Spreadex Market Update
GBP rallies with new Chancellor, BOJ Intervention Speculation as Yen Crashes
New Chancellor Jermey Hunt is set to outline his new fiscal plans for the UK today, boosting the GBP in expectation of a more sustainable, less debt-laden approach than his recent predecessor.
There is chatter regarding possible forthcoming BOJ intervention given the continued slide in the currency. JPY has fallen to 32-year lows against the Dollar today with Japan Fin Min Suzuki warning that the BOJ is watching the market “with a sense of urgency” and will respond, as necessary.
Key Factors for Today
- USD sees softer start on Monday – traders await new inputs
- Equities improve amidst USD weakness
- GBP & CHF strengthen on hawkish central bank expectations
- JPY weakest, fears of further BOJ intervention
- Metals and oil stronger on weak start for USD
Coming Up
- USD US Empire State manufacturing
- CAD BOC Business Outlook Survey
- NZD New Zealand CPI q/q
The US Dollar is starting the week with a softer tone, trading in the red across the European open as traders digest last week’s moves. With US CPI coming in above forecasts, expectations for a larger Fed hike in November are well anchored and should keep USD supported near-term.
Equities See Better Start Amidst USD Weakness
Equities markets have started the new week with a better tone given the soft start we are seeing for the Dollar. However, the backdrop of rising interest rates, excessive inflation and geo-political risks means that there are downside risks for equities and risk sentiment looks vulnerable to further deterioration near-term.
NSF Shares Stabilise Following Volatility
Shares in Non-Standard Finance have opened flat today following the volatility we saw on Friday. Shares in the doorstop-lender spike higher by over 40% before reversing lower as traders reacted to incoming news-flow regarding the financial health of the company. The group recently revealed that it is seeking fresh capital following a breach of first and second quarter lending covenants.
GBP Leading in FX, JPY The Weakest
In FX, a softer start for the Dollar is allowing for better prices elsewhere. GBP has taken the lead today, seeing the strongest gains across the European open. Expectations of aggressive action from the BOE at the upcoming November rates meeting are keeping GBP underpinned for now.
The Swiss Franc has been making gains also today, benefiting from the decline in JPY which is diverting safe-haven demand towards the Franc instead. JPY has been the biggest loser so far today with traders bracing for possible intervention at any point if the sell-off continues.
Metals & Oil Higher Amidst Softer Start for USD
In the metals and commodities space, both gold and silver have seen a better start to the week owing to the weakness in USD so far. Both metals are sitting off recent lows and look to have scope to advance further should today’s USD weakness continue. The latest US Empire Manufacturing data will be watched later today as the only key US data which might impact markets. Oil prices have started the week with a better tone also, following the
losses we saw on Friday. OPEC+ production cuts (and the risk of further cuts) should keep oil supported near-term.
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