The Euro is resuming its bearish wave after it settled above 1.15 and is trying to break the 1.1460 support point
The BTPs were in focus as the 10-Year yield printed fresh multi-year highs through 3.5% and the spread to bunds widened back to above 300bps. The Budget deficit concerns, as well as the Di Maio-Salvini-Le Pen combo testing the EU’s resolve, weighed on investor sentiment. The T-note futures pared losses incurred during the Asian session yesterday, while cash Treasuries remained closed for Columbus Day in the U.S on Monday.
European equity indexes followed their Asian counterparts lower yesterday, with the Euro Stoxx shedding approximately 0.8%, as it was led down by Autos, Banks, and Technology sectors. The FTSE MIB underperformed its peers with an approximately 2.2% drop. The DAX fell 100+ points before bouncing.
The Bloomberg Dollar Spot Index continued its solid performance observed in Asia before stalling around the 1193 level, while the loonie and sterling were the worst Group-of-10 performers, as the JPY shrugged off the broad USD strength. The Chinese yuan extended its slump, sending the USD/CNY above 6.92 after Sunday’s Bank Reserve Requirement Rate cut.
WTI crude dipped after a steamy session in Asia, while aluminum recouped some of its overnight losses
Even though nothing is closed yesterday for Columbus Day in terms of market, banks were closed for the holiday and that should have resulted in a calm market for the day which was not the case. European equities kept falling downwards on the issue of Italian deficit/GDP and the teaming up of Le Pen, Di Maio, and Salvini which has been weighing the EU’s resolve.
On Friday, gold prices advanced in the positive territory of 1200 and recording one of its best weekly gain in six following the release of disappointing US nonfarm payrolls for September, which has been a burden on the greenback and has prompted market participants to look for alternative assets.
The US Nonfarm payrolls increased by 134 K last month according to the Labor Department against expectations for an increase of 185 K. However, the unemployment rate decreased to 3.7%, the lowest levels in nearly 50 years.
Gold prices are seen trading lower during the early US trading session and have suffered overnight losses, while the safe-haven metal has not benefited from an uptick in risk aversion to starting the trading week. Instead, the commodity is seen pressured by the resurgence of a strong US dollar on the forex market. Global equities were trading lower overnight with sharp losses witnessed in the Chinese equities market after it was closed for a public holiday.
Chinese monetary officials during the weekend loosened monetary policy a bit more but that did not stop their stock market sell-off. U.S. stock indexes are pointed toward weaker openings then the New York day session begins. The U.S. government, including the Treasury bond cash market, is closed for the Columbus Day holiday today
The Bloomberg Dollar Spot Index advanced as Treasury futures fell in Asia yesterday, before reversing their decline as Italian bonds slumped. Public holidays in the U.S. and Japan meant trading was subdued, but enough to show how fragile sentiment is for the euro and the pound. The Chinese yuan dropped as the central bank cut its reserve requirement ratio and weakened the currency’s daily fixing, while the Canadian dollar led losses among its Group-of-10 peers. Commodities extended recent losses and stock markets were broadly in the red.
EUR/USD – Trades below the cloud following conversion line bearish crossover and nine-day RSI shows no sign of a reversal for now; 21-weekly MA caps as 55-DMA first hurdle for bulls. The immediate resistance is located at 1.1565 followed by 1.1650. Immediate support can be found at 1.1460 followed by 1.1360. Looking forward to trading in a possible range today from 1.1420-1.1560
GBP/USD – Closes above 21-DMA Friday to suggest it can target Sept. highs; remains on bearish trend on closes below 1.3171. The immediate resistance for today is 1.3150 followed by 1.3190. Immediate support can be found at 1.3010 followed by 1.2920. Look for a possible trading range today from 1.3020-1.3130.
USD/JPY – Momentum studies show early signs of a pullback as pair hits 11-month highs; healthy correction could target baseline at 112.46 but the weekly picture remains bullish, 200- weekly MA at 113.18.
. The immediate resistance is still at 114.06 followed by 114.55. Immediate support can be found at 112.55 followed by 111.90.
AUD/USD – DeMark buy setup Friday makes case for a dip-fading; close above 0.7085 needed to alter momentum. Immediate support at 0.7025 with next support at 0.6980. The immediate resistance is at 0.7140 followed by 0.7280. Expected range today from 0.7025.7130.
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