- USDIndex peaked to 107.20 but it lost altitude into the close, now at 106.40. The hawkish outlook from the Fed’s Bullard weighed on bonds and stocks, though the markets managed to pare losses late in the day. Bullard stressed that the funds rate needs to go higher and into restrictive territory and suggested a worst case scenario of 7%. Yields – 10-year climbed to 3.80% before dipping to 3.767%.
- Stocks –choppier but was generally underwater due to the Fed outlook, recession fears, and ongoing geopolitical risks. But losses were trimmed, leaving the US100 down -0.35%, the US500 off -0.31%, and the US30 fractionally lower.
- EUR – choppy at 1.038, struggling to break 200-day SMA.
- JPY – holding below 140.
- GBP – holds above 1.1900, as UK retail sales rebounded in October. However, Sales are down more than 6% on the year on both measures and the data are a flagging the impact inflation and the erosion of real disposable income are having on overall activity. GDP already contracted in the third quarter of the year and the fourth quarter is likely to be worse. Chancellor Hunt did his best to sell his budget as measured and appropriate, but the prospect of a rising tax burden just as mortgage costs are on a steep incline will hit consumption and overall growth further.
- USOil – down -5% to $81.20, impacted by the stronger dollar earlier, as well as on fears a recession will crimp demand along with signs that supply chains are easing.
- Gold – down to $1760 on very hawkish Bullard.
Today: ECB’s President Lagarde, German Buba President Nagel & BoE’s Haskel speeches
Biggest FX Mover @NZDUSD +0.61%% (06:30 GMT) bounced to 0.6170. MAs aligning flattened, MACD lines remain positive & RSI at 62 but flat indicating that bullish bias might run out of steam. H1 ATR 0.00144, Daily ATR 0.01107.
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Andria Pichidi
Market Analyst
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