- USD (USDIndex 94.09) recovers 94.00, PPI in-line with exceptions but Chinese PPI hit an all-time (26-yr) high +13.5%% & CPI doubled last month to 1.5%. Equities slip from key levels, yields decline to 6-wk lows and Oil rallied. FedSpeak dominated by Doves yesterday but calling caution on inflation – nothing new from Powell, Lagarde or Bailey. Brainard apparently interviewed for FED Chair, Biden cranks up gasoline plan & plans to video meet with Xi next week, Musk “lost” $50bn.
- Evergrande $148m interest payment due today & contemporary Fantasia needs “help”. This isn’t going away as the Chinese authorities (in the middle of reappointing Xi) may have hoped for.
- US Yields (10yr closed down again at 1.432%) having hit a 6-week low at 1.4150 yesterday as the Auction was filled at 1.44% (1.58% – last time) back to 1.46% now.
- Equities down failing to hold key levels. USA500 -16.00 (-0.35%) at 4685 – Big movers; TSLA -11.99%, PayPal -10.46%, VISA -3.22%, AMZN +2.5%. GE (once the world biggest company) to split into 3. USA500.F trades lower at 4677. Asian equities weaker again on Chinese data.
- USOil – rallies on drawdown in private inventories compared to a build. Spiked over $83.00 to 6-day high $83.25. Biden may act on high US Gasoline prices.
- Gold recovers further testing as high as $1833 on open as Inflation hedge trade builds, back to $1824 now.
- FX markets – EURUSD down to 1.1565, USDJPY back over 113.00, from 112.80 lows & Cable back to 1.3550 having rejected 1.3600. AUD & NZD at 4-wk low.
European Open – December 10-yr Bund future fractionally lower, Treasury futures underperforming. Yields are off session highs, but after bonds were surprisingly firm in the wake of yesterday’s US PPI, there is likely some caution ahead of the key US CPI later today.
Today – US CPI & Weekly Claims, ECB’s Elderson, – US & CAD closed tomorrow for Veterans Day.
Biggest FX Mover @ (07:30 GMT) NZDCAD (-0.44%) Chinese and Oil news combine to move pair lower. Collapsed from 0.8920 to 0.8820 before finding some support. Faster MAs aligned lower, MACD signal line & histogram falling & under 0 line, RSI 34 & recovering from 19.00 lows. H1 ATR 0.0011, Daily ATR 0.0062.
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Stuart Cowell
Head Market Analyst
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