Market Update – October 4 – Stocks Bounce, Yields Fall, RBA Springs a Surprise

USDIndex – Descends into 111.50, support area, and under 9-day EMA for first time since September 19. Yields slipped significantly (US 10yr @3.65%) following reverse from UK Chancellor tax cut plan lifting UK GILTS and wider sentiment. ISM Manu. data hit a 2.5 year low but at 50.9 remains in expansion mode. Oil & Oil Stocks rallied on OPEC production cut rumours and TSLA dropped -8.6% on delivery misses and with no immediate solution. RBA surprised with a 25bp hike vs. an expected 50 bp interest rate hike. AUD & JPY underperform overnight.    
EUR – Trades at 0.9840 now testing Friday high but capped by a 9-day high at 0.9900.
JPY – Remains weighed. 145.00 was breached but only for an hour yesterday, despite hawkish comments from Japanese officials – trades at 144.80 now.
GBP – UK government confirmed it will scrap plans to abolish 45% top tax rate  in humiliating U-turn. Sterling continued to rally, Cable and GBPJPY breached 20-Day MA. Cable now trades at key resistance  1.1350. 
Stocks – US stocks, ripe for a bounce at the beginning of the Quarter, leapt over 2%. US500 +92.81 (+2.59%) 3678 Energy stocks led with XOM & CVX (+5%) and APPL & MSFT, (+3%),which led tech lower on Friday, led the rally on Monday. TSLA sank -8.6% pulling TWTR -3.10% & RIVAN -3% lower.  US500.F 3731 now. 

USOil rallied over 6% to $84.35 highs after weekend reports of OPEC+ cutting production “up to 1.5 million barrels per day”. Trades at $84.00 now.
Gold – spiked higher from $1665 over the key $1700 and trades at $1703 now. 
BTC – rallied from sub $19.0k yesterday to $19.7k now.

Today – US Factory Orders and Speeches from Fed’s Williams, Logan, Daly, Mester & Jefferson, ECB’s Lagarde.

Biggest FX Mover @ (06:30 GMT) EURJPY (+0.56%) Rallied from Thursday’s collapse to 140.00 to test 143.00 zone today. MAs now aligning higher,  MACD histogram & signal line positive & rising, RSI 67.44 & rising, H1 ATR 0.243, Daily ATR 1.706.

Stuart Cowell

Head Market Analyst

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