GBP/JPY hits a 5-year high on UK rate hike bets

“In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.” – Low Simpson

 

 

 

HEADLINES

 

 

 

• Sterling hits one-month high vs dollar as UK rate hike anticipation builds
• Dollar dips as bonds stabilize, while sterling, NZ dollar gain
• Gold Up Thanks to Declining Dollar, U.S. Bond Yields
• Oil prices pull back as U.S. factory data intensifies demand concerns
• World stocks hit 1-month high as traders look to earnings boost
• As oil prices skyrocket, fund managers hop on board for the ride

 

 

FOREX

 

 

Sterling hits one-month high vs dollar as UK rate hike anticipation builds

 

Sterling hit a four-week high against the dollar on Tuesday as expectations mount the Bank of England (BoE) will hike interest rates, while the greenback dipped as the rapid rise in U.S. Treasury yields in recent days stabilised.

BoE Governor Andrew Bailey on Sunday sent perhaps the clearest signal yet of a pending hike, saying the BoE will “have to act” to deal with rising energy costs in Britain which threaten a surge in consumer prices. A November hike could make the BoE the first major central bank to increase rates since the beginning of the COVID-19 pandemic early last year.

 

Dollar dips as bonds stabilize, while sterling, NZ dollar gain

 

The dollar dipped on Tuesday as the rapid rise in U.S. Treasury yields paused and other currencies, including sterling, were boosted by expectations of sooner-than-previously expected interest rate hikes.

The greenback reached a one-year high against a basket of other currencies last week as Treasury yields surged and as investors bet the Federal Reserve may need to increase rates to address stubbornly high inflation.

 

 

COMMODITIES

 

 

Gold Up Thanks to Declining Dollar, U.S. Bond Yields

 

Gold was up on Tuesday morning in Asia, thanks to declines in both the dollar and U.S. bond yields that provided some support to the yellow metal. The dollar, which normally moves inversely to gold, was down on Monday and remained near the lower part of its recent range. Benchmark U.S. benchmark 10-year Treasury yields were also on a downward trend.

 

Oil prices pull back as U.S. factory data intensifies demand concerns

 

Oil prices pulled back after touching multi-year highs on Monday, trading mixed as U.S. industrial output for September fell, tempering early enthusiasm about demand.

Production at U.S. factories fell by the most in seven months in September as an ongoing global shortage of semiconductors depressed motor vehicle output, further evidence that supply constraints were hampering economic growth.

 

 

STOCKS

 

 

World stocks hit 1-month high as traders look to earnings boost

 

World stocks climbed to a one-month high on Tuesday as a rally in technology shares and prospects of more forecast-beating corporate earnings helped counter concerns about elevated inflationary pressures.

 

 

ANALYSIS

 

 

As oil prices skyrocket, fund managers hop on board for the ride

 

A surge in oil prices is drawing fund managers back into shares of oil and gas companies, even as some remain unsure that the price gains will stick.

The rally has caught many fund managers by surprise, and some are scrambling to catch up, betting that commodity prices will remain high in the face of burgeoning demand. Allocations to energy stocks among fund managers increased by 23 percentage points from last month to the largest overweight since March 2012, a BofA Global Research survey showed on Tuesday.

 

 

CHART

 

 

British pound / Japanese yen – Weekly Candlesticks

Source: GKFX Prime Metatrader 4

GBP/JPY has broken out above 156.5 to its highest since June 2016. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

https://www.fxstreet.com/economic-calendar
https://www.reuters.com/article/britain-sterling/update-1-sterling-hits-one-month-high-vs-dollar-as-uk-rate-hike-anticipation-builds-idUSL1N2RF0PA
https://www.investing.com/news/economy/dollar-softens-amid-bets-other-central-banks-to-outpace-fed-tightening-2647424
https://www.investing.com/news/commodities-news/gold-up-thanks-to-declining-dollar-us-bond-yields-2647467
https://www.investing.com/news/commodities-news/oil-prices-climb-to-highest-in-years-as-covid-recovery-power-generators-stoke-demand-2646194
https://www.investing.com/news/economic-indicators/analysisas-oil-prices-skyrocket-fund-managers-hop-on-board-for-the-ride-2648407