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Markets are fairly steady as investors closely await Fed Chairman Powell’s speech later today. The dollar edged lower ahead of a slew of US economic data. JOLTS Job openings and Pending Home sales dominate US economic docket prior to the Fed Chairman’s speech for rate guidance. Eurozone inflation dropped to 10.0% reinforcing a softer sentiment on the ECB tightening. Commodity markets extended rebound as optimism around China reopening looms.
USDCAD reversed gains by -0.47% ahead of US economic data. The dollar heads for the biggest monthly loss since 2010 as investors brace for Fed’s Powell speech later in the day. The Canadian dollar’s strength is underpinned by a strong recovery in the oil markets. The US API weekly crude oil stocks were -7.850 M vs -2.487M barrels suggesting rising demand for the black liquid. The pair retracted from 1.3600, a 4-week high and bears could target the 1.3500 psychological level.
EURAUD plunged by -0.42% as falling inflation in the Eurozone may push ECB for a lower hike in December. The Eurozone CPI data fell to 10.0% against the 10.4% forecasted dampening sentiment for further tightening by the ECB. The Aussie domestic inflation indicated signs of slowing, although a rally in commodities helped strengthen the commodity-backed currency. Bears are trading lower towards the 1.5300 level, an 8-week low and a break below that low could trigger selling pressure, the next key level is the 1.5000 psychological level.
GBPJPY rallied by +0.53% as BoE governor Bailey underpinned a hawkish outlook in the near term. He indicated the BoE has more to do with rates in the coming meetings. BoE MPC member Pill is set to speak later in the New York session. The risk-on sentiment helped lift bids on the pound as Japanese industrial Production data dropped to -2.6% vs -1.5% anticipated. The pair rose from the 165.50 level and upside gains are capped by the 167.00 level.
European stocks rose as Eurozone inflation finally indicates signs of relief. FTSE100 rallied by +0.36% as bulls climb towards the 7570 resistance. A break above that level could see extended targets towards the 7600 and 7650 levels. Failure to challenge the near-term high could see the index correct towards the 7500-support level. CAC40 advanced by +0.42% as bulls bounced off near-term support at the 6650 level to hold gains above the 6700 level. Upside gains are capped by the 6800 level. DAX surged by +0.57% and the index remains capped between the 14500 and 14300 psychological levels.
US stock futures steady as investors await Fed’s Powell speech. S&P500 futures were slightly up +0.17% and gains are capped by the 4000 near-term resistance. On the downside, 3950 and 3850 levels are the near-term targets for bears. Nasdaq100 futures soared by +0.44% although bulls struggle to hold gains above the 11500 near-term support and a break below that level could trigger selling pressure towards the 11000 level. DJIA index futures were down -0.08% as the index traded below 34000 near-term resistance and the next critical level is 33500 support.
In commodities, oil extended rebound, the second day of gains as falling US inventories and possible OPEC+ output cut underpins strength. USWTI rose by +1.55% after bouncing off a 74.00 level, an 11-month low and upside gains are capped by the 82.00 level. Brent crude oil added +1.45% gains trading at 86.00 level as 81.00 remains a strong short-term support. Bulls could target the 90.00 level in the near term. Traders should pay close attention to the US Crude Oil inventories data later in the day.
