It was a relatively calm session yesterday compared to the day before where we saw GOLD and GBP plunge while oil rose to $50 per barrel for the first time since late June. Despite the calm, GBP still posted a fresh 31-year low at 1.2683 before rebounding. Today’s calendar is even less busy with only ECB due to release the minutes from the meeting in September. The ADP payroll disappointed, dropping to 154k, its lowest gain since February 2014. With the odds of a December rate hike priced in at about 55%, Friday’s NFP numbers will be especially important.
Currencies: The USDJPY surged higher to 103.61 following the rally in equities and overall USD strength. To many investors the USDJPY has bottomed at 102.50 and if tomorrow’s NFP numbers support it, 105 cannot be excluded. GBPUSD tumbled to new 31 year lows before rebounding to as high as 1.2770. EURUSD has been range bound around the 1.12-level and likely will not trend into any directions before tomorrow’s NFP release.
Stocks: Equities in Asia are on the rise today, on the back of better economic data from the US (ISM non-manufacturing) which supported the view for a rate hike by the FED in December. Last night, US stocks closed strongly in the green also with the Dow and SP500 gaining 0.62% and 0.5% respectively. The rise in stocks, shows that the possibility of a rate hike does not seem to scare them off, as stock markets usually rise in low interest rate economic environments. The reason for that is that investors like us, are more likely to invest in stocks to get a return on our investment, rather than keeping money in the bank, especially when interest rates are at all-time lows like now and return on the deposits will be almost nonexistent.
Oil and Gold: Gold extended its losses after the $46 slide on Monday, reaching as low as $1262. That was a new 3,5-month low for gold who lost almost 4% of its value in the last 3 trading sessions. Gold has been hit by a stronger USD, the prospects of a rate hike in December, but also rumors that ECB will end its asset purchasing program soon. On the contrary OIL prices have risen 2% overnight after upbeat inventory data that showed supplies falling for the 5th straight week. Oil prices have enjoyed a steady uptrend since late September after OPEC members reached a preliminary understanding to cut production to reduce a supply glut that has depressed prices for more than 2 years.