Market News

Brent prices are above $116 and more than 2.5% on the day as the market sniffs out a weekend attack on Iran.

The war hasn't gone to Trump's plan and Republican polling and approval numbers are dismal. In addition, Israeli PM Netanyahu is unlikely to remain Prime Minister after Tuesday's vote (odds around 30% of him remaining PM). 

Trump himself outlined the playbook 14 years ago:

The reports seem to indicate this will be a short-lived attacked perhaps aimed at pickaxe mountain and some missile sites. My best guess is that Trump attacks and then tries to declare victory early next week in order to reset the talking points in a deeply unpopular war. The problem is that oil prices aren't exactly cooperating at the moment and that's a tough…

• Prior was 46.3
• Prelim was 48.1
• Current conditions 46.7 vs 50.9 prior
• Expectations 48.4 vs 46.3 prior
• 1-year inflation 4.7% vs 4.7% prior
• 5 -year inflation 3.5% vs 3.5% prior

This indicator is near all-time lows but in the last number of years it's morphed into more of a political indicator than a spending one. The Fed still watches the inflation numbers though.

The University of Michigan’s Surveys of Consumers produces one of the oldest and most widely followed gauges of US household sentiment. Results come out twice a month, both at 10 am ET: a preliminary reading around mid-month and a final reading near the end of the month that incorporates the full sample. Revisions between the two are usually modest, but they occasionally shift the…

The AUDUSD has found support and resistance against two separate moving averages. They are providing the borderlines for both buyers and sellers now. 

The low for the week was on Monday.

Recall, that the AUDUSD has worked its way higher from Monday’s low near 0.6970, with buyers pushing back above a familiar swing area between 0.6989 and 0.6994.

That area is marked by the red numbered circles on the chart. The repeated highs and reactions tell traders why it matters. What had been a ceiling needed to be broken to give the buyers more control. Once above, that ceiling becomes a potential floor.

The break higher opened the door for a move toward the next key target: the 100-day moving average at 0.7032.

The buyers made their move. But at that…

Canadian consumers stepped up their spending in August. Statistics Canada reported retail sales increased 1.2% to $74.6 billion, with gains across all nine subsectors. The encouraging detail is that sales volumes also increased 1.2%. There was real buying behind the headline increase.

The strength extended beyond autos and gasoline. Core sales rose 1.1%, reversing July’s 0.7% decline, with food, general merchandise, and health and personal care retailers contributing. Gasoline was the exception to the volume story: receipts increased 1.7%, but volumes fell 0.5%, indicating higher prices drove that gain.

Quick analysis:

Today’s report gives the Canadian economy some better news, but the broader data are still telling a mixed story. The…

• Prior was 59.8
• Manufacturing 56.0 vs 55.5 expected
• Prior manufacturing 57.0
• Composite 57.6 vs 58.4 prior
• selling prices rose at the sharpest rate since August 2022
• New orders highest in over four-and-a-half years
• Business output expectations for the 12 months ahead cooled compared to September but were still the second highest seen this year

One of the big surprises last month -- and one that the market took as a hawkish signal at time time -- was the jump in this survey. Employment was at the strongest since June 2022 and input cost inflation at the highest since Oct 2022.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

In yesterday’s educational post, I discussed why gold was falling despite sharply lower Treasury yields. Lower yields would typically provide support for a non-interest-bearing asset like gold. However, the dollar was mixed, and gold’s inability to reclaim its hourly moving averages kept the technical bias tilted toward the sellers. The fundamental expectation needed confirmation from the price action. It did not get it.

Today, that technical story continued with a break below $4,000 before buyers finally pushed back.

In today’s video, I walk through the chart, the sequence of breaks, and the levels that will help determine whether this rebound can develop into something more.

The moving averages told traders who was in control

Earlier this…

The technology buyers had their shot on Wednesday. On Thursday, sellers took back control.

That is the backdrop heading into the final North American session of the week. U.S. stock futures are modestly lower after yesterday’s sharp declines in technology shares, Treasury yields are recovering some of their steep fall, and the Middle East headlines continue to keep the oil market on edge.

The dollar, however, is not moving in one direction against everything. It is higher against the EUR, GBP, JPY, CHF and AUD, but marginally lower against the CAD and NZD. With U.S. business surveys and consumer sentiment still ahead, there is another opportunity for the data to give traders the next shove.

In the morning video above, I take a look at the…

• The advance August reading was +1.3%
• Prior was -0.7%
• Sales up in all 9 subsectors, led by motor vehicles
• Ex-autos +1.2% vs +1.0% expected
• Prior ex-autos was -0.7%
• September advance sales +0.7%

The advance (or flash) reading is the real market mover in this report now as it generally corresponds with the final reading. The +0.7% m/m number for September is a good sign of ongoing strength.

RBC last week was out with its cardholder spending data for September and that's usually a good cross-check and precursor to the official report. It showed core sales up 0.5% m/m on strong discretionary categories.

With that, the market should feel increasingly comfortable that the Bank of Canada will hike rates next week, as is priced at just under 80%. What's…

Headlines:

• Falling Treasury yields may be hiding a darker story about the AI boom
• Crude oil extends gains as Saudi-Houthi conflict and concerns of US-Iran attacks keep the market supported
• Gold gets caught in market liquidation despite falling real yields supporting higher prices
• France October PMI slumps back into contraction as political uncertainty weighs on demand
• Germany October flash manufacturing PMI 54.2 vs 53.5 expected
• Eurozone October PMI misses estimates as growth slows, keeping ECB rate hike dilemma alive
• UK October flash services PMI 53.1 vs 51.8 expected
• UK retail sales fall more than expected in September, complicating BOE rate hike outlook

Markets:

• 10-year Treasury yields up 5 bps to 5.00%
• USD and CAD lead, CHF lags on the day
• WTI…

Zcash sold off sharply yesterday alongside many other cryptocurrencies as growth concerns led to widespread risk aversion.

The selling started late on Wednesday and then accelerated after The New York Times reported that the US and Israeli militaries had prepared detailed plans for potential strikes against Iran following the US midterm elections. The report also indicated that US was reinforcing its military presence in the region, with additional forces expected to be fully deployed by early November.

The risk of another direct confrontation between the US and Iran, combined with growing concerns about economic growth and the Federal Reserve forced to keep a…

The bullish momentum in crude oil has been slowly picking up after The New York Times reported that the US and Israeli militaries had developed plans for renewed strikes on Iran following the US midterm elections, with additional forces expected to be fully deployed by early November.

The Saudi-Houthi conflict, meanwhile, continues with the Houthis recently targeting Saudi airports and energy infrastructure, including a reported strike near Dammam that killed two people and injured eight. Saudi Aramco instructed staff to evacuate its Dhahran headquarters and work remotely following the latest security incidents.

The attacks in the Strait of Hormuz have intensified recently after…

The latest October PMI readings today don't paint a particularly encouraging picture of the health of the euro area economy. Growth is slowing and businesses are feeling the pinch, but inflation pressures are still refusing to go away. And that is the sort of headache that the ECB really doesn't need right now.

The data showed disappointing readings from both the manufacturing and services sectors, with the latter slowing rather markedly. A lot of that can be attributed to France though, as business activity there returned to contraction in October. And while Germany continues to hold up better, the broader slowdown across the region is becoming more difficult to ignore as we look to the final quarter this year.

With that in mind, this is…