As the North American session begins, the USD is the strongest and the GBP is the weakest.
In the European morning session, UK September CPI came in at +1.7% year-over-year, below the expected +1.9%, with core CPI at +3.2% versus the forecasted +3.4%. This marks a decline from prior figures of +2.2% and +3.6%, respectively. The softer inflation data led to a drop in GBP/USD from 1.3073 to 1.2981 (the current price has rebounded to 1.3031), as it reinforced expectations of a potential rate cut by the Bank of England in November.
The low price today was the lowest since August 20 before rebounding. The move took the price briefly below the September 11 low and the natural support near 1.3000. That level remains a key sport and going forward.
On the topside, traders will be watching the 50% of the move up from the August low at 1.30488 as resistance
UK Services inflation fell from 5.9% to 5.6%, and core inflation saw a significant drop from 5.6% to 4.9%, easing pressure on the BOE.
Market odds of a 25 bps rate cut were around 80%.
Yields in the US are lower with US yields down around three basis points across the curve.
In the US equity markets in premarket trading , stocks are modestly higher after declines yesterday. Equities were influenced yesterday after ASML reported weaker earnings which hit the tech/chip sector. Europe's premiere tech company estimated sales between 30 billion euros to 35 billion euros in 2025, with gross margins between 51% and 53%. That compares negatively to estimate revenues as high as 40 billion euros and gross margins of 54% to 56%.
Also hurting markets yesterday, were disappointing earnings from France's luxury goods LVMH highlighted by Louis Vuitton posting a surprise drop in 3Q sales. The company reported a -3% decrease in revenues to 19.1 billion euros in the three months ended on Sept. 30 versus the year-ago period vs estimate of +2% growith. Yields in the US are down by about -3 bps in trading in early trading.
A snapshot of the other markets as the North American session begins shows:
- Crude oil is trading down -$0.42 or -0.60% and $70.16. At this time yesterday, the price was at $70.70
- Gold is trading up $17.99 or 0.67% at $2680.17.. At this time yesterday, the price was $2648
- Silver is trading up $0.41 or 1.3% at $31.88. At this time yesterday, the price is at $31.11
- Bitcoin is trading higher at $68,030. At this time yesterday, the price was at $65,365
- Ethereum is trading at $2638. At this time yesterday, the price was at $2585.
In the premarket, the snapshot of the major indices trading modestly higher after yesterday's declines.
- Dow Industrial Average futures are implying gain of 22.58 points. Yesterday, the index fell -324.80 points or -0.85% at 42,740.42
- S&P futures are implying a gain of 4.74 points points. Yesterday, the index fell -44.59 points or -0.76% at 5815.26.
- Nasdaq futures are implying a gain of 28.25 points. Yesterday, the index -187.10 or -1.01% and 18315.59.
Yesterday, the small-cap Russell 2000 rose 1.17 points or 0.05% at 2249.81.
European stock indices are trading mixed:
- German DAX, -0.19%
- France CAC, -0.55%
- UK FTSE 100, +0.77%
- Spain's Ibex, +0.34%
- Italy's FTSE MIB, -0.07% (delayed by 10 minutes)
Shares in Asian Pacific session shares were mixed:
- Japan's Nikkei 225, -1.83%
- China's Shanghai Composite Index, +0.05%
- Hong Kong's Hang Seng index, -0.16%
- Australia S&P/ASX index, -0.41%
Looking at the US debt market, yields are trading lower across the curve
- 2-year yield 3.925%, -2.5 basis points. At this time yesterday, the yield was at 3.954%
- 5-year yield 3.828%, -3.0 basis points. At this time yesterday, the yield was at 3.890%
- 10-year yield 4.006%, -3.0 basis points. At this time yesterday, the yield was at 4.077%
- 30-year yield 4.294%, -2 point basis points. At this time yesterday, the yield was at 4.374%
Looking at the treasury yield curve close steeper on Friday. At the close
- The 2-10 year spread is at +8.3 basis points. At this time Friday morning, the yield spread was +12.3 basis points.
- The 2-30 year spread is at +37.0 basis points. At this time Friday morning, the yield spread was +42.0 basis points.
