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The risk-on sentiment dominated the markets on Tuesday as investors pay close attention to the release of US inflation data. The German economic sentiment slid lower in September as the inflation report remained unchanged. BoE Governor Bailey and ECB’s McCaul will be speaking later in the New York session. Crude oil markets rallied as investors digest the OPEC monthly Report.
USDJPY dips by -0.40% as the dollar continues its retreat from 110.80, a 2-decade high. The Yen pocketed some small gains early Tuesday as Japanese officials promise Yen intervention. The US CPI data due for the New York session will set the tone for the Federal Reserve rate decision next week. Investors’ probability of 75bps has remained the same from yesterday as the inflation figures are forecasted to be less than previous. Bulls got rejected at the 142.85 intraday resistance while bears faced a challenge at the 142.00 psychological level. Further down bears may reclaim 139.50, previous resistance turned support.
EURCAD rose by +0.30% following the EU’s mixed economic data. German’s inflation figures came in unchanged from last month at 7.9% while Spanish CPI rose to 10.5% from the 10.4% previous reading. The German ZEW economic sentiment dropped to -61.9 vs -60.0 expected showing more pessimism in the economy. The CAD has failed to pin down the euro for the past two days even though both central banks hiked their key rates by 75bps last week. The pair`s bulls rode on ECB officials’ hawkishness from 1.31400 facing barriers at 1.32800 and1.3400 in the medium term.
GBPAUD traded flat at +0.09% mid-European session after rising to 1.7048, post-UK’s mixed data. The pay growth came in stronger in July as Average Earnings Index+ Bonus rose to 5.5% from 5.4%. The change in the number of unemployed people rose to 6.3K in August from -13.2K despite a drop in the unemployment rate to 3.6% in the month of July. The Australian Westpac Consumer Sentiment rose to 3.9% from -3.0% though it came in with less impact. The NAB Business Confidence for August rose to 10 from 8 in August. A number above 1.7048 may give bulls 1.7080 and 1.7100.
European stocks rallied for the 4th consecutive day as bulls reclaim the trend. DAX soared by +0.75% and critical levels to watch out for are the 13600 and 13900 resistance levels. FTSE100 futures extended rally by +0.40% trading at the 7500 level and a break above that level could see bulls targeting the 7570 level, a 3-months high. CAC40 gained by +0.53% and near-term targets are at 6500 and 6600 levels, 5-months high.
US stock futures held steady as US inflation growth is forecasted to slow down. S&P500 futures rose by +0.35% sustaining a 5-day rally from 3900 support. Upside gains are capped by the 4200 level and a break above that could reinforce a bullish outlook towards the 4300 psychological resistance. Nasdaq100 futures advanced by +0.36% and bulls could target a 13000 psychological level as markets trade above the 12650, previous resistance-turned-support. DJIA index futures gained by +0.51% challenging the 32500 level. Critical levels to watch out for are the 33000 resistance and 32000 support.
US 10-year yields plunged by -1.55% from a 3.36% high to a 3.20% level ahead of US CPI data. Gold held steady at +0.33% as the US inflation data takes the centre stage. A break above the 1725 level could trigger a rally towards the 1760 level.
