VOT Research Desk
Nov1
Market Analytics and Considerations
Although the US dollar is currently under pressure, the long-term outlook is more positive.
APAC equities received a much-needed lift from Japanese and Chinese PMI data.
Biden made a strong case against inflated oil corporation profits.
Today, as Treasury yields decreased throughout the Asian session, the US Dollar is performing worse against all developed market currencies. The shifts reversed the gains of the previous day. For the time being, the benchmark 10-year note is still above 4%.
After the strong PMI numbers from China and Japan, there was also some positive risk sentiment. The manufacturing PMIs for Japan’s Jibun Bank and China’s Caixin were both higher than expected at 49.2 and 50.7, respectively.
One of the few currencies that has weakened in comparison to the “big dollar” is the Chinese Yuan.It has fallen to its lowest point since the beginning of 2008, when USD/CNY reached as high as 7.3270. That is quite a distance from the low of 6.3035 in March.
In October, the Ministry of Finance (MoF) of Japan disclosed that they had engaged in currency intervention for 6.3 trillion Yen (42.5 billion USD).
Following a 3.8% month-over-month increase in building approvals in September, the Kiwi Dollar has been the major currency that has performed the best thus far.
After the RBA raised their cash rate target by 25 basis points (bps) to 2.85%, AUD/USD made a run toward 0.6450 before retreating. “Buy the rumor, sell the fact” seems to be the case.
All APAC stocks are up, with Hong Kong’s Hang Seng Index (HSI) rising by more than 4% at one point. After yesterday’s declines, US futures are pointing to a positive start to their cash session.
According to US President Joe Biden, record oil company profits are a wartime windfall, and producers who do not reinvest their gains in order to increase output may be subject to an additional tax
.
The Brent contract has surpassed US$ 93.50 bl, while the WTI futures contract has risen above US$ 87 bl.
Today, additional PMI data from Switzerland, the UK, Canada, and the United States will be released. Latter will also release comparable ISM numbers. The market is still nervous ahead of Wednesday’s Fed rate decision.
Technical Analysis of the DXY (USD) Index The DXY index has remained in an ascending trend channel and may be regaining bullish momentum after crossing above the 55-day simple moving average (SMA).
This may provide support because the 100-day SMA, which is currently intersecting at 108.60, coincides with the lower bound of the ascending channel.
Support may come from the most recent low and the breakpoint at 109.54 and 109.29, respectively, ahead of that level.
The breakpoint at 111.77 or the previous peaks at 113.92 and 114.78 could serve as resistance on top.
