Spreadex Market Update
USD Rally Back in Action as Traders Await CPI on Friday
USD back in favour on Tuesday as markets await Yellen comments later and CPI on Friday. Equities fall following strong start on Monday. RBA hikes rates by more than expected, leading AUD higher. GBP falls as UK political uncertainty grows on back of vote of no confidence against UK PM. Oil prices stabilise following 2% losses yesterday.
Key Factors for Today
- USD Hits fresh weekly highs
- Equities fall back amidst central bank tightening focus
- AUD rallies on RBA rate hike, GBP falls amidst UK political uncertainty
- Gold & silver remain range bounce
- Oil stabilises following 2% fall yesterday
Coming Up
- EUR Eurozone sentix investor confidence
- GBP UK Final services PMI
- USD Treasury secretary Yellen speaks
USD Back in Demand
The US Dollar has started the day on a firmer footing with decent demand kicking in across the European open on Tuesday. The DXY was seen breaking out to its highest levels since late May today as bullishness returns to the greenback after Friday’s data. US treasury secretary Yellen speaks later today and we also have US trade balance and consumer credit data to focus on.
Equities Fall following Strong Monday Open
Equities markets are back under pressure today amidst the uptick in US Dollar. This comes on the back of strong gains yesterday. The Nikkei in particular saw an almost 2% rally, helped by a weaker JPY. The ASX200, on the other hand, has fallen almost 2% today on the back of the RBA hiking rates by a further 50bps overnight. Downside in the FTSE is being offset today by weakness in GBP on the back of yesterday’s vote of no confidence in Boris Johnson which saw the UK leader narrowly holding onto power.
AUD Leads the Way on RBA Rate Hike, GBP Falls on UK Political Uncertainty
In FX, AUD has been the best performer over late Asian and early European trading today. The Aussie was boosted by a firmly bullish RBA meeting overnight which saw the bank hiking rates by 50bps and signalling further hikes to come. The hike was above expectations and, along with hawkish guidance, is now seeing the market playing catch-up with the RBA. CHF and JPY have been weakest though, should the current downturn in equities develop further over the day, this dynamic might reverse on increased safe-haven flows.
Metals Markets Remain Lifeless
Gold and silver prices continue to hold within recent ranges today. Both metals have struggled to make a firm directional move over recent weeks, hampered by opposing market forces. With Friday’s US labour market data failing to create the conditions needed for a break, traders are now looking to the coming Friday’s US CPI numbers.
Oil Stable Following Monday Plunge
Oil prices have stabilised today with mild buying keeping crude futures in the green across the European session so far today. This comes on the back of a more than 2% fall in oil prices yesterday. Should USD continue to gain favour today, we can expect oil prices to return to downside near-term. Fears of a long delay in the US/Iran deal aimed at returning Iranian supply to the market might see oil prices turn higher again if the issue gains more focus this week.
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