Summary:
- CAD drops sharply as BOC keep rates on hold
- GBP rallies as UK GDP beats forecasts
- US500 drops below 2550 as DE30 falls towards 12900. VOLX Jumps
- Surprise DOE build causes Oil to pause near 2017 highs
- Bitcoin falls to key support level
- US durable goods orders beat forecasts
One of the sharpest moves in the markets today has come in the Canadian dollar following the Bank of Canada rate decision. The BOC kept rates on hold at 1.0% as was widely expected but a dovish statement has seen some sharp declines in the Loonie with USDCAD hitting its highest level since early July.
Whilst there was a substantial move in USDCAD, there has been an even larger one in the GBPCAD pair today with the cross already markedly higher before receiving a further boost from the BOC. The morning trade saw the pound soar after the most recent GDP data beat forecasts for Q3.
There has been some notable weakness in stocks this afternoon with the UK100 one of the worst hit and off by almost 1%. The London benchmark has seen some selling due in part to the rise in sterling and also a global decline on the day which began with the JAP225 closing lower and has seen the DE30 fall towards 12900 whilst the US500 has dipped below 2550. The moves in historical terms are minimal but against the incredible recent backdrop that has seen very little by the way of declines, they are noteworthy. The VOLX, a gauge of volatility for the US500 has jumped higher by 8%. We noted on Monday that the S&P500 had broken the record for the number of days without a 3% drop – the price that would constitute this is now at 2499.
The latest DOE inventory numbers have shown a surprise build in the headline, with a reading of +0.9M considerably higher than the -2.7M expected or the -5.7M seen previously. The number was in fact fairly similar to last night’s API equivalent which showed a rise of 0.5M.
We outlined quite the upbeat outlook for Bitcoin yesterday taking into account a technical analysis. Let us remind that we pointed to a pivotal support which was expected to halt a drop in the Bitcoin price. Since then several hours have passed and one could conclude that we’ve been right when it comes to importance of a support zone. Consequently, a decline has been stopped while the price has drawn bullish engulfing pattern suggesting that bulls are ready to keep a lid on the market anew.
A busy afternoon of economic releases from North America has begun with some more solid data from the US. Tuesday saw better than forecast PMI readings for both the manufacturing and services numbers and today a better than expected release regarding durable goods orders has further supported the notion that the world’s largest economy is performing well. Durable goods orders rose by 2.2% M/M in September against consensus forecasts for a 1.0% rise and a prior reading of 2.0% (revised higher from 1.7% previously).