|Day's Range||95.960 - 96.158|
|52 Week Range||95.960 - 98.665|
U.S.-China trade relations remain the focus for traders. Things heated up somewhat on Monday when a Chinese official told American Investors at a meeting that Beijing did not “fear” a trade war with Washington.
The latest FOMC minutes show that some of the FOMC members want to bring the fed funds rate even higher than the projected neutral rate. What is next for the US yields?
As easing of tensions in the U.S. stock market and higher U.S. Treasury yields helped the Dollar/Yen close higher last week. The previous week’s stock market volatility led to the dumping of risky assets and the buying of the safe haven Japanese Yen. This week, stock market volatility eased somewhat, allowing Treasury yields to challenge multi-year highs once again. This encouraged investors to take profits in Japanese Yen positions they had bought the previous week.
The Fed minutes showed policymakers were confident in the current path of interest rate hikes, saying that a series of gradual rate hikes was the correct strategy in helping to maintain a stable economy. The minutes also showed central bankers were wary of “excesses” in financial markets.
U.S. Treasury markets posted a wicked two-sided trade on Thursday. The first move by yields was to the upside, driven by Wednesday’s hawkish Fed minutes, which strongly indicated the Fed will remain on its tightening path. Yields began to fall on safe-haven buying after European Central Bank President Mario Draghi criticized plans by certain member countries to increase borrowing limits, sending Italian and Spanish yields up sharply.
China sees its slowest growth since 2009 to rile the markets in the wake of a Thursday sell-off that came off the back of positive stats out of the U.S.
It’s all eyes on the Pound, with Brexit news and UK retail sales figures to provide direction through the day. Any progress on Brexit to be the key driver.
Gold prices edged lower on Wednesday as equities and the dollar gained amid waning risk-averse sentiment and strong reports. US Futures point to a lower open ahead of the FOMC meeting.
Americans did that again – V shape reversal after a heavy drop. Many traders get used to it but many are still surprised. The style that they are doing this is impressive and most probably scares off the potential sellers, which is an additional bullish factor here. First, let me show you the Nasdaq, which defended the round 7000 points support (green) and went higher. Another day, another dollar one could say. That reversal cancels any sell signal. ...
Adding to the dollar’s weakness was the consolidation of Treasury yields. After yields surged to multi-year highs last week, the rise in yields has subsided, reducing demand for the dollar. Gold improved on Tuesday, but the market posted an inside move, which typically indicates investor indecision and impending volatility. Traders said the gains were related to short-covering. New longs appeared to be scarce since the rally in the equity markets forced them to re-evaluate their reasons for being long. U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled higher on Tuesday after the American Petroleum Institute reported a surprise crude oil draw.
While we can expect some focus on the FOMC minutes, it’s all about the GBP and the EUR today, the EU Summit putting Brexit and Italy in focus.
A Commerce Department report on Monday showed that U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years.
As stock markets plummeted all around the globe, sentiment deteriorated sharply, and investors turned back to the well-known safe-haven – gold.
Brexit jitters hit the Pound, with Italy’s budget delivery to the EU later today weighing on the EUR, as risk aversion returns to the markets.
Trading near ten-weeks’ high isn’t speaking loud for the Gold’s strength as 100-day SMA level of $1229 & $1236-38 horizontal-region still stand tall to challenge the buyers. In case the bullion surpasses the $1238 resistance, it’s rally to $1250-51 & $1266-67 can be expected but the $1278 barrier, comprising 200-day SMA, may disappoint optimists then after. Alternatively, the $1215-13 could entertain short-term sellers before offering them the $1200 round-figure. ...
The steep drop in U.S. equity markets drove investors to seek shelter in the safety of U.S. Treasury markets. This drove down yields which made the U.S. Dollar a less-desirable investment.
While the USMCA brings to an end the coveted free trade agreement, as details of the USMCA emerge, a number of changes were made, while both Canada and Mexico are expected to continue to face aluminum and steel tariffs.
Precious metals move down despite weaker USD in broad market owing to positive outlook for USD in near future market sessions.
Economic data out of Asia give the Aussie and Kiwi Dollars some respite early in the day, while geo-political risk remains the key area of focus.
The Euro rose due to an escalation of tensions between the European Union and Italy. China’s Yuan weakened as Beijing’s move to spur more lending failed to ease concern about economic growth.
The Dollar could be in for another move should geo-political risks linger and trade war chatter out of China provide little comfort.
While the benchmark 10-year Treasury yield hit its highest level since 2011 on Friday, the U.S. Dollar Index was struggling. Perhaps this indicates a decoupling by the dollar and Treasury yields. If the run up in Treasury yields begins to level off then we can expect to see a weaker U.S. Dollar this week.
The shift in sentiment in the U.S. Dollar Index suggests that investors believe wage inflation is creeping higher, but it has not accelerated as much as the market was fearing. Gold buyers are currently operating under the notion that the fear of a rising dollar is going to cause a huge rout in the emerging markets and investors are going to need gold to hedge that risk. Crude oil prices rebounded into the close as mixed U.S. unemployment data eased concerns about demand in the world’s top oil consumer ahead of a U.S. sanctions deadline on Iranian oil exports.
Consumer spending in both Australia and Japan improved but not by enough to shift sentiment as focus shifts to U.S labour market stats.
Last week, the Federal Reserve again raised rates and upgraded the economic outlook for upcoming quarters, while inflation remained the same, but still above the 2% target