Sterling continues its descent, which was spurred on by the fallout from UK CPI data, in early US session. The odds of a 50 bps rate hike from BoE in August are being reassessed, now standing at a mere 50% probability. Furthermore, expectations of a peak rate have also dipped, falling below the 6% threshold. Australian Dollar is taking a hit as well, assuming the position of the second weakest currency for the day. This downturn is occurring concurrently with the Chinese Yuan and Copper prices. Yen, while the third weakest, is likely to face limited selling, at least until release of Japan's inflation data on Friday. Conversely, Dollar, along with Swiss Franc and Euro, is showing signs of strength. The greenback's decline started slowing earlier in the week and there is prospect of a stronger recovery. However, the momentum of Dollar is more likely to be influenced by developments in other major currencies rather than its own intrinsic factors. Technically, Copper's fall from 3.942 is currently seen as the third leg of the pattern from 3.9501 only. While deeper decline cannot be ruled out, downside should be contained above 3.6706 support. Indeed, break above 3.843 minor resistance will bring stronger rebound back to retest 3.9420/9501 resistance zone. In case of a rebound, AUD/USD would likely follow higher, even if there is slight downside surprises in Australia employment data tomorrow. In Europe, at the time of writing, FTSE is up 1.68%. DAX is down -0.16%. CAC is up 0.12%. Germany 10-year yield is down -0.0054 at 2.383. Earlier in Asia, Nikkei rose 1.24%. Hong Kong HSI dropped -0.33%. China Shanghai SSE rose 0.03%. Singapore Strait Times rose 0.64%. Japan 10-year JGB yield dropped -0.0195 to 0.467. |
