Market Update – Stocks lift, USD slips, RBNZ in line – All eyes on FOMC Minutes

USDIndex slipped from August highs at 106.80 to support at 106.20, Yields rallied and then slid into close, yield curve still 44 bp inverted. Stocks moved higher after better than expected results from WMT (+5.11%) and HD (+4.06%) lifted sentiment. The DOW gained +0.71% and the  S&P500  closed over 4300 for the first time since April. Asian markets followed through too, (Hang Seng +0.84%, Nikkei +1.16%) on mixed data. Oil pushed to 6-mth low at $85.50, Gold sank to $1780 and BTC moved back to $24K area. 

AUD fell after Q2 wages data missed, JPY fell after huge trade balance, and NZD rallied following hawkish outlook from RBNZ following expected 50 bp rate hike. NZ rates now 3%, and Governor Orr – lower GDP & growth but no recession ahead for NZ.

UK CPI – hotter again – 10.1% vs 9.8% & 9.4% last time. CORE CPI also higher at 6.2% vs 5.8% & RPI 12.3% vs. 11.8%.

USDIndex posted an 8-day high before closing lower on the day, tested key 106.20 support and trades at 106.30 now.  NZD, AUD and JPY all in play in Asian session.
EquitiesUSA500 closed up 8pts (+0.19%) to 4305, US500FUTS at 4307 now and testing key 200-day moving average. Meme stocks in play (BBBY +29.06%, GME +6.33%). MUSK tweeted (later denied) that he was looking to buy Manchester Utd.
Yields 10-year yield rallied to 2.8730% but closed at 2.81% and trade at 2.824% now.  The 2/10yr. yield curve also remained firmly inverted by 43.95 bp.  
Oil – under 200-hr MA for a 3rd day at $87.44, having dipped to 6-mth lows at $85.68; before excitement over an Iranian nuclear deal and therefore Oil exports restarting dimmed, private inventories were also higher than expected helping lift prices.
Gold – dropped to $1771 and remains under $1800 for a 3rd day trading at $1775 now. 
Bitcoin tested down to the 200-hr MA at $23.7K before recouping $24k to trade at 24.3k now.
FX MarketsEURUSD down to 9-day lows at 1.0122 yesterday, back to 1.0170 now. USDJPY rallied from 133.00 yesterday to 134.50 now following trade balance miss and huge import bill (up 47.2% vs 45%). Cable spiked to 1.2140 following hot inflation data back to test 1.2100 now.

Today – EZ Employment Flash, GDP, US Retail Sales, Business Inventories, FOMC Minutes, Earnings from Carlsberg, Uniper (miss), Target & Cisco.

Biggest FX Mover @ (06:30 GMT) GBPAUD (+0.53%). Continues recovery from Friday’s low at 1.7020 to over 1.7300 now.  MAs aligning higher,  MACD histogram positive & signal line rising, RSI 66.57 & rising, H1 ATR 0.00295, Daily ATR 0.01520.


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Stuart Cowell

Head Market Analyst

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