1 Minute Market Rundown – 3rd October 2022
U-Turn by the UK Government
U-Turn by GBP Continues
U-Turn for Risk This Month?
Goodbye September, you will not be missed. The worst September on record for the Dow was accompanied by most other global risk assets as the bad news kept coming and the sellers found no buyers to fight them. As highlighted on Friday the market’s job is price in expectations and it is fair to say those expectations are low. October brings the start of the final quarter of the year and the final earnings season kicks off. With expectations on the floor it is hard to see where the fresh bad news comes from and I am hopeful of somewhat of a turnaround in markets.
The month has not started brightly (or has, depending on your view) as the new UK Government announces a U-turn on its widely derided cut of the top rate of income tax. It was a shockingly timed policy and the change of heart is the right thing to do but it hardly inspires confidence. The pound has bounced again on the news and whilst there may be some more shorts to unwind, a Government that gets its first big call this wrong and runs away so quickly does not inspire confidence from voters or investors. I will continue to look for places to short GBP.
USD/JPY is back above 145 nervously testing the levels where the BOJ intervened last time. During my time in the markets I have seen the BOJ act many times. It is NEVER a one off event. That said, they are not fools. I suspect they will let the market break to new highs before round 2 so do not chase it above 146 is my feeling as they will be waiting to catch people out.
The Euro is a little sidelined for now but we continue to like short EUR crosses with EUR/CHF our favourite and euryen waiting to be added. The headline pair will struggle to vault parity again so moves above 9900 will get my attention.
Crypto markets remain subdued, but with my view on risk in general more positive I remain hopeful that we can gain momentum here sooner rather than later. We need to break 20,500 and 1400 in BTC and ETH respectively to get the train out of the station so patience is key.
As always, good luck out there!
Richard Usher – Head of OTC Trading
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