America roundup: Dollar hits new 2-decade high, Wall Street ends lower, gold nears 2 1/2-year low, oil prices drop $2/bbl , settle at a 9-month low – September 27, 2022

Market overview

• Wholesale sales in Canada (monthly) 0.8%, -0.6% previous

• French 6-month BTF auction 1.325%, previous 0.890%

• French 3-month BTF auction 0.681%, previous 0.686%

• French BTF auction 12 months 1.855%, 1.798% previous

• US Sep Dallas Fed Mfg Business Index -17.2, previous -12.9

• US 3-Month Bill Auction 2.880%, previous 3.270%

• US 6-Month Bill Auction 3.235%, previous 3.780%

Future Outlook – Economic Data (GMT)

•01:30 China Aug Industrial Profit (YY) 0.80% previous

•01:30 China Aug YTD Industrial Profit -1.1% previous

Future Outlook – Economic Events and Other Releases (GMT)

• No significant event

Currency summaries

EUR/USD: The euro fell against the dollar on Monday as the euro was weighed down by comments from European Central Bank President Christine Lagarde that interest rates will have to rise over the next political meeting despite slowing growth. Investors were also digesting the victory of a right-wing bloc led by Giorgia Meloni in Sunday’s Italian legislative elections. On the data front, the Ifo institute said its business climate index fell to 84.3 from 88.5 in August as the current valuation component and expectations fell significantly. Immediate resistance can be seen at 0.9716 (38.2% fib), a break up can trigger a rise towards 0.9803 (5DMA). On the downside, immediate support is seen at 0.9600 (psychological level), a break below could take the pair towards 0.9555 (23.6%fib).

GBP/USD: The pound fell to an all-time low against the dollar on Monday as investors feared Britain’s new economic plan could hurt the country’s finances. The pound fell 4.9% during Asian trading to an all-time low of $1.0327, adding to Friday’s 3.6% plunge after the unveiling of historic tax cuts from the new Finance Minister Kwasi Kwarteng financed by the biggest increase in borrowing since 1972. UK government bond prices have collapsed. Traders speculated that the BoE could take emergency action to stem the currency’s slide, but fell again after BoE Governor Andrew Bailey said the central bank was monitoring markets , but reported no immediate action. Immediate resistance can be seen at 1.00730(38.2%fib), a break up can trigger a rise towards 1.0916(5DMA). On the downside, immediate support is seen at 1.0688(23.6%fib), a break below could take the pair towards 1.0600 (Psychological level).

USD/CAD: The Canadian dollar fell to its lowest level in more than two years against its much stronger U.S. counterpart on Monday as investors feared rising global borrowing costs could tip major economies in recession. Canadian wholesale trade rose 0.8% in August from July, according to a preliminary estimate from Statistics Canada. Inflation is too high in Canada, so the Bank of Canada needs to raise interest rates to slow spending and give the economy time to catch up, Governor Tiff Macklem said. U.S. crude oil futures extended their recent decline to settle 2.6% lower at $76.71 a barrel. be seen at 1.3756 (38.2%fib), an upside break may trigger a move higher towards 1.3808 (daily high). On the downside, immediate support is seen at 1.3675 (50%fib), a break below could take the pair towards 1.3600 (Psychological level).

USD/JPY: The dollar rose against the yen on Monday as the US Federal Reserve’s hawkish stance on rate hikes boosted the greenback. The surge in inflation prompted several central banks to tighten their monetary policy. The US central bank and a number of other major central banks raised interest rates last week, raising concerns about the impact on growth. Last week, the Federal Reserve raised interest rates by 75 basis points for the third straight time and Chairman Jerome Powell said central bank officials were “firmly committed” to lowering inflation. Benchmark US Treasury yields firmed near their highest level since 2011. Strong resistance can be seen at 145.25 (23.6% fib), a break up can trigger a rise towards 145.84 (BB superior). On the downside, immediate support is seen at 143.90 (5DMA ), a break below could take the pair towards 143.14 (38.2%fib).

Summary of actions

European stocks closed broadly lower on Monday as investors exercised a high degree of caution amid growing fears of a global recession due to rising interest rates.

Britain’s benchmark FTSE 100 closed down 0.03%, Germany’s Dax ended down 0.46% and France’s CAC ended the day down 0.24%.

Wall Street sank deeper into a bear market on Monday, with the S&P 500 and Dow Jones closing lower as investors feared the Federal Reserve’s aggressive campaign against inflation could send the US economy into a tailspin. marked slowdown.

The Dow Jones closed down 1.11%, the S&P 500 ended down 1.03%, the Nasdaq ended down 0.60%.

Summary of treasury bills

US Treasury yields hit new highs on Monday, rising alongside yields on the eurozone and UK government debt amid fears that the world’s central banks will continue to tighten monetary policy to rein in stubbornly high inflation.

Yields on two-year Treasury bills, which tend to be more sensitive to changes in interest rates, hit a new 15-year high of 4.237%, and yields on the benchmark 10-year note rose by around 5 basis points from their Friday close, climbing to 3.746. %.

Gold prices hovered near a 2.5-year low on Monday, driven by higher Treasury yields and a stronger dollar, while jitters over rising interest rates Americans hurt the attractiveness of non-performing bullion.

Spot gold fell 1.2% to $1,623.79 an ounce as of 2:35 p.m. EDT (6:35 p.m. GMT), after falling to $1,620.85, its lowest price since April 2020. US gold futures settled down 1.3% to $1,633.40.

Oil prices fell $2 a barrel on Monday to nine-month lows in choppy trade, under pressure from a rising dollar as market participants awaited details on further sanctions against Russia.

Brent futures for November settled down $2.09, or 2.4%, to $84.06 a barrel, dipping below levels reached on January 14.

U.S. West Texas Intermediate (WTI) crude for November delivery fell $2.06, or 2.3%, to $76.71, the lowest since Jan. 6.

Carol N. Valencia