During the night the USD remained strong after Wednesday's rally, which was fueled by the boom of US Treasury yields. Profitability of the 10-year-old US exceeded 3.22% and it was at most until 2011. In the case of 30-year-olds, we have 4-year highs. Strong data from the US in the form of ADP and ISM on Wednesday signaled the sale of bonds, and the breaking of technical barriers dispersed the movement.
USD follows the debt market and strengthens the entire line. EUR / USD broke 1.15 and USD / JPY approached 114.30. At night, we see a bit of calm on the main pair, and the pressure switched to AUD, NZD and CAD. AUD / USD breaks the September pits and goes down to 0.7080.
The stock market shows a deterioration in sentiment, as higher US debt yields pull capital from emerging markets, threatening the balance on the current account. Hang Seng is down 1.9% today. The Japanese Nikkei225 (-0.8 percent) also loses, despite the positive impact of the growing USD / JPY.
There is more peace in the commodity market. Gold does not react to growing profitability and remains at 1197 USD / oz. Crude oil continues to discount fears about supply restrictions after Iran's sanction is restored. WTI currently costs 76.1 USD / b, and Brent 86 USD / b.
On Thursday, the 4th of October, the event calendar is light in important data releases, but global investors should keep an eye on Unemployment Claims, Continuing Claims and Challenger Job Cuts data from the US and Ivey Purchasing Managers Index data form Canada. Moreover, there are some speeches scheduled later in the day from FOMC Member Randal K. Quarles and Member of the Executive Board of the ECB Benoit Coeure.
EUR/USD analysis for 04/10/2018:
The FED president is very happy with the current state of the economy. It is particularly pleased with the achievement of the inflation target of 2.0% and the lowest unemployment for 20 years. In general, economic conditions are very positive. The task of the FED is to help maintain the current sentiment in the economy. The dynamics may continue for some time, which is why the FOMC will gradually raise rates and ensure that inflation does not escape in any direction. Wages should also gradually increase in the near future. The FED still has a long way to reach neutral rates, they are still in the accommodative phase. Powell's general message is not a surprise, the state of the American economy looks best for years.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The words of the FED president led to the strengthening of the dollar. EURUSD fell at night below 1.15 and is currently close to 1.1470. The next target for bears is seen at the level of 1.1445 - 1.1432 zones where some support is located. The market conditions are now oversold and there is a clear bullish divergence between the price and the momentum oscillator, so the price might soon bounce or initiate a horizontal move.