pound headed for a fifth day of losses on Tuesday as turmoil engulfing UK government bond markets forced the Bank of England to step in again to attempt to stem a damaging debt sell-off. Sterling last traded 0.1% lower against the dollar at $1.1054, but edged up 0.1% versus the euro to 87.84 pence. The BoE said it would extend a series of debt buybacks to include inflation-linked bonds predominantly owned by pension funds which witnessed their biggest rout on record on Monday. The pound hit a record low of $1.0327 on Sept 26. It has since recovered around 7% in value, but is still showing an 18% loss so far this year - its weakest annual performance against the dollar since 2008. Immediate resistance can be seen at 1.1138 (5DMA), an upside break can trigger rise towards 1.1257 (38.2%fib).On the downside, immediate support is seen at 1.0949 (23.6%fib), a break below could take the pair towards 1.0700 (Lower BB).
USD/CAD: The Canadian dollar was little changed against its U.S. counterpart on Tuesday but holding near its weakest level in more than two years as investor sentiment remained fragile ahead of a key U.S. inflation reading this week. The S&P 500 seesawed and the safe-haven U.S. dollar gave back some recent gains against a basket of major currencies ahead of U.S. consumer price data on Thursday that could guide expectations for further interest rate hikes by the Federal Reserve. Worries that aggressive tightening by central banks could tip some major economies into recession has hammered Wall Street this year. Canada is a major producer of commodities, including oil, so the loonie is particularly sensitive to the global economic outlook. The loonie was trading nearly unchanged at 1.3780 to the greenback, after touching its weakest intraday level since May 2020 at 1.3855. Immediate resistance can be seen at 1.3837 (23.6%fib), an upside break can trigger rise towards 1.3948 (Higher BB).On the downside, immediate support is seen at 1.3726 (9DMA), a break below could take the pair towards 1.3664 (38.2%fib).
USD/JPY: The dollar steadied against the Japanese yen on Tuesday as investors braced for a key U.S. inflation report that is expected to influence the Federal Reserve’s monetary policy stance. Investors are bracing for a key inflation report later this week that is expected to show persistently strong price pressures. U.S. data due on Thursday is forecast to show that headline inflation came in at a hot 8.1% year-on-year rate in September, but down from 8.3% in August. Core inflation is expected to have risen to 6.5% from 6.3% previously.Overall, dollar sentiment remained positive as worries about rising interest rates and geopolitical tensions unsettled investors, while the yen hovered near the level that prompted last month's intervention. Strong resistance can be seen at 145.90 (23.6% fib), an upside break can trigger rise towards 146.22(Higher BB).On the downside, immediate support is seen at 144.98 (23.6% fib ), a break below could take the pair towards 144.94 (5DMA).
Equities Recap
European stocks closed lower on Tuesday, posting losses for a fifth straight session, as worries about surging inflation, rising interest rates and slowing growth continued to weigh on sentiment.
The UK's benchmark FTSE 100 closed up by 1.06 percent, Germany's Dax ended up by 0.43 percent, and France’s CAC finished the day down by 0.13 percent.
The S&P 500 and Nasdaq ended lower on Tuesday, with indications from the Bank of England that it would support the country's bond market for just three more days adding to market jitters late in the session.
Dow Jones closed up by 0.12 percent, S&P 500 closed lower by 0.65 percent, Nasdaq ended down by 1.10 percent.
Treasuries Recap
Longer-dated U.S. Treasury yields shot to multi-year highs on Tuesday as bonds were slammed globally by a rout in the UK gilts market amid growing concerns that U.S. inflation data this week will not stop the Federal Reserve's rapid hiking of interest rates.
Yields on the 30-year bond jumped almost 12 basis points to the highest in nearly nine years at 3.959% as trading in Treasuries resumed after a U.S. holiday on Monday.
Yields on 10-year Treasury notes climbed just over 12 basis points to 4.006%, near last month's 12-year high of 4.019%
Commodities Recap
Gold bounced off a one-week low on Tuesday as investors braced for a key U.S. inflation report that is expected to influence the Federal Reserve’s monetary policy stance.
Spot gold rose 0.6% to $1,677.70 per ounce at 1418 EDT (1818 GMT), after rising about 1% earlier in the session. U.S. gold futures settled 0.6% higher at $1,686.00.
Oil prices settled 2% lower on Tuesday, extending the previous session's almost 2% decline, as recession fears and a flare-up in COVID-19 cases in China raised concerns over global demand.
Brent crude settled down $1.90, or 2%, to $94.29 a barrel while U.S. West Texas Intermediate crude settled down $1.78, or 2%, to $89.35.