Sterling took a big hit on the session as traders pullback on the potential fuel crisis and rising U.S. yields. Will traders continue to push the pound lower or will they fade the move in the upcoming Asia session?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a falling wedge on USD/CAD, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 15248.56 -2.09% FTSE: 7028.10 -0.50% S&P 500: 4352.63 -2.04% NASDAQ: 14546.68 -2.83% |
US 10-YR: 1.548% +0.064 Bund 10-YR: -0.193% +0.007 UK 10-YR: 0.996% -0.003 JPN 10-YR: 0.07% +0.018 |
Oil: 74.80 -0.86% Gold: 1,733.00 -1.08% Bitcoin: $41,819 -2.86% Ether: $2,874.95 -4.08% |
Fresh Market Headlines & Economic Data:
Nasdaq tanks 2.8% in worst day since March as yield spike hits tech stocks, Dow drops 570 points
Digital Dollar needs legislative support, Fed Chair says
Oil hits three-year high as natural-gas crunch spills into crude market
Gold slides over 1% as U.S. yields jump on rate hike bets
Janet Yellen Says U.S. Could Run Out Of Cash To Pay Its Bills In Less Than 3 Weeks
U.S. consumer confidence hits seven-month low as near-term economic outlook dims
US home price growth reaches new high for fourth consecutive month
U.S. trade deficit climbs again as retails import more consumer goods for holiday shopping season
Richmond Manufacturing Index: -3 in September vs. 9 in August
Upcoming Potential Catalysts on the Economic Calendar
API Crude oil stock change at 8:30 pm GMT
Germany Import Prices at 6:00 am GMT (Sept. 29)
Spain Inflation Rate at 7:00 am GMT (Sept. 29)
Italy PPI at 8:00 am GMT (Sept. 29)
U.K. Mortgage Approvals, Consumer Credit at 8:30 am GMT (Sept. 29)
Euro Area Consumer Confidence at 9:00 am GMT (Sept. 29)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/USD
Sterling took a beating in today’s session, arguably on rising fears that the potential U.K. fuel crisis may impede the U.K.’s economic recovery. This of course is likely to have traders lowering their rate hike odds, which recently sky rocketed after last week’s hawkish monetary policy statement from the Bank of England, so the drop lower is pretty understandable. The U.S. dollar was also on a solid run higher this week thanks to the recent spike higher in U.S. Treasury yields, and likely contributed to the fall in GBP/USD.
Right now, it seems that the bears have run out of steam as we head into the Asia trading session, so the question is now whether we see a bounce from current levels, or Asia traders continue to push the Greenback higher? We’ve also got low-to-mid-tier U.K. economic updates coming soon, so Sterling volatility may stay bid if we see surprising numbers.
For now, we’re in the camp that a short-term bounce may be in the cards given that the drop started in the Tuesday Asia session and the market is approaching a major psychological level (1.3500), so Asia traders may lean towards taking profits. If so and we see a bounce up to the Fibonacci retracement area marked on the one hour chart above, we’ll be on the lookout for bearish reversal patterns for a potential short-term short position, especially if U.K. data disappoints.
