Market Drivers – US Session 20/10/2022

Mohamed Abdelhamid 21 October, 2022 3:22 am Forex Market, Market Update

Soaring treasury yields managed to save the US dollar on Thursday. The American currency started the trading day with negative performance, but later was able to trim intraday losses and finished the day little changed against most major rival currencies.

The yield on the 10-year US Treasury note picked at 4.23%, while the 2-year note yield hit 4.62%, as inflation and recession made it to the top of investors’ concerns.

The EUR/USD pair trades around 0.9770, while GBP/USD settled at 1.1210, trimming early gains. The AUD/USD pair met sellers around a fresh weekly high of 0.6355 and finished the day unchanged, around 0.6260, while USD/CAD settled at 1.3780.

The USD/JPY pair hit a multi-decade high of 150.28, slowly grinding higher. Market players are cautious as BOJ’s intervention seems imminent.

Economic Data

Philadelphia Fed Manufacturing Index edged up in October to -8.7 from -9.9, below the market expectation of -5.5. The reading is seen as basically disappointing but not irrefutable.

Weekly initial jobless claims for the week ended October 15 fell to 214,000 from 228,000, coming in well below the expected 230,000. The drop of initial jobless claims supports the view that the increases in the past two weeks, could serve as a robust signal

Other Developments

Turkey’s Central Bank slashed interest rates by 150 bps for the third consecutive month, with the main rate now at 10.5%, despite annual inflation surpassing 80%. The Turkish lira edged higher on Thursday after briefly hitting a record low as the country’s central bank cut rates more than expected.

Wall Street rallied ahead of the opening following solid earnings, but US indexes finished the day in the red territory as bond yields soared to their highest since 2008.

UK Prime Minister Liz Truss resigned after 44 days in office and the news constituted a major risk-off factor. After failing to order the financial system, Truss resigned but this could instead trigge more chaos.

Gold nears the weekly high, now trading at around $1,626 per ounce after trading as high as $1,645. Crude oil prices are stable, with WTI now at $84.80 a barrel.

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