European cash equity markets are mostly lower ahead of the midway stage (FTSE -0.3%, DAX -0.5%, CAC -0.3%, FTSE MIB -0.4%). We did see a higher open with outperformance in the oil and basic resource sectors but losses in Italian bank stocks have weighed in recent trade. Italian government bonds have also come under pressure with the ten-year yield up thirteen basis points to a fresh multi-year high of 3.71%. Despite the reversal in risk sentiment, core European and US government bond yields are both holding on to minor gains with the US ten-year inching up to a fresh multi-year high this morning. Data releases were sparse and largely ignored, including a wider than expected German trade surplus after imports dropped -2.7% MoM. Turning to the currency markets, the Dollar Index has edged above the 96.0 level in recent trade but still had to second for second place among the G10’s behind the Japanese Yen. Sterling and the Euro are the weakest while Brent crude futures have added +0.9% and spot gold has lost -0.1%. Looking ahead, futures are pointing to a lower open on Wall Street amid a busy FOMC schedule including possible comments from Kaplan, Evans and Harker. Canadian housing starts are the sole data release.
October 09, 2018
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