Market News Today – USD at 3-month highs, Bonds rallied/Yields dived, Nasdaq & S&P hit another ATH. Seem familiar? FOMC minutes showed the “Hawkish Tilt” and some members are up for tapering (as early as this year) – conditions could be “met somewhat earlier than they had anticipated”. Asian equities down as risk off bites, on Virus spikes, in Sydney, Indonesia and South Korea mixed. USDIndex up to 92.82 yesterday – 92.70 now, EUR slips under 1.1800, JPY down to 110.25 & Cable under 1.3800 at 1.3775. Gold holds $1800, down from $1808, USOil down again $71.15,now; what next for OPEC? 10yr yields dived under 1.300%. Overnight – RBA’s Lowe acknowledged that QE will be required for the foreseeable future, strong UK hosing data, better data from JPY and German Trade balance missed expectations.
Week Ahead – FOMC Minutes, RBA Rate Decision, ECB Growth Forecasts & Special Strategy Meeting.
European Open – The September 10-year Bund future is higher, the 30-year outperforming, similar to developments in U.S. futures. Yields continue to fall and curves flatten as markets adjust their tapering and central bank expectations, amid the realisation that the initial bounce back in activity is starting to level off – at high levels and with capacity constraints limiting the scope for a further acceleration in growth. In cash markets the U.S. 10-year rate dropped back a further -1.2 bp to just 1.304%, and the German 10-year is set to fall further below the -0.3% mark. DAX and FTSE 100 futures meanwhile are down -0.1% and -0.4% respectively and US futures are also in the red.
Today – ECB Minutes, Strategy Review Announcement & Lagarde Press Conference, US Initial & Continuing Unemployment Claims
Biggest FX Mover @ (06:30 GMT) NZDJPY (-0.96%) Rallied to 78.00 highs yesterday before closing at 77.60. Move lower today on JPY bid, under 77.00. Faster MAs aligned lower, RSI 26.70 OS & still falling rising, MACD signal line & histogram remain significantly below 0 line, and falling. H1 ATR 0.0015, Daily ATR 0.0065.
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Stuart Cowell
Head Market Analyst
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