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Daily summary: Global stocks' relief rally fades, GBP regains some ground

  • European equities deepened recent sell-off, with Germany’s DAX and French CAC40 closing at almost two-year lows, down by 1.71% and 1.53%, respectively;
  •  Germany's inflation rate increased to 10.0% in September, well above market estimates, raising additional worries that the ECB will have to rate hikes more aggressively to tame surging inflation; 

  • The Germany finance ministry rolled out €200 billion energy subsidy package;

  • Kremlin is expected to annex four regions in Ukraine tomorrow and Putin will deliver a speech at 1:30 pm BST;

  • Major Wall Street indices also resumed downward move, erasing yesterday gains as better than expected claims report, upwardly revised core PCE prices for the second quarter raised concerns that inflation is much more persistent. Dow Jones is trading 1.80% lower, S&P 500 lost 2.35%, while Nasdaq plunged 3.20% to a 14-week low of 11105 pts;

  • Hawkish comments from several Fed members also weighed on market sentiment. Fed Mester said policymakers are not at a point where they should consider halting rate hikes. In her opinion inflation is expected to fall, but we will need a higher Fed funds rate to achieve that. Fed Bullard said there's a risk management emphasis, which means we need to stay higher for longer. He sees higher risk of recession, but that is not the base case at this time.

  • NATGAS price tested $6.63/MMBtu, the lowest in about two-and-a-half months, on the back of lower demand due to Hurricane Ian and forecasts for milder weather over the next two weeks. The EIA reported US utilities added 103 billion cubic feet (bcf) of gas to storage last week, above forecasts for a 94-bcf build.

  • Nickel, aluminum and copper rose sharply, following the news that LME is considering implementing ban on new supplies of Russian metals;

  • WTI crude is trading near $83 per barrel, bouncing off their daily lows of about $80 amid growing speculation that OPEC+ could intervene in markets by cutting again next week following reports that Russia is reportedly willing to reduce production by 1 mln bpd;

  • Gold managed to erase early losses and is trading slightly below the flatline around $1660 per ounce amid slightly weaker dollar, while silver price managed to stay above support at $18.60;

  • Reuters reported that PBOC advised major state-owned banks to be prepared to sell dollars in order to strengthen yuan;

  • Thursday's session brings temporary relief for EURUSD and GBPUSD buyers. Greenback fell 1.5% against the pound and less than 0.5% in terms of the euro, but it does not seem that today's pullback should threaten the dollar domination any time soon, especially considering the recent comments from Fed members and good data from the US.

  • Despite a pullback against EUR and GBP, the dollar managed to strengthen against other major currencies;

  • Major cryptocurrencies  almost completely recovered early losses and are performing quite well given the strong sell-off on global stock indices;

GOLD -Precious metals rebounded today thanks to the weaker dollar. Technically looking at gold on the H4 interval, the price hit a key resistance at $ 1662.00, which is marked with the upper limit of the 1: 1 structure. If sellers will manage to halt current upward momentum, then another downward impulse could be launched towards $ 1615. On the other hand, if current bullish sentiment prevails, traders should pay attention to resistances at $ 1671.5 and $ 1690.00, respectively. Source: xStation5

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