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US Market Outlook 8 Oct 2018

Posted by Tim Sholl on 09-Oct-2018 00:18:02

Public holiday in US for Columbus Day and Canada for Thanksgiving Day so expect subdued trading.

Stock indices around the globe are on the back foot today after a weak close to last week in the US and today we have the Chinese market back from a week long public holiday and we have seen a sharp fall as investors catch up on the negative price action. European stockmarkets are also falling as Italian government taunt the EU about the austerity program developed over the past decade. We have seen higher borrowing costs and a lower EUR as a result. US stock indices closed last week with a negative technical picture and futures indicate a continued weakness this session.

FX markets continue to push the USD higher with the DXY up at 95.60 and testing the highs of 95.78 seen last Thursday. The JPY has seen some strength as investors turn defensive , and the GBP was strong due to positive signs of a Brexit deal being possible in next few weeks. The commodity currencies of AUD , CAD and NZD have weakened recently due to close ties with China.

Oil markets have seen prices rise  to 4 year highs around 76.90 on concerns of a supply deficit when US sanctions are placed on Iran and importantly when secondary sanctions are placed on any country dealing with Iran. However over the weekend it was revealed that the US may waive some of the secondary sanctions on other countries.

Rising bond yields in the US due to the strength of the economy and the reduction in Fed liquidity is dragging yields higher around the globe and causing some dramas in countries with weaker economies.

So in summary we have rising interest rates , a higher USD , and falling stock indices around the globe. This is a very negative combination for most economies.

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Daily Chart - US Dollar Index futures - DXc1 - Higher bond yields and strong economic data pushing investors towards the USD.

Topics: Trading, Market News, US Market Outlook