The focus remained on the Middle East and the Israel-Hamas war. Attempts to contain the hostilities and prevent the conflict from escalating throughout the region provided some support for risk appetite to start the week. The VIX slipped to 17.45 after surging to 19.45 to end last week. Fed’s Harker says Fed should not be considering more rate increases. Expectations for more good earnings results also boosted Wall Street, as did some softening in the US Dollar, even as Treasury yields climbed.
New Zealand inflation slowed more than economists expected in Q3, adding to signs that the RBNZ has come to the end of its tightening cycle. The annual inflation rate fell to 5.6%, a 2-year low, from 6% in the second quarter, Statistics New Zealand said Tuesday in Wellington.
Reduced demand for haven assets – Oil & Treasuries fall as efforts to ease conflict intensify with Biden’s visit in Israel. President Joe Biden will travel to Israel tomorrow, in a visit designed to signal US solidarity with its closest Middle East ally and help prevent the conflict from engulfing the region. Final Hours for Country Garden as it is on the brink of a possible offshore default. This could highlight the depth of the confidence crisis gripping the sector. USDIndex dipped to 105.95 and GBPUSD failed to cross 1.2200. Morgan Stanley’s Michael Wilson: A rally in the USA500 in the fourth quarter of 2023 “is more likely than not”. Stocks: Boosted by Fed Harker dovish comments, the AI euphoria and expectations that the FED will not raise interest rates further and speculation of a good earnings season. USOIL reversed to $85 and Gold dropped back to $1912 on the back of heightened risk aversion against the background of escalating tensions in the Middle East. BTCUSD settled at 28200. A brief 10% surge in Bitcoin yesterday gave traders a glimpse into the possible impact of a looming the US SEC decision on whether to allow exchange-traded funds investing directly in the token. Today: Earnings reports from Goldman Sachs & Bank of America. US Retail Sales and Canadian CPI.Interesting Mover: GBPAUD (-0.56%) broke 1.9150, which coincides with breakout of ascending triangleand May-June Resistance. This could be a possible Head and Shoulder formation.
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Andria Pichidi
Market Analyst
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