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Market Wrap
At the London close the biggest change in the composition of the heatmap is the decline in relative strength for the Chinese yuan. The Antipodeans plus Canadian dollar have maintained their strength against the safe haven currencies and the US equities currently reflect a slight positive momentum.
There has been little schedules data release during the start of the US session but today is the turn for the US treasury to release their monthly budget statement. Tracking the flows as I do, I can tell you daily how much the US government spend as I feel it has a major impact on the US stock markets.
The end of September is also the end of the US Treasury fiscal year and in this fiscal year they have spent a record amount, already up to $7.409 trillion. The orange line on the graph above is the monthly closing prices of the SPX (S&P500) which I believe is largely influenced by the flows.
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A decline in the US dollar could be to do with the issuance of lots of corporate debt but also on news from China’s Evergrande who say rumours of their impending bankruptcy are unfounded. Last week could have been a move into the US dollar from worried East Asian investors trying to distance themselves from the run on Evergrande after rating agencies downgraded them. On the US dollar index the turn came at the 50% level of the last down wave so a close below the recent swing low and the $92.30 level will be bearish for the greenback.
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The oil markets are higher today on the weakening US dollar but also on news from OPEC+ and the US Department of Energy. Exxon Mobil have requested a further 1.5mln barrels of oil from the Strategic Petroleum Reserve as resumptions of their infrastructure in the Gulf of Mexico remains slow. Whereas OPEC+ have not raised their forecast for global demand of oil and more importantly have not downwardly revised their estimates for 2022.
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The US open and London close has been good for the GBPUSD after a quick dip down to the weekly pivot at 3.30pm today. If this level can hold as support the next logical target is the recent swing highs and above.
