September 16: Overnight Market Wrap

September 16: Overnight Market Wrap

Key Points:

Dollar retraces early losses. DXY closes unchanged on the day

Gold fails at key resistance at 1970/75 before falling back

US Empire September manufacturing at 17.0 vs 6.8 expected

Another mixed day for markets that has seen a continued rebound in the Nasdaq whilst other indices lagged but closed in positive territory. Stocks had been higher on the day but after Apple’s new product event closed without any news on the iPhone 12 some risk aversion appeared and the shares slipped 3% dragging down the sector but still managing a healthy 1.21% gain for the index. The USD had a day of weakness initially starting during the Asian session and into the NY session where the retracement began. AUD had squeezed to a high of 0.7343 from 0.7263 after the RBA minutes signalled no alarm bells and no reference to lower rates at this stage. Likewise EUR and GBP pushed higher reaching highs of 1.1900 and 1.2928 respectively before falling back 50 pips each into the close. USD/JPY also continued lower touching 105.30 and despite a squeeze to $1972 Gold couldn’t hold its gains and fell back to close at $1953. The DXY once again closing at 93.10 so unchanged on the day as we head towards the FOMC. Politically there was a tentative tariff handshake between the US and Canada with the US backing down on aluminium tariffs and Canada retracting any retaliatory action and a spat between the US and WTO as the latter ruled that the formers tariffs against China since 2018 violated trade rules. Earlier in the day we had a look at UK employment data which was better overall yet hardly stirred the markets. However, with the UK Chancellor insisting the furlough scheme will not be extended, particularly as it looks like new lockdown restrictions are about to hit, we could see catastrophic numbers going forward. Further UK data today by way of inflation followed by US retail sales ahead of the main event from the Fed. Expect Asia to tread water today awaiting bigger risk events later in the day.

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