An unexpected boost for the USD

With the heavyweights over for the week, it’s time to check where we are right now at the end of the week.

US Stocks
Source: Bloomberg

While China’s Q3 GDP and the US Presidential debate had blown over with relatively little impact on the markets, the ECB meeting on Wednesday garnered some reaction in the European session. Oil prices also buckled once again and pulled back overnight.

The movements in oil have largely been guided by two topics lately – OPEC updates and US oil inventory reports. WTI, which saw a fresh 15-month high on Wednesday, returned to trade just above US$50/bbl this morning. Russia’s largest oil company, Rosneft, has once again suggested that country can significantly increase oil production.

Doubting the effectiveness of a deal even if one should be put in place, the market took to selling crude oil back to earlier price levels. Alongside yesterday’s movements following the Saudi announcement that non-OPEC members are willing to join in the production freeze, we can see the market appears to be more sentiment-driven than anything else. Some reprieve may still come about next week should we continue to see the drawdown in US crude stockpiles. 

The immediate impact of any oil price fluctuations always appear to reach the stock markets fastest. Coupled with the mixed earnings reports, the S&P 500 index was weighed down on Thursday, though it maintains a 0.39% increase from the week’s open. Telecommunications exerted the greatest downward pressure on the index after Verizon Communications Inc. disappointed in subscriptions. The telco printed the worst performance in subscriber growth in six years in Q3, even as earnings surpassed expectations.

Asian markets could erase some of yesterday’s gains, with the new gloom setting in. Nevertheless, with 21% of all companies on the S&P 500 having reported and 81% of the slice surpassing expectations, Q3 is starting to look promising for the earnings season.

Meanwhile, the ECB kept rates unchanged overnight and, as expected, provided little insight into their asset purchasing program. What took the market by surprise was the aggressive selling of the EUR following the press conference. EUR/USD dipped to the lowest level since Brexit day, trading just above $1.0920 at last view. The corresponding push to the dollar index saw prices holding firmly above $98.000 level into Friday.

The 24-hour traded USD/SGD rose to a fresh 7-month high above $1.3900 once again, and further upsides may be seen in onshore USD/AXJ markets when the rest of Asia opens.

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