Market update: The Fed still dominates
|Market News Today – USD holds on to gains (USDIndex test 92.00) US Equities mixed – (USA100 +0.87% & new ATH, USA30 -0.62%). BoJ left policy unchanged and stuck to its ultra-accommodative policy setting & extended COVID funding. JPY Inflation came in better than expected with the CORE reading turning positive (just) for the first time since April 2020. Asian shares up but closing lower for the week. Round Number Friday – EUR down to1.1900, JPY 110.00 and Cable 1.3900. 10 yr Yields 1.51% but the spreads between US Corporate debt and US Government debt is at a 10-year low – and could explain the tech rally yesterday following the Hawkish FED. Gold dived to $1770 (open the week at $1875; -5.6%) trades at $1785 now. USOil spiked down to $69.50 before recovering to $70.50.
Overnight – Big beat for German PPI (1.5% vs 0.7%, & 0.8% prev.) and big miss for UK Retail Sales (-1.4% vs 1.5%, & prev: 9.2%)
European Open – The September 10-year Bund future is slightly lower and in cash markets Eurozone bonds are also finding some support, although the U.S. 10-year rate has lifted 0.7 bp to 1.51% overnight. Stocks traded narrowly mixed across Asia and DAX and FTSE 100 futures are also little changed, while US futures are slightly higher, led by a 0.3% rise in the NASDAQ. With growth stabilising the tide is slowly turning, although it is clear that central banks will be taking a very, very cautious approach on tapering, with policy set to remain extremely accommodative for a long time to come. It seems unlikely that the BoE will break the line when it meets next week. – Action Economics
Today – Little new news today – EU Econ Ministers meeting & Fed’s Kashkari, it’s also Quadruple Witching Friday (Quarterly Index & Stock Options and Futures Contracts all expire – 3rd Friday of the Quarter)
Biggest FX Mover @ (06:30 GMT) NZDJPY (-0.59%) turned lower again, has been under 20-day moving average since June 3 from 78.76. Breached 78.00 yesterday and 77.00 today. Faster MAs remain aligned lower, RSI 24 & OB, MACD signal line and histogram falling and significantly below 0 line. H1 ATR 0.130 Daily ATR 0.620.
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