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Fragile appetite in the US dollar

The EURUSD reconquered the 1.10 level in Asia as the USD appetite eased across the board. The probability of a December rate hike in the US decreased to 66% from 68% yesterday.


European traders started the day bid in the US dollar, however the US jobless claims, which stand at four-decade lows, continues keeping the Fed hawks alert despite the politically challenging US markets.


The appetite in US stocks remain limited; the S&P500 tested the 2110 level yesterday, as the Dow Jones slipped below the 18000 handle.


WTI recovered above $50, yet the momentum seems to lack strength in order to push the price of a barrel above $52, which currently prevents a further recovery towards the $53/$55 area. From a technical point of view, the $48.90 level (major 38.2% retracement on Sep 20th to Oct 10th rise) is a good candidate to lend support to the post-OPEC positive trend.


The economic calendar is busy today. Traders will be chasing hints on Federal Reserve (Fed) and Bank of England’s (BoE) policy outlooks as FOMC Chair Yellen and the BoE’s Governor Carney are due to speak before the weekly closing bell. US retail sales, business inventories and University of Michigan’s confidence index will also be in traders’ focus and could enhance, or temper any directional move in the USD on the back of Yellen’s words.


The pound is preparing to close the week on a depressed note, having failed to recover losses suffered following last Friday’s ‘flash crash’. Unfortunately, the deep downside potential in the pound keep the GBP-longs away from opening fresh positions, as the downside moves tend to be too aggressive to allow the upside momentum to develop for a sustainable recovery. The least the traders could do is to wait for USD appetite to reverse pre-US election. Any panic in the US markets could pave the way for a temporary recovery towards the 1.2440/1.2500 area against the US dollar.


The FTSE opened upbeat following a three-day slide. All sectors are in the green, except energy stocks (-0.14%), which are facing minor selling pressure as WTI faces resistance despite a 1.27% rally in the session. We could expect a bullish reversal in energy stocks before the week-end.


Fresnillo (-1.75%) shred 0.181 points off the FTSE 100 as gold trades below its 200-day moving average ($1275) on improved prospects for US yields.


The US-10 year yield tests 1.77% on the upside.