FTSE +11 points at 7549 DAX +16 points at 12965 CAC +8 points at 5371 IBEX +179 points at 10321
The US dollar is in an attempt to pare losses against the G10 majors, after President Donald Trump's quarrel with the senator Bob Corker raised doubts on the feasibility of the tax reforms again. Divisions within the Republicans seems to be a similar story to the healthcare bill and controversies could result in more disappointment for the Trump’s administration.
The Federal Reserve (Fed) minutes are due today. The Fed hawks came back in charge of the market, after the FOMC hinted at its additional rate hike intentions this year at the latest meeting. The probability of a December rate hike stands close to 80%.
The US equities gained. Walmart (NYSE:WMT) rallied by 4.47% after announcing $20 billion share buyback program and an optimistic earnings guidance. Asian traders showed little appetite for the US equity futures before the Fed minutes. Though the upside is still the only direction the US stock investors are willing to see.
The euro is better bid as Catalan separatists took a step back from their unilateral independence rhetoric and seem open to discussion with Madrid. Catalonian President Puigdemont said that the October 1 referendum gave the Catalan government a mandate to pursue independence, but not immediately. IBEX closed 0.92% lower on Tuesday, yet Spanish stocks are set for a strong positive open. There is a light economic data flow in Europe except the Spanish inflation. The euro’s relief recovery may be halted by PM Mariano Rajoy's speech on Catalan crisis due later in the day. The first resistance against the US dollar is eyed at the 50-day moving average (1.1858).
The pound recovered following stronger-than-expected industrial and manufacturing data on Tuesday. The GBPUSD tests the 200-hour moving average (1.3226) on the upside. The Bank of England (BoE) hawks lie in wait to underpin the pound recovery as talks of a sooner-than-anticipated BoE rate hike loom. 'Fastest inflation in four years leaves the U.K. central bank preparing to hike next month for the first time in more than a decade', reported Bloomberg. The probability of a November rate hike stands at 78.1%, up from slightly above 10% at the beginning of September. However, the political uncertainties remain a major downside risk for pound traders. PM Theresa May talked down the possibility of another Brexit referendum, although her deputy Damian Green voiced his preference to remain part of the union. Tensions are high among the Tories, especially in the aftermath of a difficult start to the negotiations with the EU.
The EURGBP is rangebound around its 100-day moving average (0.8950).
FTSE 100 (+0.40%) advanced to 7543p on Tuesday, while DAX (-0.21%) and CAC (-0.04%) traded under the pressure of the Catalan crisis. European equities are set for a slightly positive open.
Gold consolidates gains, but the safe-haven allocations are losing momentum. The next resistance is eyed at 1'295/1'300 area (50-day moving average / major 38.2% retrace on July - September rise). A rebound in USD could reverse the three-day positive trend and encourage a retreat toward the 100-day moving average ($1’273).
The WTI crude took over the $50/barrel handle, on speculations that low oil prices could eventually bring the OPEC and its allies to take additional measures to help rebalancing the market. The weekly API data is due today and the more official EIA data is due tomorrow (with one-day delay) because of Monday US holiday. The crude inventories may have fallen by 2.4 million barrels last week, according to the latest Bloomberg survey. Lower stockpiles could give an extra boost to the market. Resistance is eyed at $52.90, September high.