- Risk off sentiment dominated the Asian part of the session & European bourses are also set to open lower.
- GER30 and UK100 futures currently down -0.6%. US futures are posting losses of -0.3 to -0.4% as markets fret about rising yields, the spike in oil prices and stagflation risks amid ongoing supply chain constraints that are increasingly keeping a lid on the manufacturing outlook
- Equities down. JPN225 -0.9%, ASX corrected -0.3%.
- Oil prices continued to rise to the highest since 2014 currently $81.06. UKOIL to $84.58 – adding to inflationary pressures in recovering economies.
- Gold prices could reach $1,850 before retreating in 2022 – ANZ Research.
- US Yields held above 0.6%, yields continued to rise in Australia and New Zealand, although China’s 10-year rate dropped back slightly.
- News: South Korea’s central bank left its Base Rate unchanged, as expected, while in data Japan’s PPI rate jumped higher, and the UK’s unemployment rate was unchanged at 4.5% in the 3 months to August.
- FX markets – USD and GBP remain bid, Yen splits– Sterling is benefiting from rate hike speculation.
- EURUSD, 1.1565, Cable stuck at 1.3600, USDJPY broken 113!
European Open – The December 10-year Bund future is up 10 ticks, US futures are also slightly higher, while in cash markets the US Treasury yield is holding above the 1.6% mark. Central banks seem split on how to react and while the BoE is clearly laying the ground for an earlier than expected lift off on rates, ECB officials continue to do their best to keep rate hike speculation under control. The latter is keeping a lid on the EUR, while so far Sterling is benefiting from rate hike speculation, although that could change if the focus turns to growing supply chain and delivery disruptions and the impact of the spike in gas prices, which is also causing problems in areas such as food and drink production.
Today – German ZEW Sentiment
Biggest FX Mover @ (06:30 GMT) USDJPY (-0.14%) Retreating from 113.47 and currently back to 113 border. Faster MAs aligned lower, MACD signal line & histogram trending lower but well above 0, RSI 43 slowing down, all indicating a correction after OB condition. H1 ATR 0.123, Daily ATR 0.669.
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Andria Pichidi
Market Analyst
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