Friday, September 28, 2018

EURO Suffers - Italy Defy EU Zone Rules, Supports Higher USD (DXY) After FED Rate Hike

Euro drop to 1.1582 ( tech pattern in the making) as the USD remain buoyant from its three month moving average set at 93.75; is now above our 95.05/10 core basis level currently at 95.30 which is a 1% gain for the week. 

Support for the USD is coming from both directions with the recent Fed rate hike. Not to mention, a greater portion of the total amount of funds repatriated back to the US which have found a place to be parked at with the expectations of higher yields in the near future. 

And now with the EU battle over fiscal policy with Italy has intensified after the government budget deficit at 2.4% of GDP which basically is interpreted to defy EU rules. Especially when European Union inflation rates are ever increasing would be a hard sell for Brussels to accept. Allowing European equities to trade in the red, decoupling from risk appetite. 

After the Fed's move on rates, the recent decline in US equities have proven to be the fact that these market adjustments would indeed be part of market volatility. Although, some analyst still may expect a dramatic decline which may not occur for now. Since the relative market corrections  from the previous have given bulls a reason to buy into dips for positioning especially coming into the 4th quarter trading. 

Update as of 10.02.18 : Previously stated: 
How often do we see, #USD #EQUITIES #OIL Moving in the same direction

#DOW Hits Record Highs  Buying on dips is back on play! 
Watch for #Earnings Season real soon!

With that said, the USD Index needs to hurdle above the 97.00 levels to be more convincing, but would take a considerable period of time to achieve nearest to this level. However, with the next schedule of rate hikes; the dominant trajectory for the USD remains intact. Overtime it may have some relative declines, a misdirection would not be discounted along the course of its price objective heading into the December schedule and the first two quarters of 2019. 


  1. As Italian banks shares were not spared, CABLE in fact have managed to shift lower towards the 1.3000 levels other than some quite encouraging news on Brexit which have predominantly been PM Theresa May's response to hurdle negotiations.

    However, with the latest news DOW seems to be on the buy on dip mode again as traders saw this move and have taken advantage of its corrective session decline to end the 3rd quarter more on a positive tone. Definitely NOT a window dressing market play unlike in Asia.

  2. #ADP Backs #GreenBuck #DXY at 95.70bp
    Price Update: Major Indices at Record Highs
    Buy into Dips is certainly at play!

    #SP500 at 2,938.35 up by +14.92 (+0.51%)
    #DOW at 26,935.93 up by +161.99 (+0.61%)
    #NASD at 8,042.21 up by +42.66 (+0.53%)
    #RUSSELL2K at 1,658.45 up by +2.41(+0.15%)

  3. EURUSD at 1.1536, CABLE at 1.3005, AUDUSD at 0.7137, NZDUSD at 0.6539, USDJPY at 114.09, WTC at 75.23, 10-year Bond at 3.099 and DXY at 95.70 basis point.