The BOE came in and said they would be buying bonds to stem the selling.They plan a series of bond buying operations through October 14 and announced that the QT program won’t begin until October 31 (fingers crossed). The markets are now implying a rate of 3.79% at their November 3 meeting. That represents a 62% chance of a 125 BP hike and a 38.2% of 150 BP hike.
Needless to say with the government proposing fiscal stimulus and the central bank promoting austerity measures with some bond intervention, things are in disarray and all over the place. Nevertheless, it worked at least today as we saw yields move lower, stocks move higher, the dollar move lower.
Looking at the US debt market, the .
- 2 year yield is at 4.120% that’s down 18.8 basis points
- 5 year yield is at 3.944%, down 27 basis points
- 10 year yield 3.729%, -23.4 basis points
- 30 year yield 3.685%, -14.2 basis points
In the European debt markets:
- German 10 year fell -12 basis points
- UK 10 year fell -46 basis points
- France’s 10 year fell -12 basis points
- Italy’s tenure fell -17 basis point
In the US stock market all the major indices were sharply higher:
- Dow industrial average rose 1.88%
- S&P index rose 1.9%
- NASDAQ index rose 2.05% gain
- Russell 2000 of small-cap stocks was the big winner with a 3.17% rise
There was relief from the “dollar is king” trend as well. In fact looking at the strongest to the weakest of the major currencies, the dollar was not the king but the weakest of the major currencies. The flow of funds were heading into the safety currency – the CHF – and one of the most beaten down, the NZD.
- GBPUSD moved higher and was able to extend back above its falling 100 hour MA at 1.08345 The price also moved above the swing highs from yesterday and earlier today at 1.0837. With the 100 hour MA and the swing highs near the same level entering into the new day, the level will be a short term bias defining level going forward.
- EURUSD moved back above the 100 hour moving average at 0.9667 and also a key swing area going back to June/October of 2002 between 0.9662 to 0.9708. See the video below outlining the level and the technicals in play. The price moved higher from the London exit levels and is closing above the 0.9708 level increasing the bullish bias.
- USDJPY moved back away from the 145.00 level and moved down to test the 100 hour moving average currently at 143.906. In the new day the 100 and 200 hour MA below at 143.694 will be support targets that if broken would increase the bearish bias.
- USDCAD extended below its 100 hour MA for the first time since September 13 after trying to hold support earlier in the day. The 100 hour MA comes in at 1.3645. Stay below in the new day and the sellers are in control (trading at 1.3619 currently).
- USDCHF was the biggest mover today as it tumbled below its 100 hour MA at 0.9859 and then the dipped and traded above and below its 200 hour MA at 0.97619. There is a key swing area near the 200 hour MA between 0.9754 and 0.9764 as well. The current price is trading within that area at 0.9758 into the NY close. How the winds blow in the new day around that area will help to determine the next short term bias. Move below increases the bearish biasl. Stay above and there could be a rebound from the sharp move lower today.
- NZDUSD: The NZDUSD moved back above its 100 hour MA at 0.5707 after trading earlier in the day to the lowest level since March 19, 2020 (which was the day, the NZDUSD bottomed in the pandemic sell off). The low in 2020 reached 0.54668. The low today 0.55638. Close but no new multi decade low for the NZDUSD. The price is trading at 0.5729 going into the NY session close which is above the 100 hour MA at 0.5707. Close support in the new trading day will be the 100 hour MA level. If the buyers are to continue to hold short term control, staying above that level will be needed.
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Good fortune with your trading.