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Nasdaq closes higher on Wednesday as stocks stabilize following massive sell-off

 

 

“Always look for the fool in the deal. If you don’t find one, it’s you.” — Mark Cuban

 

 

 HEADLINES

  • Sterling gains against the dollar as UK inflation falls
  • Gold edges up on softer dollar, rate hike bets cap rise
  • U.S. crude, distillate stocks rise in most recent week – EIA
  • Nasdaq closes higher on Wednesday as stocks stabilize following massive sell-off
  • Short-term bond yields continue climbing, 2-year Treasury tops 3.8%
  • GBP/USD: Renewed downside pressure ahead for the pound – Wells Fargo
  • AUDUSD Near Term: Downside favored

 

 

Sterling gains against the dollar as UK inflation falls

 

Sterling gained against the dollar on Wednesday as the greenback moving broadly lower and British inflation unexpectedly eased for the first time in a year.

The pound rose 0.5% to $1.1546, pulling away from its three-decade low of $1.14070 hit last week. Against the euro, it rose 0.2% to 86.59 pence.

The dollar fell after the Japanese yen rose on reports that the Bank of Japan conducted a rate check, in apparent preparation for currency intervention. Policymakers in Tokyo also stepped up warnings about recent sharp falls, thought most analysts doubted there would be any direct yen-buying move soon.

 

 

COMMODITIES

 

Gold edges up on softer dollar, rate hike bets cap rise

 

Gold edged up on Wednesday as the dollar slipped, but expectations for steep rate hikes from the U.S. Federal Reserve took some sheen of the precious metal and capped its gains.

Spot gold rose 0.1% to $1,702.90 per ounce by 11:57 a.m. ET (1557 GMT) after marking its biggest one-day percentage decline since July 14 on Tuesday, driven by the dollar’s rally following a surprise rise in U.S. inflation.

U.S. gold futures fell 0.2% to $1,713.30.

 

 

ENERGY

 

U.S. crude, distillate stocks rise in most recent week – EIA

 

U.S. crude stocks and distillate inventories rose more than expected in the most recent week, while fuel demand remained below last year's levels, the Energy Information Administration said on Wednesday.

Crude inventories (USOILC=ECI) rose by 2.4 million barrels in the week to Sept. 9 to 429.6 million barrels, compared with analysts' expectations in a Reuters poll for an 833,000-barrel rise. The gains were boosted by an 8.4-million-barrel release from the U.S. strategic reserves into commercial stocks; those releases are set to end in October, and supply is expected to tighten at that time.

Refinery crude runs (USOICR=ECI) rose by 93,000 barrels per day, boosting refinery utilization rates (USOIRU=ECI) by 0.6 percentage point to 91.5%.

 

 

STOCKS

 

Nasdaq closes higher on Wednesday as stocks stabilize following massive sell-off

 

The Nasdaq Composite grinded higher in choppy trading on Wednesday as investors tried to find their footing after the biggest one-day drop in more than two years.

The Nasdaq rose 0.74% to 11,719.68. The S&P 500 added 0.34% to close at 3,946.01. The Dow inched up 30.12 points, or 0.10%, to 31,135.09 after being down more than 200 points at session lows.

Moderna was one of the top performers in the Nasdaq, jumping more than 6%. Tesla rose 3.6%, and Apple tacked on 1%.

The modest gains followed a massive sell-off for stocks on Tuesday. The Dow sank more than 1,200 points, or nearly 4%, while the S&P 500 lost 4.3%. The Nasdaq Composite dropped 5.2%. It was the biggest one-day slide for all three averages since June 2020.

 

Short-term bond yields continue climbing, 2-year Treasury tops 3.8%

 

Short-term U.S. Treasury yields continued to climb higher on Wednesday as investors digested the previous session’s dramatic market route triggered by a hot inflation reading.

The yield on the 2-year Treasury, the part of the curve most sensitive to Fed policy, was trading roughly 2 basis points higher at around 11:00 a.m. ET to reach 3.771%. The 2-year yield climbed as high as 3.834% during the session, its highest level since 2007. Tuesday’s session saw it surge 17 points.

While short-term yields appear to be driven by Fed hike expectations, long-term yields may struggle to move far past their highs of the year, said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research.

 

 

ANALYSIS

 

GBP/USD: Renewed downside pressure ahead for the pound – Wells Fargo 

 

“Our outlook for Bank of England rate hikes contrasts with the more aggressive path of tightening expected by the Federal Reserve. It also falls well short of rate hikes currently priced into markets, which anticipate a peak in the Bank of England's policy rate near 4.50% around the middle of 2023. As the Bank of England lags the Fed and falls short of market expectations, we expect the GBP/USD exchange rate to come under renewed pressure, falling to $1.1200 or below by late 2022/early 2023.”

“As the U.S. economy also falls into recession and the Fed reaches the end of its tightening cycle we expect some rebound in the pound, though with the U.K. facing its own economic challenges that rebound should be modest, We forecast a GBP/USD exchange rate of $1.1500 by the end of 2023.”

 

 

CHART

 

AUDUSD Near Term: Downside favored

 

Technical View: Short position below 0.6795. Target 0.67. Conversely, break above 0.6795, to open 0.6835.

Comments: The pair is expected to resume descend after correction.

 

 

Source: Trading Central 

 

 

CALENDAR

 

*Times in GMT

 

 

Source: FX Street Economic Calendar


 

SOURCES

 

https://www.reuters.com/markets/europe/sterling-gains-against-dollar-uk-inflation-falls-2022-09-14/
https://www.reuters.com/article/global-precious/precious-gold-dips-below-1700-oz-as-rate-hike-bets-cloud-outlook-idUSL4N30L2E7
https://www.reuters.com/markets/us/us-crude-distillate-stocks-rise-most-recent-week-eia-2022-09-14/
https://www.cnbc.com/2022/09/13/stock-market-futures-open-to-close-news.html
https://www.cnbc.com/2022/09/14/us-bonds-treasury-yields-in-focus-after-hot-inflation-reading.html
https://www.fxstreet.com/news/gbp-usd-renewed-downside-pressure-ahead-of-the-pound-wells-fargo-202209141742