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• USDIndex gets softer, breaking 112.00 floor and currently at 111.70. Treasuries gained ground though pared the rally into the close, richened though underperformed Gilts and European bonds. Much of the impetus again came from across the Pond after new UK Chancellor Hunt confirmed a complete U-turn on the government’s fiscal plan. The bull steepener saw the curve at -44 bps from -48 bps Friday.


• A weaker than expected Empire State index has added to beliefs the FOMC’s tightening is cutting into growth and will ultimately lower inflation, hence slowing rate hikes down the road.


• EUR – crossed 20-DMA and currently at 0.9850. 


• JPY – at 149.10 for the first time since August 1990.


• Stocks – US100 paced the surge, jumping 3.43%, while the US500 climbed 2.66%, back above Support level at 3700 (20-DMA), with the US30 up 1.86%. The UK100 was up as much as 1.47% before gains were trimmed to 0.90%. Bank of America's Q3 earnings beat expectations, attributed to "resilient" US consumers (share price +6%). JPMorgan Chase reported smaller than expected drop in profits.


• USOil – holds support at $85 amid softer USD and as  cuts supplies to Europe. – A weaker USD makes oil cheaper for non-US buyers.


• Gold – $1660.


• BTC – extends some gains from yesterday to $19534.


• UK Chancellor Hunt announced overnight the scrapping of plans to cut income tax indefinitely & the plan to reduce the entry level tax will be shelved. Cuts to dividend tax rates and tourist VAT will be reversed as well. At the same time, the UK will shorten universal energy support to April 2023 and instead the government will look into more targeted support measures. Hunt warned that more difficult decisions are coming on spending in order to get finances under control and restore market trust in the UK economy. So far it has worked as the Gilt yield plunged 35 bps to 2.83%, the FTSE climbed to 6920, and Cable tested 1.1439 before dipping back to 1.1327 at the close.


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  The BOE is likely to delay the sale of  838 billions pounds of government bonds to encourage greater stability in gilt markets following Britain’s failed “mini” budget, the Financial Times reported on Tuesday.

  
  

Today – US Monthly Budget and EU ZEW. Earnings: J&J, Lockheed Martin, Netflix, etc.

Biggest FX Mover @ (06:30 GMT) NZDUSD (+1.27%) topped to 0.5700 after hotter-than-expected CPI data. MAs aligned higher, MACD histogram & signal line extend northwards, RSI 71 but flattened.  H1 ATR 0.00155, Daily ATR 0.0136. 

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Andria Pichidi

Market Analyst

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