16 September 2020
- US MBA mortgage applications w.e. 11 September -2.5% vs +2.9% prior
- Thought for the day - Don't over leverage
- Pay cuts for long term remote working ahead?
- HKMA sells $1.55bln into market
- UK N.Ireland Brandon Lewis on Brexit
- EURUSD holds ascending trend line ahead of FOMC
- Oil makes fresh highs on the day, but sellers above
- Big week for central bank meetings
- EU Commission head: not the time to withdraw fiscal support
- China and UAE see some positive results from their trials
- Mostly up at the off for European cash open
- Trade ideas thread - European session 16 September 2020
- Why I'm buying gold now, before the FOMC
- Q2 New Zealand GDP preview
- Golden triangle set to break on FOMC later today
- NZD strongest and EUR weakest agains the USD
- Oil complex higher on inventory build and hurricane Sally
- A quarter of US Gulf of Mexico output offline as hurricane advances
Other markets
- FTSE -0.20%
- Euro Stoxx -0.06%
- Dax -0.03%
- CAC -0.02%
- Gold +0.49%
- US oil +2.12%
The session started with a positive risk sentiment that saw the USD weaker across the major currencies. That accelerated around mid-morning and risk appetite was positive and US futures were positive on the session alongside European cash markets. Some of the recent selling pressure in US stocks have been mitigated now. I guess you 'never bet against the Fed'. All eyes will be on the Fed later of course.
UK CPI data came out firmer than expected at 0.2% vs 0.0% expected but with COVID-19 issues impacting consumer behaviour and a drop from 1%(which was July's reading) there is room for the BoE to cut rates this week. With potential unemployment ahead for the UK the return to 2.0% inflation is going to be a long old haul. However, subdued inflation is a problem most of the world is/has been struggling with for some time. Recreation and retail helped lift inflation higher more than restaurants and airlines helped push it lower. The bearish prospects ahead for the UK leave the possibility open for the BoE to increase asset purchases at tomorrow's meeting. They may also signal a cut in interest rates coming in future meetings. Risk for the GBP is firmly tilted to the downside and it is reasonable to expect sellers. It is a big week for central banks meeting now with the meetings immediately ahead of us. Make sure you don't miss these as three of the largest four banks are set to meet in the next 24+ hours. Here is my quick little rundown ahead.
Oil prices did well in the session and they climbed overnight as Hurricane Sally causes shut downs in the gulf of Mexico. Around 500Kbpd went off line according to the US interior Gov't. Furthermore, a surprise inventory draw combined with positive risk sentiment pushed the positive feeling on. However, the fact remains with both the IEA and OPEC revising global demand down pressures for oil remain and it is reasonable to expect medium term sellers on higher prices in the oil complex.
Aside from the above there was some USD selling. Positive risk sentiment and possibly expectations of a bearish FOMC could have been driving the move. However, I am open to the accusation of talking my own book here as I entered gold long ahead of the FOMC. Check out my post here. Of course readers will be updated with how I manage this trade tomorrow as I am scheduled to return for Thursday and Friday's European morning session.
That's all from me today and thanks once again for the contributions in the thread's comments sections. Good to see some folks engaging very well there from far and wide. I have flagged the issue regarding the inability to leave comments on some posts with support and they should be getting to that. Apologies for the inconvenience.
