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Major currency markets stabilised on Tuesday with the USDX ending the day almost unchanged after reaching once again a new high for this year. Even most emerging market currencies have been trading relatively stable on Tuesday and Wednesday with some exceptions, like the Turkish lira.
The Turkish lira continued depreciating at an even faster pace with the USD/TRY pair rising by more than 12 per cent just over the course of Tuesday. The sell-off in the lira markets was likely exacerbated by comments from the Turkish President, who called for lower rates to achieve his goals in an “economic war of independence”. At its peak on Tuesday the USD/TRY rate was up by more than 40% since the beginning of this month.
Sentiment in the stock markets was a bit mixed these days with the US 500 index closing almost unchanged after some intraday losses, while the US 30 index managed to end the day even with some gains. European markets like the Germany 40 and Europe 50 on the other hand continued to trade lower. In Asia the Japan 225 (JPY) index was trading clearly lower by Wednesday morning after a relatively stable performance over the past days, while the China A50 and India 50 (USD) recovered.
After a relatively quiet start into the week on Wednesday a lot of important data releases especially from the U.S. can be expected since they need to be squeezed all in one day now due to the approaching Thanksgiving Holiday. Among the releases are revised the third quarter GDP, and corporate after tax profits, weekly jobless claims, data on consumer spending and personal income as well as the PCE price index, which is expected to show once again signs of rising inflation.
While the EUR/USD pair reached a new 16-months low intraday on Tuesday, no significant movement compared to the end of day level from Monday was seen. The euro itself also performed mixed against other majors with the EUR/GBP and EUR/JPY recovering, while the EUR/CAD rate was down after a somewhat volatile trading session.
European fundamentals in the form of PMI statistics were overall quite positive with the eurozone manufacturing PMI surprising stable at 58.6 compared to 58.5 in the previous month, while the service sector PMI improved from 54.7 to 56.6 despite the increasing risks from measures meant to contain another wave of COVID infections.
As gold prices continued declining for the fourth trading day in a row on Tuesday, in the spot markets for the first time in more than two weeks the value of the precious metal fell below $1,800 per troy ounce. Sizable price drops were also seen among other precious metals like silver, palladium and platinum.
The strong dollar coupled with rising rates, such as the 10-year U.S. T-Note benchmark could have been some fundamental factors affecting the markets.
Fundamental data releases like the PCE price index for October, which will be released by Wednesday afternoon might also affect connected markets like the dollar and in turn especially if the numbers come unexpected spill over to commodities.
Oil prices went up on Tuesday and continued on the up-slope by Wednesday morning, by now recovering practically all the losses from Friday of last week. While oil prices might have been initially affected announcements from multiple countries to consider releasing oil from their strategic reserves, the voices from OPEC+ that this might lead to changes in the expansion of production capacities could have counteracted the former announcement.
Oil prices rose mostly during the early hours of the U.S. trading session on Tuesday with the data in the weekly statistical bulletin of the American Petroleum Institute (API) which indicated that crude oil stockpiles increased by 2.3 million barrels leading at most only to a very moderate and brief retracement.
On Wednesday the Energy Information Administration (EIA) publishes its weekly data on crude oil, gasoline and distillate stockpile changes.
Major stock market indices like the US 500 and US Tech 100 once again traded lower, while also recovering a bulk of the intraday losses towards the end of the day, so that the former index was down by just around 0.06%.
For once chip sector stocks (US Semiconductors ETF -0.81%) underperformed, while energy stocks (US Energy ETF +2.95%) like Occidental Petroleum (+6.13%) and Halliburton (3.05%) traded higher with oil markets in recovery mode.
After announcing its quarterly results Best Buy (-12.29%) was the worst-performing stock in the S&P 500 index that day despite reaching better earnings and revenue at $11.91 bn. than anticipated. Investors might have been spooked by expectations of stagnating growth in that segment as well as rising costs like for shipping as well as issues from increasing incidents of theft in its retail stores.
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