English
29
Sep

German CPI, U.S. Jobless Claims, GDP

calendar 29/09/2022 - 08:11 UTC

The U.S. dollar strongly retraced lower against most other major currencies with the USDX index down by one per cent, though given the significant appreciation of the greenback at the beginning of the week, the currency is still up on a weekly basis. By Thursday morning however the greenback was trading again stronger against most other majors and emerging market currencies. The USD/TRY pair meanwhile traded once again higher, reaching yet another all-time record on Wednesday without breaking its upwards trend even at the time when the dollar weakened.

After stock market indices seemed to turn around on Wednesday, by Thursday night yet another sell-off seemed to set in. Especially European markets like the Europe 50 and Germany 40 were under pressure with both indices trading by Thursday morning below the closing levels even from Tuesday as both were down by around 2.5%.

In the U.S. on Thursday as usual the weekly new jobless claims will be published as well as possibly revised GDP statistics for the second quarter. Canada also publishes its Q2 GDP data. Later during the Asian-Pacific trading session a lot of important fundamentals will be released in Japan, including unemployment rate, industrial production and retail trade. A bit later Chinese PMI data will be published.

EUR/USD

The euro traded overall stronger against many other currencies on Wednesday including the dollar and even the pound sterling, which was supported by the announcement by the Bank of England of at least a limited QE action.

After reaching a peak in the evening hours on Wednesday around 0.975, the currency pair gradually retraced lower with a possible support level forming by Thursday morning only around the 0.965-level.

On Thursday morning economic sentiment and consumer/industrial confidence index data will be published by the European Commission followed later on by the preliminary consumer price index (CPI) data release from Germany for September.

EUR/USD

GBP/USD

The pound sterling strongly recovered against the greenback following the announcement by the Bank of England (BoE) that it would again engage in operation that could be seen as quantitative easing with the central bank announcing that for the next two weeks it would purchase long-term UK government bonds. Market participants were already expecting at least some action from the BoE which until recently was seen to be on a path towards quantitative tightening as the GBP/USD pair dropped at a rapid pace over the previous days and especially on Monday night with a key concern among investors apparently the most likely unfunded tax cuts announced by the government in the UK.

On Thursday M4 money supply data for August will be released in the UK and then on Friday potentially revised GDP statistics for the second quarter can be expected.

GBP/USD

WTI Oil

Oil prices ended the series of losses after WTI crude oil reached a new low since early January this week and strongly rebounded on Wednesday, making it the second day in a row with higher oil prices in the markets and the strongest move of that type in almost three weeks.

On one hand equity markets also rebounded higher possibly following the positive sentiment after the QE announcement by the BoE. Also oil prices moved steadily higher even after the Energy Information Administration (EIA) released its weekly petroleum status report according to which crude oil stockpiles have gone up by just 0.2 million barrels over the past reporting week, a significantly smaller figure compared to the data published by the American Petroleum Institute (API) on Tuesday.

The path forward for oil is very unclear at this moment as on one hand the world is seen heading into a recession and on the other the fear of market turmoil has policy and monetary policy makers already possibly preparing bailout plans. The implementation of COVID restrictions in China could also be a key factor. By now the PRC is one of the very few countries maintaining strict policies, while other nations which previously had a very hard handed approach in order to fight the pandemic like New Zealand and Canada continue to lift restrictions. Should China lift its restrictions, that could further boost the country's demand for energy commodities.

WTI Oil

US 500

Major stock market indices like the US Tech 100 and the US 500 closed with a strong upside on Wednesday, thus recovering from the dip in the morning hours which send the US 500 index below the lows from June.

Stocks in the real estate sector (US Real Estate ETF +2.07%) performed overall well during the session and recovered all the losses from the previous day. Lower benchmark yields could have played a role as the 10-year U.S. T-Note benchmark fell at times below the 3.8%-level after briefly reaching as high up as 4%.

Netflix (+9.47%) was the second-best performing stock in both the S&P 500 and NASDAQ Composite indices on Wednesday, being outshined in terms of performance only by Biogen as the stock from the biotech company surged higher by almost 40% following the release of promising data about its Alzheimer's drug. Netflix moved higher possibly over the report that its series "Monster: The Jeffrey Dahmer Story" had in terms of hours watched the best weekly performance of any show since July and also that an analyst from Atlantic Equities upgraded his price target for the company with the expectations that the soon to be introduced ad-supported subscription could have material impact.

On Thursday Nike and Micron are set to publish their respective quarterly results.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.