In a market wrap, analysts at TD Securities explained that markets traded with a downbeat tone, although US equities recovered from intraday lows to end the session unchanged while the TSX fell by 0.4%.
Key Quotes:
“Commentary about hiking beyond the neutral rate in the September FOMC minutes saw Treasury yields edge higher across the curve while Canadian rates were little changed.”
“The USD has clawed back some of its recent selloff against G10 FX with CAD (-0.6%) leading the selloff amid weaker crude oil prices (WTI: -2.7%) after a large inventory build. EUR (-0.6%) and GBP (-0.4%) also saw moderate declines while TRY (+1.8%) rallied after Secretary of State Pompeo signaled some sanctions could be lifted.”
“Australian employment and the Bank of Korea’s rate decision are on deck for Thursday.”
What we’re watching in markets
“The mood has turned sour, reflecting a mix of political noise a few soggy data prints. The focus remains in Europe, where EUR and GBP are among the weakest performers in the G10. Brexit drama and soft inflation offered the one-two punch but critical to the price action is whether enough progress has been made to schedule a November summit.”
“Despite the noise, HFFV has improved for GBPUSD, signaling a move to 1.36. From here, we remain dips buyer and hold long exposure in options. We think EURUSD should hold the 1.15-1.18 range but should break to topside later in Q4. The midterms could be one possible catalyst for a range break. For now, EURCHF looks set for a retest of 1.16.”
“The FOMC Minutes continued to reiterate hiking above neutral but Treasuries struggle to price in the overshoot. The Fed sees no signs of reserve scarcity just yet.”
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