General Market Comment
US indices closed lower on Wednesday, pressured by shares in the Consumer Durables & Apparel (-1.25%), Retailing (-1.01%) and Materials (-0.83%) sectors. On the economic data front, mortgage applications fell by 7.1% in week ended October 12th from a decline of 1.7% in the previous week. Housing starts diminished by 5.3% MoM to 1.201M units in September (estimated 1.21M) from 1.268M units in the prior month. In other news, building permits slightly lowered to 1.241M in September (forecasted 1.275M) vs. 1.249M a month earlier. Finally, The Federal Reserve released the minutes of the FOMC meeting that concluded on September 26th: Some participants are worried that the growth of leveraged loans in the nonbank sector may pose a risk to financial stability while other participants are concerned with the historical pattern of the inverted yield curve which has often preceded recessions in the U.S.. In order to keep inflation below the objective of 2%, participants agreed that it might be necessary to temporarily raise the federal funds rate “above their assessments of its longer-run level”. The S&P 500 (2,809.21) remains at levels below both its 20d moving average (2,870.25 – negative slope) and 50d moving average (2,872.90 – negative slope).
European markets are expected to start on a negative note.
Foreign Exchange
The US dollar was bullish against all of its major pairs on Wednesday. On the economic data front, mortgage applications fell by 7.1% in week ended October 12th from a decline of 1.7% in the previous week. Housing starts diminished by 5.3% MoM to 1.201M units in September (estimated 1.21M) from 1.268M units in the prior month. In other news, building permits slightly lowered to 1.241M in September (forecasted 1.275M) vs. 1.249M a month earlier. Finally, The Federal Reserve released the minutes of the FOMC meeting that concluded on September 26th: Some participants are worried that the growth of leveraged loans in the nonbank sector may pose a risk to financial stability while other participants are concerned with the historical pattern of the inverted yield curve which has often preceded recessions in the U.S.. In order to keep inflation below the objective of 2%, participants agreed that it might be necessary to temporarily raise the federal funds rate “above their assessments of its longer-run level”.
The Euro was bearish against most of its major pairs with the exception of the CAD. Euro-zone CPI growth was confirmed at 2.1% YoY in September in final estimation vs +2% in August. Separately, EU27 new car registrations plunged 23.5% in September after a 31.2% jump a month earlier. UK CPI growth was 0.1% in September vs +0.7% in August. It was anticipated to be +0.3%.
The Australian dollar was bearish against most of its major pairs with the exception of the CAD and the EUR.
Commodities
After the close of Wall Street, WTI Crude Future (NOV 18) was down $1.9 to $70.06. The contract was below its 20D MA (@ $72.82) and above its 50D MA (@ $69.71). The US Department of Energy reported that, for the week ended 12 October, crude oil inventories increased 6490k barrels compared to the previous week.
Gold was down $2.4 to $1222.5. The precious metal was above its 20D MA (@ $1203) and above its 50D MA (@ $1200).
Copper Future (DEC 18) on Comex was about flat to 277.75c/lb. The contract was below its 20D MA (@ 279.72c) and above its 50D MA (@ 273.06c). In Europe, the London Metal Exchange reported its copper inventories decreased 3275 tons to 160900 tons.