Investors Find Themselves in a Seller’s Market, October Surprise?
$DIA, $DXY, $GLD, $USO, $GBPUSD
Tuesday could be unofficially declared as the seller’s market across the financial arena with major equities and currencies all encountering heavy selling momentum during trading on Tuesday.
The only asset class that to benefit was the Buck, which has spiked to 7-month highs, while major equities dove into the Red and the GBP/USD falling to levels not seen in 30 odd years.
Gold entered the month of October appearing depressed with the precious Yellow metal falling to a 4-month low below Key support at 1245 after unexpectedly crashing through the psych mark at 1300 at the beginning of the month.
Selling momentum has intensified in recent days across metal trading on speculations that the case for a US interest rise before the end of Y 2016 has strengthened.
The US Dollar (.DXY) Index is currently trading at its highest marks in 7 months which is subsequently putting further pressure on safe-haven assets and weighing on equities and global currencies.
Equities were painted Red Tuesday as Crude Oil price volatility and anxiety ahead of Wednesday’s Fed minutes repelled investors from riskier assets.
Asian stocks opened Wednesday shaky on risk aversion and the notion that Bearish contagion could infect EU markets later during the day.
Wall Street quickly relinquished gains following the disappointing corporate earnings with further losses expected as slumping Crude Oil prices and mounting rate hike hopes sour risk appetite.
US Dollar Bulls have been dominant in October with the Buck suppressing other currencies as expectations mount over the Fed raising US interest rates in December.
Lasts week’s mixed jobs reports have been accepted by the markets as part of the attributes which provide a compelling reason for a US interest rate increase before year-end.
Again, the US Dollar Index currently trades around 7-month highs and could edge higher as optimism rises over the Fed taking action.
Investors will pay very close attention to the latest FOMC meeting minutes Wednesday afternoon with participants around the globe seeking direction on the future pace of US interest rate rises.
The pending Fed minutes could be a market shaker considering the growing divergence of opinions for interest rate hikes. Much focus may be placed on the 3 dissents with investors searching for clues on the depth of the Hawkish Camp and where the Fed sentiment stands.
If the latest minutes have a Hawkish feel, then the US Dollar Index which is already technical Bullish could edge higher with prices trading towards 98.00. From a technical standpoint, previous resistance at 97.50 could transform into a dynamic support which encourages a further incline towards 98.00