September 18: Overnight Market Wrap

September 18: Overnight Market Wrap

Key Points:

US jobless claims continue to disappoint at 860K

USD weaker across the board, DXY back to 92.85 support

US stocks all close in the red with Nasdaq down 1.27%

The US dollar started the day in the same vein it closed out the previous by strengthening across most pairs post FOMC as risk aversion continued throughout the Asian session. However, on the European open things changed and a reversal was in place that saw the USD move lower and close lower on the day in a controlled manor without too much volatility. The DXY fell back to 92.85 support into the close. The exception was GBP that managed a full round trip from 1.2980 to 1.2865 and back as markets digested BoE comments of discussing the benefits of negative rates (sell off) to EU official comments that a Brexit deal could still be struck (rally back higher). The NZD was the best performer on the day beating the AUD which saw an impressive jobs report. The headline number was +111K from -50K expected and saw the pair jump from 0.7275 to 0.7310, however the breakdown showed a rise in self-employed owners distorting the numbers and AUD then slipped back to 0.7255 with the USD strength during the Asian session. This was then reversed and we closed back at 0.7310. The correlation between the greenback and US stocks had broken over the course of the day as US indices continues to slip with all three in the red, Nasdaq as usual the biggest mover down 1.27%. Elsewhere WTI regained $41 and Gold settled at $1943 down from the previous day. The weekly jobless claims showed a slightly weaker print at 860K from 850K expected but had little impact on price action. Political commentary from Chinese press has indicated that it will not tolerate the US manipulation of Taiwan and threatened ‘non-peaceful means’ if necessary to resolve the issue. Markets have largely ignored the to and fro between the US and China awaiting the outcome of the US election to see which way things play out. Sadly, Covid cases are making the headlines again across Europe and in some US states. Whilst the case count is jumping the death rate remains low for now and once again markets aren’t paying too much attention. The UK overnight talking of a second major lockdown being discussed at government level. The data calendar today is dominated by UK retail sales for August and US Michigan Consumer Sentiment to close out the week.

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