Oct 05, 2022
VOT Research Desk
Analytical Viewpoint
Markets appear to have been cautious in the middle of the week after a two-day risk rise. Early on Wednesday, the US Dollar Index, which is down more than 1.5% so far this week, remains somewhat calm over 110.00, while the yield on US Treasury bonds for 10 years remains constant at about 3.6%.
The ADP private sector employment report, the ISM service sector PMI survey for September, and the goods trade balance data for August will all be included in the US economic docket. The announcement of the specifics of the new sanctions against Russia, which include the oil price restriction, is scheduled.
How the information generates a selling opportunity in dollars before the ISM Services PMI.
Market investors will closely monitor the news stories that emerge from the OPEC+ summit as well. Oil prices increased late on Wednesday as a result of reports that the group may reduce output by as much as 2 million barrels per day.
Following a 5% increase on Monday, the price of a barrel of West Texas Intermediate (WTI) increased by over 4% on Tuesday. It was last seen trading at the $87 mark. US stock index futures are down between 0.4% and 0.5% as of early Wednesday, reflecting the gloomy market environment.
Rising geopolitical tensions appear to be dampening investor enthusiasm toward risk. The day before, the Russian ambassador to the US warned that there was now a greater risk of a direct confrontation between Russia and the west in reaction to Washington’s decision to deliver further military assistance to Ukraine.
The Reserve Bank of New Zealand said during Asian trade hours that it has increased its policy rate by 50 basis points (bps) to 3.5%, as anticipated. The committee debated whether to raise the rate by 50 or 75 basis points before agreeing that a 50 bps increase was necessary to preserve price stability and promote maximum sustainable employment. NZD/USD initially reacted positively, rising over 0.5800 for the first time since September 23. However, risk aversion caused a decline near 0.5750.
EUR/USD
On Tuesday, the EUR/USD made significant gains and approached parity before entering a stabilization period. As of the time of writing, the pair was oscillating close around 0.9980.
GBP/USD
On Tuesday, the GBP/USD exchange rate reached its highest point in over three weeks, 1.1490, and concluded the day in the green for the sixth consecutive day. Early on Wednesday, the pair is bouncing about a constrained range above 1.1450.
Gold
Gold maintained its positive momentum with falling global bond rates on Tuesday and broke beyond $1,700 after rising more than 2% on Monday. Already up 4% so far this week, the XAU/USD pair is trading above $1,720.
USD/JPY
On Tuesday’s continuous dollar selloff, USD/JPY dipped slightly, although it regained support at 144.00. Early on Wednesday, the pair maintains its strong momentum at 144.20. By reopening inbound tourism and corporate restoring, Japanese Prime Minister Fumio Kishida stated on Wednesday that it is crucial to relate the weak yen to economic recovery.
BitCoin
Before entering stabilization phase on Wednesday just above that level, Bitcoin gained roughly 4% on Tuesday and recaptured $20,000 earlier in the day. In the early hours in Europe, Ethereal is trading at over $1,350, up more than 6% this week.
