CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

European Open: EUR/USD falls below parity ahead of the US Core PCE report

Article By: ,  Market Analyst
October 28, 2022 5:16 AM

Asian Indices:

  • Australia's ASX 200 index fell by -57.9 points (-0.85%) and currently trades at 6,787.20
  • Japan's Nikkei 225 index has fallen by -188.54 points (-0.0043%) and currently trades at 27,266.70
  • Hong Kong's Hang Seng index has fallen by -305.51 points (-1.98%) and currently trades at 15,122.43
  • China's A50 Index has fallen by -111.82 points (-0.96%) and currently trades at 11,509.14

 

UK and Europe:

  • UK's FTSE 100 futures are currently down -36 points (-0.51%), the cash market is currently estimated to open at 7,037.69
  • Euro STOXX 50 futures are currently down -20 points (-0.55%), the cash market is currently estimated to open at 3,584.51
  • Germany's DAX futures are currently down -79 points (-0.6%), the cash market is currently estimated to open at 13,132.23

 

US Futures:

  • DJI futures are currently up 19 points (0.06%)
  • S&P 500 futures are currently down -82.5 points (-0.73%)
  • Nasdaq 100 futures are currently down -17.5 points (-0.46%)

 

 

The BOJ do… absolutely nothing

The Bank of Japan did the entirely predictable act of doing nothing, so interest rates remain at -0.1% and they will continue to target the 10-year JGB at around zero percent. Although they did announce that they’ll change the way they purchase ETF’s from December the 1st to take into account holding costs and seek to lower fees. Their quarterly outlook report stated that risks to prices are to the upside, and that growth expectations are to the downside. Also very predictable.

Japan’s government announced a spending package of ¥29.1 trillion ($199 billion) for households in response to high inflation. The yen saw little reaction during a low

 

Inflation keeps on doing its thing

Further signs of inflation hit the screens, as if we even needed more. Australian producer prices hit a record high of 6.9% and its quarterly read matched the record high of 1.9% last seen in 2008. Tokyo’s overall inflation also rose to its highest level since 1991. And that sets the stage nicely for today’s US inflation data.

 

Core PCE inflation is released for the US at 13:30 BST

US inflation data is the key event tonight, and (perhaps not surprisingly) is expected to rise further. We’ve already seen inflation for Australian and New Zealand bulldoze their way trough expectations to the upside – will the US be the next one to follow?

 

But when you compare the various inflation metrics to the Fed’s inflation target, it begins to look a bit silly. A 75bp Fed hike is pretty much a done deal – to the point it might even be irresponsible if the Fed didn’t. But another hot print makes it tricky for the Fed to openly discuss a slower pace of tightening, even though they sent out a ‘test balloon’ via the WSJ discussing that very subject.

 

 

EUR/USD daily chart and implied volatility:

The euro is back below parity after spending just one day above it. It almost erased all of Wednesday’s gains and formed a 2-bar bearish reversal at the 100-day EMA. Its also coincided with a 100% projection (wave equality) so perhaps we have seen the end of a 3-wave correction. Given the US dollar index remains above trend support after pulling back, there is an argument for a stronger dollar and weaker euro. Especially if inflation rips higher than expectations, a trend which has been apparent in recent times.

 

FTSE 350 – Market Internals:

 

FTSE 350: 3910.95 (0.25%) 27 October 2022

  • 143 (40.86%) stocks advanced and 194 (55.43%) declined
  • 5 stocks rose to a new 52-week high, 3 fell to new lows
  • 18.86% of stocks closed above their 200-day average
  • 69.14% of stocks closed above their 50-day average
  • 25.14% of stocks closed above their 20-day average

 

Outperformers:

  • + 7.58% - Wizz Air Holdings PLC (WIZZ.L)
  • + 7.39% - Moonpig Group PLC (MOONM.L)
  • + 5.46% - Shell PLC (SHEL.L)

 

Underperformers:

  • -15.12% - Airtel Africa PLC (AAF.L)
  • -5.90% - HgCapital Trust PLC (HGT.L)
  • -5.03% - Baltic Classifieds Group PLC (BCG.L)

 

 

Economic events up next (Times in BST)

 

 

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024