Spreadex Market Update
USD hit new highs against major currencies
The markets are still reacting to the Bank of Japan’s decision to increase its $1.2 trillion pension fund through raising holdings in foreign and domestic stocks. The USD hit new highs against major currencies, eurodollar reaching a 2 year low of 1.2491 this decline has been pretty sharp as we can recall the eurodollar trading around 1.27 at the start of last week. Furthermore the USD has climbed 3% on the Japanese yen since the shock announcements made on Friday by the BoJ. The dollar has risen within a whisker of 113.0 which is a seven year high but retracted down to 112.6 this morning.
Hedge funds may have admitted defeat on Brent crude oil as they begin to cut bullish bets on oil. The upward trend on the dollar has of course been a reason for the recent fall in oil prices as importers find it more expensive as Brent is priced in dollars per barrel. Furthermore, recent data showing that OPEC production rose to its highest in more than a year and running at its fastest pace since 1983. This increase in supply has created further downward pressure on oil prices with WTI light crude falling 12% in October for a 4th consecutive drop, down to $80.34. China manufacturing data failed to impress perhaps reinstating that Brent and WTI are falling into a bear market.
Major global markets have benefited from the over spill of euphoria from Japan, with the Nikkei up 4.83% to a seven year high at 16,413. Finally looking towards the open this morning, with European manufacturing data out this morning this will be the main cause for movement on the DAX and FTSE. Major equities are looking to hang on to the huge gains made over the last few days. The FTSE is looking to open pretty flat at 6535 and the DAX at 9305 as the markets settle after a very volatile week.
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