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Sterling climbs after tax plan reversal; dollar also weaker against yen, euro

 

 

“I never dreamed about success, I worked for it.” — Estee Lauder

 

 

 HEADLINES

 

  • Sterling climbs after tax plan reversal; dollar also weaker against yen, euro
  • Gold rallies as dollar, yields retreat; silver soars over 8%
  • Oil jumps about $4 as OPEC+ weighs biggest output cut since 2020
  • Wall Street rallied to enter final quarter
  • 10-year and 2-year Treasury yields fall as traders begin new quarter
  • USD/CAD to advance nicely towards 1.4097 – Credit Suisse
  • EURJPY Near Term: Upside favored

 

 

Sterling climbs after tax plan reversal; dollar also weaker against yen, euro

 

Sterling jumped against the dollar on Monday after Britain reversed a plan to cut the highest rate of income tax, and the dollar was also down against the yen and euro.

The pound rose against the dollar after media reports of the u-turn to its highest level since Sept. 22, the day before British Finance Minister Kwasi Kwarteng sent markets tumbling with a new "growth plan" to cut taxes and regulation, funded by vast government borrowing.

Sterling was last up 1.5% at $1.1331.

 

 

 

COMMODITIES

 

Gold rallies as dollar, yields retreat; silver soars over 8%

 

Gold prices jumped more than 2% on Monday boosted by a dip in the U.S. dollar and bond yields, as recent lows enticed investors and also sparked a rally in silver in potentially its best day since late-2008.

Spot gold climbed 2.2% to $1,696.39 per ounce, as of 1:37 p.m. EDT (1737 GMT), which could be its biggest daily rise since March 8. U.S. gold futures rose 2% to $1,705.40.

Silver surged 8.5% to $20.62 per ounce, its highest since mid-August.

 

 

 

ENERGY

 

Oil jumps about $4 as OPEC+ weighs biggest output cut since 2020

 

Oil prices jumped nearly $4 a barrel on Monday as OPEC+ considered reducing output by more than 1 million barrels per day (bpd) to buttress prices with what would be its biggest cut since the start of the COVID-19 pandemic.

Brent crude futures for December delivery rose $3.72 to $88.86 a barrel, a 4.4% gain. U.S. West Texas Intermediate crude rose $4.14, or 5.2%, to $83.63 a barrel.

Oil prices have declined for four straight months since June, as COVID-19 lockdowns in top energy consumer China hurt demand while rising interest rates and a surging U.S. dollar weighed on global financial markets.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, is considering an output cut of more than 1 million bpd ahead of Wednesday's meeting

 

 

 

STOCKS

 

Wall Street rallied to enter final quarter

 

Wall Street's three major indexes rallied over 2.5% on Monday to start the final quarter of a tumultuous year in which investors fretted about aggressive interest rate hikes amid historically hot inflation and fears of slowing economic growth.

All 11 major S&P 500 (.SPX) sectors are in positive territory, with energy (.SPNY) on track for its best day in more than three months.

Oil majors Exxon Mobil Corp (XOM.N) and Chevron Corp rose more than 5%, tracking a jump in crude prices as sources said the Organization of the Petroleum Exporting Countries and its allies are considering their biggest output cut since the start of the COVID-19 pandemic.

Megacap growth and technology companies such as Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) each rose about 3.5%, while banks <.SPXBK> advanced 3.2%.

 

10-year and 2-year Treasury yields fall as traders begin new quarter

 

The yields on the 10-year and 2-year Treasurys fell on Monday as markets began a new quarter and investors digested manufacturing PMI data.

The benchmark 10-year Treasury was down 14 basis points at 3.659%. The yield on the policy-sensitive 2-year Treasury was at 4.118%, down by about 9 basis points.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

 

 

 

ANALYSIS

 

USD/CAD to advance nicely towards 1.4097 – Credit Suisse 

 

“Whilst a minor bearish divergence in daily RSI warns of a potentially lengthier correction, the broader uptrend remains strong and with our bullish USD and bearish Brent Crude Oil views in mind, we continue to look for an eventual resumption of the recent upside.” 

“Resistance is seen at the highs from last week at 1.3832/38, which we look to be broken to reassert strength and trigger a move to 1.4097 – the 78.6% retracement of the 2020/21 downtrend.” 

“We look for support at the recent price lows at 1.3603/01 and then at the 13-day moving average at 1.3560 to try to hold any sharper move lower to prevent a lengthier downside correction.”

 

 

 

CHART

 

EURJPY Near Term: Upside favored

 

Technical View: Long position above 140.88. Target 143.23. Conversely, break below 140.88, to open 140.1.

Comments: The pair remains supported. Further advance favored.

 

 

Source: Trading Central 

 

 

 

CALENDAR

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

 

 

SOURCES

 

https://www.reuters.com/markets/europe/antipodean-currencies-advance-ahead-rate-decisions-dollar-edges-lower-2022-10-03/
https://www.reuters.com/article/global-precious/precious-gold-rallies-as-dollar-yields-retreat-silver-soars-over-8-idUSL4N3142FS
https://www.reuters.com/business/energy/oil-jumps-more-than-3-opec-mulls-cuts-up-1-mln-bpd-2022-10-02/
https://www.reuters.com/markets/europe/nasdaq-futures-hobbled-by-tesla-weakness-2022-10-03/
https://www.cnbc.com/2022/10/03/10-year-and-2-year-treasury-yields-fall-as-traders-await-pmi-data.html
https://www.fxstreet.com/news/usd-cad-to-advance-nicely-towards-14097-credit-suisse-202210031443
 

 

 

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