Market Drivers – US Session 18/10/2022

Mohamed Abdelhamid 19 October, 2022 2:54 am Forex Market, Market Update

The United Kingdom seized most of investors and traders’ attention. During London trading hours, the Financial Times suggested the Bank of England could delay the start of the quantitative tightening bond-selling program, sending the Pound up and adding pressure on the US dollar.

However, the BOE quickly denied the news headline, saying it was inaccurate. As a result, the dollar ticked marginally higher but was unable to retain gains amid rising equities and stable government bond yields.

Economic Data:

On Wednesday, the EU, the UK, and Canada will publish updated inflation data that could spur volatile moves.

Other Developments

Russia has removed Exxon as a shareholder from the Sakhalin-1 oil and gas project and transferred its stake to a Russian business entity.

Exxon said this amounted to expropriation and that it had pulled out from Russia as a whole. Exxon had a 30-percent stake in Sakhalin-1 but a week ago President Vladimir Putin signed a decree with which a new entity was set up to manage the operations of the Far East oil and gas project. The decree allowed the Russian government to distribute the stakes in the project and kick out foreign partners if they saw fit.

The dollar finished Tuesday mixed versus rival currencies. It was not far from its daily opening levels. Financial markets lacked clear direction, as government bond yields remained steady, while macroeconomic data was mixed.

The GBP/USD pair seesawed with the headlines, ending the day with modest losses at around 1.1320. EUR/USD extended its weekly advance by a few pips to 0.9875 to settle around 0.9850.

The USD/JPY pair kept rallying and surpassed 149.00, its highest in over 30 years. It suffered a near-term pressure earlier during European trading hours, giving up 100 pips before bouncing back. It is now trading at around 149.20. The 20-year Japanese government bond yield is up to its highest since 2015.

AUD/USD ticked higher, now battling with 0.6300, while USD/CAD also advanced and stands at 1.3740. The Canadian dollar was impacted by further slides in crude oil prices, with WTI now trading at around $82.40 a barrel. Gold was also under pressure but finished the day little changed at around $1,650 per ounce.

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