Some risk-off flows were seen in the markets, as crude oil continued to decline and US stock indices closed in the red.
Meanwhile, volatility rose in the forex arena due to high-profile releases, including the UK jobs report and Canada’s CPI readings.
Here’s what you need to know!
Titles:
- Japanese industrial production for August was unchanged at -3.3% m/m as expected
- The German Wholesale Price Index fell by 0.3% on a monthly basis, versus an expected rise of 0.2% and a previous decline of 0.8%.
- Changing the number of claimants in the UK At 27.9K in September (expect 20.2K, previous reading revised from 23.7K to 0.3K), the unemployment rate fell from 4.1% to 4.0% (expect 4.1%), and the average income index slowed from 4.1% to 3.8% for countries All three. Monthly period ending in August
- German ZEW economic sentiment index Improved to 13.1 in September (10.2 expected, 3.6 previous); ZEW Eurozone Economic Sentiment at 20.1 (expected 16.9, previously 9.3)
- Industrial production in the euro area Rose 1.8% m/m in August (1.8% expected, previous reading reduced from -0.3% to -0.5%)
- Headline Canadian Consumer Price Index Decreased by 0.4% m/m in September (-0.2% expected, -0.2% previously); The annual reading decreased from 2.0% to 1.6% (2.0% expected); Core CPI at 0.0% (0.1% expected, -0.1% previous)
- Presidential candidate Donald Trump defended his plans to significantly increase tariffs On foreign imports, citing trade with Mexico, Europe and China
- US Empire State Manufacturing Index At -11.9 in October (+3.4 expected, +11.5 previously)
- New Zealand’s GDT auction led to dairy prices falling by 0.3% (previously +1.2%)
- Daly is a Federal Open Market Committee official Rest assured that monetary policy remains tight and is working to reduce inflation, a 3% rate may be around neutrality
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
While most asset classes started the day on a quiet note, WTI was keen to pick up where it left off the previous day by falling throughout the Asian session. Israel’s assurances about avoiding any strikes on Iranian oil facilities appear to calm concerns about global oil supplies despite rising geopolitical tensions.
Treasury yields also appeared unstoppable in their decline, as government bonds rose on risk-off flows and downbeat global inflation reports. US stock indexes ended the day in the red, mostly weighed down by weak earnings from chip company ASML and a bleak outlook for Chinese demand.
On the flip side, gold was able to rely on its safe-haven appeal as the precious metal closed 0.51% higher on the day, even as the dollar also rose.
Forex market behavior: US dollar against major currencies:
Overlay of the US dollar against major currencies Chart by TradingView
The major pairs ran mixed during the early Asian session, but the US dollar eventually found its groove and saw a bit of consolidating price action later in the day.
Some risk-off sentiment stemming from market uncertainty surrounding geopolitical tensions in the Middle East has lifted the safe-haven currency against its higher-yielding counterparts, while the yen has managed to put up a very good fight.
The US currency took a bearish trend during the early hours of the London market, giving up strength even against the pound despite pessimistic UK jobs data and making steady gains against the euro due to upbeat industrial production and the results of the ZEW Economic Sentiment Survey.
The US dollar took some extra hits after seeing a downbeat Empire State Manufacturing Index, but USD/JPY and USD/CHF found support at intraday lows. The USD/CAD pair rose sharply on weaker-than-expected Canadian inflation data which boosted expectations for further cuts from the Bank of Canada.
Potential catalysts coming on the economic calendar:
- UK CPI report 6:00 PM GMT
- UK PPI input/output data at 6:00pm GMT
- Manufacturing sales in Canada at 12:30 PM GMT
- ECB President Lagarde’s testimony at 6:45 pm GMT
All eyes and ears may be on the pound today, as the UK economy prepares to print its data September CPI numbers. Stay tuned for any surprises that may impact the Bank of England’s policy outlook!
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