BoE to end its support of the Gilt Market

　　

U.S. equities edged lower throughout yesterday’s trading. The Dow Jones Industrial Average, however, was able to edge slightly higher by 0.12% to close at 29239.19. The S&P 500 lost 0.65% to close at 3588.84. The tech-heavy Nasdaq Composite retreated 1.1% to close at 10426.19. The risk-off sentiment was driven by comments from BoE governor Andrew Bailey, who said the central bank would end its special support of the gilt market. Governor Bailey urged market participants to unwind positions they may not have the ability to maintain.

The benchmark U.S. 10-year treasury yield continued to edge higher and was last seen trading at 3.947%.

Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion. The bombing from Russia was sparked by the attack on the Crimea bridge last week. Escalating tensions between Russia and Ukraine continue to weigh on investing sentiment and global energy supplies.

On the economic docket, Britain is set to release its GDP figures during today’s European trading session, and the U.S. will release PPI figures during the American trading session today. The FOMC meeting minutes will be released during the latter part of the American trading session today as well.

Main Pairs Movement

The Dollar index gained 0.1% throughout yesterday’s trading. The Dollar has continued to gain traction ahead of the key PPI data release and FOMC meeting minutes release. Markets are now pricing in further tightening of 75 basis points by the Fed as inflation continues to run rampant.

EURUSD gained 0.08% throughout yesterday’s trading. The Euro-Dollar pair was able to maintain its intraday gains despite a broadly stronger Dollar. Economic data releases by the U.S., however, can once again send the pair lower.

Cable lost 0.82% throughout yesterday’s trading. The British Pound dropped as BoE governor Bailey’s comment on pulling back the emergency purchasing of Gilts. Today’s British GDP release will be closely observed.

XAUUSD lost 0.12% throughout yesterday’s trading. The precious metal fared worse against a strong Dollar.

month-high around $1723.

Resistance: 1688, 1723, 1761

Support: 1661, 1644, 1620

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
GBP	BOE Gov Bailey Speaks	02:35
GBP	GDP (YoY)	14:00	2.4%
GBP	GDP (MoM)	14:00	0.0%
GBP	Manufacturing Production (MoM) (Aug)	14:00	0.2%
GBP	Monthly GDP 3M/3M Change	14:00
USD	PPI (MoM) (Sep)	20:30	0.2%
EUR	ECB President Lagarde Speaks	21:30