Markets waiting for the Non-Farm Payrolls report today and the EUR is slightly back above the 1.15 level
The Core European bond curves had bear steepened, taking their cue from the U.S. Treasuries in reaction to more hawkish comments from the Fed’s Chair Jerome Powell. The Peripheral bond spreads to Germany were broadly tighter, with BTPs leading the move as the market continued to weigh Italian political risks. The European supply was in focus as both the new 3Y BTP and the short gilt traded at fresh session lows on softer auction metrics.
S&P futures pared losses during the European session, as the household/personal goods and real estate lagged on the Euro Stoxx (which is down 0.4%) versus banks’ robust performance.
The GBP is the best performer among major currencies, with the EUR/USD bouncing off overnight lows to re-test the 1.1500. The Turkish lira continued its sell-off after yesterday’s higher-than-expected CPI print. The USD/CNH pared its overnight climb above 6.900, as the Bloomberg Dollar Spot Index extended its gains into the sixth day but remained below YTD highs.
The WTI crude steadied near $76.30 after hitting a four-year high on Wednesday.
Gold prices traded down as the dollar advanced on the release of positive US economic data while rising US treasury yields were also responsible for the headwind in the precious metal.
On Wednesday, data have shown that US service sector activity accelerated to a 21-year high in September and another report revealed that private sector hiring increased at the quickest pace in seven months in September. In the meantime, Federal Reserve Chairman Jerome Powell said in a speech in Boston on Wednesday that the economic outlook was “remarkably positive” and that rates might rise above “neutral”, currently anywhere from 2.5 to 3%.
Gold moved slightly up even though the U.S. Labor Department reported that the initial weekly jobless claims neared 49-year lows by dropping to 207,000 in the week to Saturday, beating expectations.
Geopolitical risks are still an issue specifically surrounding Italy, which could trigger a short covering rally in gold when prices rose sharply on Tuesday boosted by Italy fiscal and political issues, before retreating around the 1200 level on Wednesday. moreover, Tuesday’s rally shows that gold “remains on investors’ radar” during times of uncertain geopolitical developments.
Gold futures traded unchanged before the US open, with the range seen tight and the trading volume low as market participants continue to monitor the movement in the US dollar.
Bullish Outcome: Above 1202.58 Bollinger band, look for further upside with 1206.57 and 1210.00 in extension.
Bearish Outcome: Below 1202.58 middle Bollinger band, look for further downside with 1198.58 and 1193.30 in extension.
The Bloomberg Dollar Spot Index extended gains but stayed below year-to-date highs amid sparse profit-taking, while Treasuries remained under pressure. Ten-year U.S. yield jumped to 3.23% amid high volumes, its highest level since 2011, keeping emerging-market currencies under pressure. Antipodeans led losses in the Group-of-10 basket while the euro rebounded as option-related interest offered support. European stock markets traded in the red as bonds widened losses.
EUR/USD – At bar 7 on daily DeMark buy setup as bearish momentum stays strong; RSI enters oversold levels but still to signal a reversal. The immediate resistance is located at 1.1565 followed by 1.1650. Immediate support can be found at 1.1360 followed by 1.1390. Looking forward to trading in a possible range today from 1.1460-1.1560
GBP/USD – Drops below Aug. trendline and closes the second day below 55-DMA to keep bears’ conviction strong. The immediate resistance for today is 1.3090 followed by 1.3150. Immediate support can be found at 1.2920 as we mentioned before followed by 1.2860. Look for a possible trading range today from 1.3090-1.2980.
USD/JPY – Momentum studies show early signs of a pullback as the pair hit the highest level in nearly 11 months. The immediate resistance is still at 114.60 followed by 115.00. Immediate support can be found at 113.70 followed by 112.85.
AUD/USD – Breaks the 0.7085 Sept. low and hits the weakest level since February 2016, at bar 8 on daily DeMark buy setup. Immediate support at 0.7083 with next support at 0.7025. The immediate resistance is at 0.7140 followed by 0.7280. Expected range today from 0.7100.7025.
EUR/CHF – Bullish trend exhaustion signals accumulate after hanging man and DeMark sell setup completion on the daily; 55-DMA caps on a closing basis, now at 1.1387. The immediate resistance is at 1.1455 followed by 1.1537. Immediate support can be found at 1.1355 followed by 1.1252.
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