USD Grinds Higher As Equity Rally Continues
Swissquote Bank Ltd | Oct 06, 2016 05:10AM ET
Market Brief
Crude Oil prices eased slightly during the Asian session in spite of a positive lead from the US. Yesterday, the West Texas Intermediate reached $49.97 a barrel, the highest level since early June this year, as US crude oil inventories unexpectedly shrank by 3 million barrels to 499.7 million in the week ending September 30, while the market was expecting an increase of 1.5 million barrels. US crude rose as much as 1.75% on Wednesday and tested the $50 threshold before easing back to around $49.60 as investors remain sceptical that a price above $50 is sustainable over the short-term without an OPEC deal. The international gauge, the Brent crude, followed a similar pattern as it was unable to move above the $52 benchmark.
In overnight trading, the US dollar broadly extended gains as market participants become increasingly confident that the Federal Reserve will be able to raise rates before the end of the year. The encouraging data from the US yesterday bolstered the market sentiment ahead of tomorrow NFPs. However September’s ADP change came in slightly below expectations at 154k versus 165k expected, suggesting that the expected 174k private job gains expected for September may be a little over optimistic.
The worst performers were high quality commodity currencies such as the AUD, the NZD and the NOK. The Australian dollar sank 0.50% against the US dollar, down to 0.7585 as traders slowly exit long Aussie positions to return to the USD. Similarly, the New Zealand dollar continued to grind lower as it fell 0.20% against the greenback, down to 0.7155. The closest support can be found at around 0.71 (psychological and low from early August), while on the upside a resistance lies at around 0.73.
In Asia, regional equity markets extended gains on Thursday following a positive lead from Wall Street. The Nikkei rose 0.47%, while the broader Topix index was up 0.45%. Mainland Chinese markets are still closed due to Golden week holidays. Offshore, Hong Kong’s Hang Seng was up 0.49%, while in Taiwan the Taiex rose 0.13%. In Europe, equity futures are blinking green across the screen, suggesting a higher open.
Today traders will be watching the inflation report from Switzerland; PMI from Germany, France, Italy and the Eurozone; initial jobless claims and consumer confidence index from the US.
Currency Tech
EUR/USD
R 2: 1.1616
R 1: 1.1428
CURRENT: 1.1199
S 1: 1.1046
S 2: 1.0913
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GBP/USD
R 2: 1.3121
R 1: 1.2857
CURRENT: 1.2729
S 1: 1.2650
S 2: 1.2000
USD/JPY
R 2: 107.90
R 1: 104.32
CURRENT: 103.59
S 1: 99.02
S 2: 96.57
USD/CHF
R 2: 0.9956
R 1: 0.9885
CURRENT: 0.9761
S 1: 0.9522
S 2: 0.9444
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