Market Drivers – US Session 29/09/2022

Mohamed Abdelhamid 30 September, 2022 3:45 am Commodities, Forex Market, Market Update

The US dollar ended the day unevenly across the FX board, despite Wall Street resuming its decline and trimming all Wednesday’s gains. Treasury yields remained stable, with the 10-year note yielding 3.75% and the 2-year note 4.17%.

Gold trades near its weekly high at the $1,664 level, while crude oil prices saw little intraday change. The barrel of WTI currently stands at $81.50.

Economic Data

Germany’s Harmonized Consumer Price Index rose at an annual pace of 10.9%. The EU will publish the first estimate of the Consumer Price Index on Friday, while the US will release the PCE Price Index, the Fed’s favorite inflation measure.

The US economy contracted at an annualized rate of 0.6% in the second quarter, the US Bureau of Economic Analysis’ (BEA) third and final estimate showed on Thursday. This reading came in line with the market expectation and the previous estimate.

Other Developments

The Bank of England Chief Economist Huw Pill noted that “it’s hard to avoid the conclusion that fiscal easing announced will prompt a significant and necessary monetary policy response in November,” following the controversial measures adopted by the government and the central bank in the last few days.

EU-Russian tensions over natural gas deliveries escalated after the suspected sabotage of the Nord Stream pipelines. Germany launched a relief package in response to higher gas and electricity prices, while Hungary announced it would not support new energy sanctions on Russia.

European currencies were firmly up, despite bad news that kept coming from the old continent. The EUR/USD pair flirts with 0.9800, while GBP/USD trades in the 1.1070 price zone. The USD/CHF pair is down to 0.9760.

The USD/JPY pair remains lifeless at around 144.30, while commodity-linked currencies shed some ground against their American rival. AUD/USD changes hands at 0.6490 while USD/CAD is just below 1.3700.

The focus will be on China early Friday. The country will publish the September official NBS Manufacturing PMI and the non-manufacturing index, while Caixin will publish the Manufacturing PMI. The sector is foreseen holding in contraction territory, while services output is expected to have contracted in the month. Worse-than-anticipated numbers may spur risk aversion and weigh on the pair.

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