FTSE +24 points at 7396 DAX +84 points at 13060 CAC +31 points at 5332 IBEX 35 +72 points at 10085
The US core inflation advanced to 1.8% year-on-year in October after having steadied at 1.7% for five months. The headline inflation decelerated from 2.2% to 2.0% as expected. Meanwhile, advance retail sales slowed less than expected in the same month, from 1.6% to 0.2% month-on-month versus 0.0% predicted by analysts. Odds for December Federal Reserve (Fed) rate hike rose to 97% after the core inflation picked up.
The US stocks edged lower as the US tax reforms are now in jeopardy. Republicans’ decision to add the repeal of Obamacare’s individual mandate to their legislation could decrease the chances of approval in the Congress. The Dow Jones (-0.59%), the S&P 500 (-0.55%) and NASDAQ (-0.47%) traded down. The S&P500 hit the lower daily Bollinger band (2’555), the VIX index spiked to 13%, last seen three months ago during low summer volumes.
The USD/JPY rebounded past 113.00 in Tokyo after sliding to 112.47 on Wednesday. The pair could stabilize within 112.90/113.20 on improved US yields and better US dollar appetite. Nikkei (+1.43%) and Topix (+1.09%) recovered after five consecutive session losses.
European equity traders will likely inherit a positive market.
The Aussie trades on mixed sentiment. The AUD/USD extended losses to 0.7569 as Australian economy added only 3’700 jobs in October. Yet a closer look at the labour data revealed that the situation was not as bad as it seemed at the first sight. Full-time jobs rose by 24,300 and compensated for 20,700 part-time job losses. The unemployment improved to 5.4% compared with 5.5% printed a month earlier. The AUD/USD’s squeeze below 0.7580 (lower Bollinger band on daily chart) attracted buyers, as iron ore futures traded up by 1.30%. However, carry traders aren’t willing to play long-AUD with AU/US 2-year yield spread the its lowest level since beginning of 2001. As such, the 75 cents level is still a plausible mid-term target for macro players. Likewise, the AUD/JPY, a popular carry pair, slipped below its 200-day moving average (86.03) for the first time in five months.
Gold met resistance by the 50-day moving average ($1’288) and consolidated at the tight range of $1’275/1’280 in Asia.
The EUR/USD returned below its 100-day moving average (1.1794) after having advanced to 1.1860 on Wednesday. Stronger US dollar curbed the positive momentum, which is needed to attract EUR-longs into a low yielding currency. The EUR/USD could slide toward its 50-day moving average (1.1750). The EUR/GBP hit 0.9013 and could pause before taking a fresh direction.
The pound appetite remained limited above the 1.32 against the US dollar, after the UK wages data showed steady growth in September instead of deterioration predicted by analysts. Due today, October retail sales data may hint at improved activity. Encouraging read could give a quick push to the pound, yet traders are looking for top-selling opportunities at a period of rising political certainty. Offers are eyed at 1.3210/1.3240 (50-day moving average)
The death cross formation on hourly chart keeps WTI under the pressure of technical shorts. WTI crude sees support at $55/barrel. The key support to October – November rebound is eyed at $54.66 (major 38.2% retrace). Below this level, a short-term bearish reversal could shift bears’ target to $53.60 and $52.60 (major 50% and 61.8% retrace). Solid weekly resistance is eyed at $58.50 (50-week moving average).