This article was written by ACY
Securites’ Michael Moran.
Mixed Data, Lower Yields, Fed
Uncertainty Weigh on Sentiment
Dollar Index, a popular gauge of the Greenback’s value against a basket of 6
major currencies ended flat at 104.35, after dropping to 104.00, it’s lowest
level since September 2023.
fall in US Inflation numbers earlier this week failed to push the US currency
lower after Cleveland Fed President Loretta Mester said that the lower levels
of inflation were not enough to convince her that the central bank had won its
battle against higher prices.
for Unemployment benefits in the US climbed to 231,000, its highest in three
months. The rise in Jobless Claims added to data indicating some cooling in the
Aussie (AUD/USD) underperformed, tumbling to 0.6470 (0.6510), following a rise
in Australia’s October Unemployment Rate to 3.7% from 3.6%. The Kiwi (NZD/USD) slid
to 0.5975 (0.6020).
in Asia remained sour on lingering Chinese property concerns. Despite robust
Chinese October Retail Sales, Fixed Asset Investment slumped to 2.9% from 3.1%
previously. The drop in Chinese total spending (encompassing property) weighed
on risk sentiment.
USD/JPY pair finished at 150.60 after plummeting to an overnight low at 150.29.
The Greenback saw a high at 151.43 Yen in choppy conditions. Lower US bond
yields weighed on the USD/JPY pair.
Euro (EUR/USD) steadied to 1.0853 against yesterday’s finish at 1.0835. The
shared currency soared to an overnight high at 1.0896 before easing. Sterling
(GBP/USD) was little changed at 1.2410.
bond yields were lower. The US 10-year treasury bond rate slid to 4.44% (4.53%).
Germany’s 10-year Bund yield fell to 2.59% from 2.64%. Japan’s 10-year JGB
yield dipped to 0.78% (0.79%).
Street stocks slid. The DOW closed at 34,870 (35,010) while the S&P 500
ended 0.08% lower at 4,503 (4,515). Other global share prices were mixed.
economic data released yesterday saw US October Industrial Production (m/m) fall
to -0.7% from 0.1% previously and lower than expectations at -0.3%. US Capacity
Utilization eased to 78.9% from 79.5% previously. US Manufacturing Production
(y/y) fell to -1.7% (-0.9% previously).
USD/JPY – The
Dollar initially soared to an overnight high at 151.43 in volatile trade before
easing to 150.60 in late New York. The USD/JPY pair saw an overnight low at 150.29.
Japan’s 10-year bond yield finished lower, at 0.78% from 0.87%.
AUD/USD – The
Aussie Battler was pummeled lower to 0.6470 at the close against a previous
finish at 0.6510. In choppy trade, the overnight high traded was 0.6517 while
the overnight low recorded was at 0.6461. Higher US bond rates also weighed on
EUR/USD – The
shared currency eased to 1.0855 at the close of trade in New York. Earlier, the
Euro rallied to 1.0896 before sliding lower. The overnight low traded for the
EUR/USD pair was at 1.0896, just below that 1.0900 level.
GBP/USD – The
British Pound finished little-changed at 1.2410 (1.2390). Overnight, the high
traded for Sterling was at 1.2456 while the overnight low recorded was at
1.2376. The British currency benefitted from the overall weaker Greenback. UK
Retail Sales are due later today.
more volatility in the markets as we begin the last trading day of this week.
releases today kick off with New Zealand’s Q3 PPI Input (f/c -0.6% from -0.2%
previously – ACY Finlogix), and New Zealand’s Q3 PPI Output (f/c -0.3% from
0.2% previously – ACY Finlogix).
follows with its FDI (Foreign Direct Investment), which is forecast at -9.7%
from -8.4% – ACY Finlogix).
UK starts off Europe with its UK October Retail Sales (m/m f/c 0.3% from -0.9%;
y/y f/c -1.5% from -1.0% – ACY Finlogix). UK October Core Retail Sales (m/m excluding
fuel – f/c 0.4% from -1.0% – ACY Finlogix).
follows with its Industrial Production (y/y f/c -1.7% from -0.8% – ACY Finlogix).
The Eurozone follows with its Eurozone Final October Inflation Rate (m/m f/c 0.1%
from 0.3%; y/y f/c 4.2% from 4.5% – ACY Finlogix).
kicks off North America with its Canadian October PPI report (m/m f/c 0.3% from
0.4%; y/y f/c -1.2% from 0.6% – ACY Finlogix).
US round up today’s data releases with its October Housing Starts (m/m f/c 1.35
million from 1.358 million; m/m -1.3% from 7% – ACY Finlogix), US Preliminary October
Building Permits (1.45 million from 1.471 million; m/m f/c -1.5% from -4.5% – ACY
Federal Reserve Heads, Daly and Collins are due to speak at various events.
two weeks of absence from the markets, this writer has seen the Dollar Index
slide from the mid 106 level to the lower 104 levels.
fall in US CPI and PPI data indicated that inflationary pressures were finally
strong rise in US Claims for Unemployment Benefits to 3-month highs reinforced
the belief that the Fed has completed its monetary tightening cycle.
Dollar Index rebounded off its lows supported by the market’s risk-off stance.
Expect the Greenback to remain supported today,
albeit within wide trading ranges due to heightened volatility. Which is a
bonus for FX traders.
– Having just come from a 2-week holiday in Japan, the
one thing that stood out was the rise in visiting tourists. The weak Yen is a
bonus for the tourists. What this suggests for traders is that the buying of
the Japanese currency will keep the USD/JPY topside limited to the 152-155 level.
Today, immediate support lies at 150.30, 150.00 and 149.70. Immediate
resistance can be found at 151.00, 151.40 and 151.80. Look for more choppy
trade likely between 150.00-151.50. Prefer to sell USD/JPY rallies.
– The Aussie Dollar remained under pressure, tumbling to
0.6470 (0.6520) due to risk-off and broad-based US Dollar strength. Today, look
for immediate support at 0.6450 (overnight low traded was 0.6460). The next
support level lies at 0.6420. On the topside immediate resistance is found at
0.6500, 0.6540 and 0.6580. Look for more choppy trade, likely between 0.6430-0.6530.
Trade the range.
– The Euro steadied to 1.0855 in late New York from
1.0835. Immediate resistance today in the shared currency lies at 1.0885
followed by 1.0905. On the downside look for immediate support at 1.0830
(overnight low) followed by 1.0800 and 1.0770. Look for the Euro to consolidate
in a likely range today of 1.0820-1.0920. Trade the range today.
– Sterling dipped to 1.2410 in late New York after
trading to a high at 1.2450 overnight. The British currency saw an overnight
low at 1.2376. Today look for immediate resistance at 1.2430, 1.2460 and 1.2500.
Immediate support lies at 1.2375 followed by 1.2345 and 1.2315. Look for more
choppy trade in this currency pair, likely between 1.2375-1.2475. Trade the
range in this puppy as well… nice and wide.
Friday and trading all, its good to be back. A top weekend too
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