- European indices erased early losses and finished today's session higher, with DAX rising over 1% supported by upbeat results from Deutsche Bank and Mercedes-Benz. Tomorrow traders will focus on the ECB monetary policy decision, with officials expected to raise interest rates by 75 bps.
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Despite a muted open of the US session, major benchmarks managed to erase some losses after BoC surprised the markets with a smaller than expected interest rate hike of 50 bp. Investors now see a greater chance that the FED could do the same in December.
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Also dovish comments from Governor Macklem brought some relief for market bulls. Macklem sees early promising signs that underlying inflation is coming down and the next time the bank raises rates, it could be a larger-than-usual hike, or it could be a normal-sized hike.
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Nevertheless, the upward move is capped by the tech sector, which took a hit following weak quarterly results from Alphabet and Microsoft. At the moment Dow is up 0.3%, while S&P 500 and Nasdaq dropped 0.3% and 1.4%, respectively.
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Also fresh remarks from US Secretary of State Blinken worsened moods in the evening. In his opinion China has decided to increase pressure on Taiwan, including holding out the possibility of using force.
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Oil prices rose over 2.5% amid a weaker dollar, even despite the fact that US crude stocks rose by about 2.588 million barrels, well above analysts’ estimates of 1.029 million barrels, according to a fresh EIA report.
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Gold and silver also benefited from upbeat sentiment and jumped over 1.0%, while US 10-year Treasury yield eased further to 4.0%.
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The dollar index fell to a five-week low below the 110 mark, as investors turned towards risky assets. This dollar's weakness was seen across the board, with some of the most pronounced selling activity against currencies such as the AUD and NZD, while EURUSD broke above the parity level. The USDCAD pair strengthened sharply following the BoC decision, however upward momentum faded away late rin the session and the pair erased most of today's gains. The greenback also came under heavy selling pressure against the Chinese yuan amid reports of government intervention in currency markets.
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Major cryptocurrencies also extended yesterday's upward move. Bitcoin tested resistance at $21,000, while Ethereum bounced off the $1590 level despite the poor performance of the highly correlated US tech sector.
USDCHF pair pulled back from recent highs around 1.0155 and fell below parity level yesterday. Strong downward pressure prevails today and the pair is testing local resistance at 0.9870, which is marked with previous price reactions. Should break lower occur, downward correction may deepen towards next support at 0.9740, where lows from September 2022 are located. Source: xStation5
