Selling dollar pauses, eyes on inflation data, Fed’s beige book
Here’s what you need to know on Wednesday, October 20:
The greenback was able to erase much of its losses thanks to the rally in yields on US Treasury bonds on Tuesday, but struggled to find demand against its risk-sensitive rivals with risk flows influencing financial markets. . Market mood appears to have turned cautious on Wednesday morning as investors await inflation data from the Eurozone and Canada. Later today, the Federal Reserve will publish its beige book.
Macro data: Data from the United States showed on Tuesday that housing starts and building permits fell 1.6% and 7.7% respectively in September. The People’s Bank of China (PBoC) on Wednesday left its one-year key rate unchanged at 3.85% as expected. The UK Office for National Statistics reported that the Consumer Price Index (CPI) declined slightly to 3.1% on an annual basis in September from 3.2% in August. Additionally, the core CPI fell to 2.9% over the same period, missing market expectations by 3%.
The reference Yield on 10-year US Treasury bonds pushed higher during US trading hours and ended up gaining more than 2% on Tuesday. Currently, the 10-year yield remains relatively calm around 1.65%, helping the dollar to remain resilient against its rivals. Meanwhile, the US dollar index, which hit a three-week low at 93.50, is fluctuating around 93.70.
Wall Street: The S&P 500 Index closed the fifth consecutive trading day in positive territory and hit its highest level since early September at 4,520. The Dow Jones Industrial Average rose 0.55% and the Nasdaq Composite rose 0 , 7%. US stock index futures show modest losses at the start of European trading. After the closing bell, Tesla will release third quarter earnings numbers.
AUD / USD and NZD / USD were the biggest winners on Tuesday and they continue to improve on Wednesday. A negative change in risk sentiment could cause these pairs to make a strong correction.
EUR / USD reached its highest level in a month at 1.1670, but conciliatory comments from European Central Bank officials made it difficult to preserve its bullish momentum. The pair appears to have entered a phase of consolidation around 1.1650 on Wednesday.
GBP / USD showed no immediate reaction to September’s inflation numbers and continues to move sideways to around 1.3800 as investors assess the likelihood of a Bank of England rate hike before the end of the month. ‘year.
Gold climbed above $ 1,780 on Tuesday but reversed direction in the second half of the day as it remains one of the most sensitive assets to fluctuations in US Treasury bond yields. XAU / USD remains afloat in the green above $ 1,770 on Wednesday.
Crypto-currencies: As trading in the first Bitcoin ETF began on Tuesday, BTC has gained over 3% and remains a touching distance from all-time highs of nearly $ 64,000 on Wednesday. Ethereum bulls are still waiting for ETH to break above $ 4,000.