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The dollar resumed its bullish wave after a US CPI-inspired drop as Fed official Christopher Waller warned investors on Sunday of being too optimistic about a softer Fed decision. The risk-on markets quickly vanished giving in Friday gains as investors maintain a cautious tone into the new week ahead of UK employment data and European inflation data. President Joe Biden is set to meet President Xi Jinping before the G-20 meeting starts.
NZDUSD slumped by -0.85% on the dollar’s resumed strength boosted by Fed’s Waller remarks. The Federal Reserve official Christopher Waller warned investors on Sunday about being too optimistic post downbeat US CPI data. Optimism over China easing covid-19 restrictions failed to uplift the NZD as it has been offset by dollar strength. The pair tanked from 0.6120 as bears set targets of 0.6050 and 0.6000.
EURJPY gained +0.57% starting the week on a positive note as the industrial sector in the eurozone surpassed expectations in September coming in at 0.9% vs 0.3% every month and 4.9% vs 2.8% yearly. A softer risk tone on the day failed to weigh on the euro against the Yen. Traders shift their focus to Japanese preliminary GDP data early Tuesday which is forecasted to have dropped in the 3rd quarter. Bulls took over from 143.50 with immediate targets residing at 145.50 if the145.00 Friday’s high fails to hold.
The British Pound gave up -0.65% against the greenback leaving an intraday resistance at 1.1843. UK’s employment data will be released on Tuesday ahead of the country’s GDP data and fiscal policy statement. Inflation in the UK is expected to rise to10.7% from the 10.1% previous reading. A cautious mood on the day pinned the sterling down against the dollar. The pair lost traction as fed’s Waller hints possibly more aggressiveness by the central bank to tame inflation. A breach of 1.1750 may give bears 1.1650 in the short term.
European stocks were mixed ahead of European inflation data scheduled for release on Tuesday. FTSE100 trimmed early morning gains as 7400 resistance holds, and near-term support is at the 7250 level. CAC40 plunged by -0.27% as bulls cools off the rally after breaking above the 6600 level and 6700 remains a near-term barrier for upside gains. DAX soared by +0.38% extending a 7-day rally to the 14300 level and a break above that level could open the way for the 14500 level.
US stock futures paused rally as dollar strength resurges on cautious Fed tone on inflation. S&P500 futures edged lower by -0.36% as bulls lose steam below the 4000 near-term high. The 4100 high and 3950 near-term support are critical levels to watch out for. Nasdaq100 futures gave in gains by -0.53% after closing above the 11600 near-term resistance. A break above the 11800 level could open the way for the 12000 psychological level. DJIA index futures dropped by -0.22% as the 34000 near-term barrier holds. Key levels to watch out for are 34000 resistance level and 33500 support.
The benchmark US 10-year treasury yields opened with a bullish gap as the dollar rises on fed Waller comments on inflation. Last week the US consumer prices dropped unexpectedly raising hopes of a near-fed pivot and dipping the 10-year yields to around 3.80%. The comments from Fed`s Waller helped trim losses as it is now trading in the 3.90% region.
