Euro is rebounding to 1.1571 after falling to its lowest levels and Gold is rising after the dollar lost some of its momentum
Asian equities retreated to a 19-month low after Wall Street suffered its worst loss in eight months, which led to broader risk aversion, which led to an increase in market volatility gauges and concerns over expensive stocks markets in an environment of rapidly rising dollar yields.
Risk aversion is seen to be the name of the game during the Asian sessions as market participants are caught by the prior session’s bearish moves. US equities took a lot of damage as the result of tightening expectations for the Fed and the continued increase of US bond yields, which sapped the demand for riskier assets such as equities.
The IMF didn’t help when its managing director Christine Lagarde supported a pessimistic report published earlier this week by warning against an escalation in global trade tensions.
As for Asian equities, Nikkei is down by 4.16% to 22,529.0,ASX 200 is down by 0.52% to 5,889.5,Shanghai index is down by 4.34% to 2,607.444 and Hang Seng is down by 3.76% to 25,207.0
Similarly, commodity failed to catch a break with gold’s retreat as positive US reports supported additional Fed rate hikes. Meanwhile, crude oil prices extended their declines after the American Petroleum Institute showed higher-than-expected U.S. crude stockpiles last week. Gold is down by 0.10% to $1,193.07 per troy ounce, U.S. WTI is down by 1.06% to $71.84 per barrel and Brent crude oil is down by 1.48% to $81.40 per barrel
The dollar reversed an early decline as Treasury yields edged higher, while another drop in Italian bonds kept the euro under pressure. Sterling held near month-to-date highs amid growing optimism that a compromise Brexit deal may be reached, with front-end volatility in pound crosses meeting a decent bid. The krone led gains in G-10 on stronger Norwegian inflation. European stock markets spent another day in the red.
Gold prices advanced as the greenback was trading weak following Treasury yields eased from recent highs during the prior session. Reports that U.S. President Donald Trump felt the Federal Reserve is hiking rates too fast received some focus.
The commodity is benefitting from an increase in risk-aversion following the IMF downgrading its outlook for the U.S., China, the eurozone and the UK, saying it now expects the global economy to expand by just 3.7% in 2018 and 2019, down from 3.9% before.
Gold prices remained on the defensive and below critical technical level as wholesale inflation increase in line with expectations. The US Labor Department revealed that its Producer Pirce Index increased 0.2% in September following a drop of 0.1% in August, with the data lining with expectations.
Additionally, Core PPI which strips out volatile food and energy costs, rose 0.2% in the last month, following a 0.1% drop in August. The majority of economists were expecting to see an increase of 0.2%.
The US economic release is having a little impact on gold prices as the market continues to be dominated by the greenback. The commodity is not reacting to the recent inflation data as prices are still trading below the critical technical level at 1200 an ounce.
While inflation is seen to be increasing, experts are noting that the current levels are still fairly low, which could continue to be supportive to the US economic growth and has kept the Federal Reserve from aggressively increasing interest rates.
EURUSD: EUR/USD’s break of 1.1550 minor resistance indicates short-term bottoming at 1.1430. Immediate support still at 1.1420 followed by 1.1360. Looking forward to trading in a possible range today from 1.1480-1.1570
GBPUSD: GBP/USD’s rise from 1.2920 is still in progress. The immediate resistance for today is 1.3275 followed by 1.3315. Immediate support can be found at 1.3130 followed by 1.3090. Look for a possible trading range today from 1.3160-1.3260.
USDCAD: USD/CAD’s rebound from 1.2780 extends to as high as 1.3070 so far. The immediate resistance at 1.3120 followed by 13175.
USDCHF: USD/CHF drops to as low as 0.9855 so far as a correction from 0.9955 extends. The immediate resistance is at 0.9955 followed by 0.9995. Expected range today from 0.9840.0.9955.
USDJPY: USD/JPY’s fall from 114.55 extends to as low as 111.95 so far today. The immediate resistance is still at 113.55 followed by 114.06. Immediate support still at 111.90 followed by 111.20.
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