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The markets eased from selling pressure as the Chinese easing of Covid curbs inspired optimism. Markets experienced a risk-on sentiment despite limited gains as investors shift focus to the BoC policy meeting later in the New York session. The BoC is set to hike rates by 50bps. ECB’s Panetta and McCaul are set to speak, while US Crude Oil inventories will take centre stage in oil markets.
USDJPY extended 3-day gains by +0.37% after US Trade balance data beat estimates. The dollar advanced as dollar demand increased as the global growth outlook darkness. Traders weigh the outlook for 2023 ahead of Crude oil inventories data. The Japanese Yen suffered further losses ahead of Japan’s GDP data early Thursday morning. The bulls eased from a 3-day rally as gains get capped by the 137.00 previous support-turned-resistance. On the downside, bears could target the 134.00 support level if resistance continues to hold.
GBPCAD soared by +0.63% as investors shift focus to the BoC rate decision. The Pound rallied early Wednesday morning as investors priced in prospects of easing China Covid curbs, although upside movement is limited by falling UK House Prices. The UK Halifax House Price Index fell to 4.7% from a previous reading of 8.2% as higher interest rates slow economic activity. Investors should closely watch the BoC interest rate decision due for release later in the New York session. The pair climbed towards a 9-months high at the 1.6750 level as bulls hold gains above the 1.6550 level.
EURAUD surged by +0.43% following stronger-than-expected GDP data. The Euro-area Q3 GDP grew to 0.3% from an initial reading of 0.2% while German Industrial Production data for October rose to -0.1% from a -0.6% forecast. The Australian GDP data weighed down the risk-sensitive currency after a miss in data. The Q3 QoQ GDP fell to 5.9 from an expected 6.2% while YoY dropped to 0.6% vs 0.7% surveyed. The rally could be limited by China reopening optimism and hawkish RBA. Bulls are currently flirting with a 10-month high at the 1.5700 level and a break above that level could give bulls the 1.5800 psychological level.
European stocks edged lower as UK House Prices fall the fastest in 14 years, reinforcing recession fears. FTSE100 plunged by -0.48% towards the 7500 near-term support as bulls fail to challenge the 7600 resistance. A break below the 6-day support could trigger further selling pressure towards the 7450 level. CAC40 erased Tuesday’s gains by dropping -0.51% as 6700 support-turned-resistance holds as a near-term barrier. The next key level is at the 6560 level. DAX fell by -0.58% breaking below the 14300-support level and bearish targets are at the 14150 level.
US stock futures extend slip as dollar demand rises on fed tightening. S&P500 futures were down by -0.23% after closing below the 3950 near-term support and bears could target the 3900 level. The 3800 level could be the next key level if 3900 is breached. Nasdaq100 futures sank by -0.36% as bears traded towards the 11500 level. On the downside, 11000 remains a possible target, however, a break above 11600 could invalidate the bearish outlook. DJIA index futures lost by -0.19% below the 34000 psychological level towards the 33000 area. Bulls are struggling to hold gains above the 33500 area.
US 10-year treasury yields were steady after better-than-expected US Trade Balance data. The US trade balance for October rose to -78.20B against -80.00B surveyed. Investors shift focus to the PPI and Consumer Expectations data due for release on Friday for policy clues. The US 10-year bond yields were trading at +0.01% after bouncing off 3.50% and the next key level for upside is at the 3.70% level.
