USD under pressure (USDIndex 103.40), Stocks mixed overnight, but up currently into EU open. Yields were sunk by two poor note auctions after an early risk-on bid weighed on the bond market. JGB yields rose, with the yield curve widening to its steepest level since 2015. Oil up at 111.45, Gold steady. US Durables report & pending home sales surprised on the high side, while the Dallas Fed index plunged. Today’s German consumer confidence not as bad as feared but the headline looks worse than it did during the pandemic and the resulting pressure on consumption will add to recession risks not just in Germany.
- USDIndex down to 103.40, as cautious investors headed for safety and the US Dollar was capped, although overall levels don’t look very different to yesterday.
- Equities – Nikkei and ASX closed with gains of 0.7% and 0.9% respectively. Wall Street stumbled and lost traction with the USA100 falling -0.72%. The USA500 was down -0.30%, and the USA30 lost -0.20%.
- Yields 10-year was up about 9 bps to test 3.21% but ended at 3.194%.
- Oil extends gains – $111.38. Saudi Arabia and the United Arab Emirates look unlikely to be able to boost output significantly as they both producing at maximum capacity. while political unrest in Libya and Ecuador adds to supply concerns.
- Gold pullback to $1,827.
- FX Markets – EURUSD retests the 1.06 barrier, USDJPY is at 135.68, Cable trades at 1.2290 now, ranging since Friday.
Today – Focus is on ECB President Lagarde at the ECB Forum on Central Banking in Sintra, Portugal, and US Consumer Confidence later on.
Biggest FX Mover @ (06:30 GMT) AUDJPY (+0.69%). Broke 3-day peak and trades above 94.00. MAs aligning higher, MACD lines are positively configurated, RSI 67 but flattened. H1 ATR 0.214, Daily ATR 1.507.
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Andria Pichidi
Market Analyst
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