Mohicans markets：Focus on the U.S. Employment Data

20:30, the U.S. will release the number of initial jobless claims for the week to September 10, and the market is currently expecting it to increase by 226,000. At the same time, the U.S. will also publish the monthly rate of retail sales in August, and the market is currently expected to be in line with the previous value, 0%.

Global Views - List of Major Markets

On Wednesday, spot gold oscillated around $1,700 during the day and fell below the $1,700 mark overnight, eventually closing down 0.27% at $1,697.42 per ounce; spot silver diverged from gold, eventually closing up 1.59% at $19.63 per ounce.

The U.S. dollar index failed to challenge the 110 mark and moved slightly lower, eventually closing down 0.15% at 109.64; the 10-year U.S. bond yield climbed to a high of 3.476% before falling back to close at 3.404%. U.S. 2-year and 30-year Treasury yields were once inverted by 33 basis points during the day, which were the largest inversion since 2000.

In terms of crude oil, both oils rose sharply in the U.S. session, with WTI crude oil once rising to a high of $90.15 before giving back some of its gains and eventually closing up 1.36% at $88.97 per barrel; Brent crude oil eventually closed up 1.42% at $94.55 per barrel. European and U.S. natural gas rose more than 10% intraday.

The U.S. Dow closed up 0.1% and the Nasdaq closed up 0.74%. Oil and gas stocks and cruise stocks were stronger, while steel and pharmaceutical stocks were weaker. Popular Chinese stocks were mixed, with Pinduoduo finishing up about 3%, New Oriental (EDU) down about 7 percent and NetEase down about 2%.

European stocks mostly closed lower, and Germanys DAX index closed down 1.22% at 13028 points, the UK FTSE 100 index closed down 1.47% at 7277.3 points, the European Stoxx 50 index closed down 0.52% at 3567.56 points.

Precious Metals

In early trading hours on Thursday, September 15, Beijing time, spot gold short term trading above 1700. On Wednesday, spot gold oscillated around $1,700 during the day and fell below the $1,700 mark overnight, eventually closing down 0.27% at $1,697.42 per ounce; spot silver diverged from gold, eventually closing up 1.59% at $19.63 per ounce.

The market now expects the Federal Reserve to raise interest rates by at least 75 basis points at its September 20-21 policy meeting after data showed that the U.S. Consumer Price Index (CPI) unexpectedly rose 0.1% in August.

The U.S. PPI registered a monthly rate of -0.1% in August, which is in line with market expectations. Although producers are still facing higher costs for services and some goods, the PPI data declined for the second consecutive month as fuel costs retreated and did not further fuel inflation concerns brought on by the higher-than-expected CPI data.

The probability of a 100 basis point rate hike has fallen back to 24% from 31% yesterday, with expectations of a significant rate hike not further intensified and market expectations for the September meeting still dominated by a 75 basis point hike.

As the market gradually stabilizes its pricing for a September rate hike, gold price volatility is likely to slow down further and we wait for the outcome of the meeting to land.

Crude Oil

In early trading on Thursday, September 15, Beijing time, U.S. oil traded around $88.80 a barrel; Oil prices rose more than 1.5 percent on Wednesday, with the international energy watchdog the IEA predicting an increase in the switch from natural gas to oil for heating due to high prices this winter and the U.S. facing a strike by railroad workers; In addition, the US replenishment of oil reserves does not include a price trigger mechanism, and the specific time may be relatively distant, providing some momentum for the bulls.

During the day, we will pay attention to the number of initial jobless claims in the United States for the week ended September 10, and the monthly rate of retail sales in the United States in August.

Bullish factors affecting oil prices

[The PPI report is in line with expectations, stopping the US stock market sell-off]

[U.S. Treasury Department announces sanctions on individuals and entities associated with Irans Islamic Revolutionary Guard Corps]

[The U.S. government and Congress are discussing a new round of economic sanctions against Russia]

[Russia hits targets of Ukrainian army, Ukrainian says counter-offensive action continues]

[The U.S. supplementary oil war reserve does not include a price trigger mechanism]

Bearish factors affecting oil prices

[EIA crude oil inventories increased more than expected]

[The Zaporozhye Nuclear Power Plant restores the third backup transmission line]

[Global buyers line up to buy Russian gas]

On the whole, natural gas prices are soaring this winter, and the shift from natural gas to oil for heating will increase, which will increase the demand for crude oil. In addition, the strike of American railway workers will boost oil prices to a certain extent; In addition, the U.S. sanctions on individuals and entities in Iran may make the Iranian nuclear negotiations far in the future. At the same time, the U.S. is considering a new round of sanctions against Russia, which will increase the geopolitical tension. Under the influence of many positive factors, oil prices may return to the 90 mark in the short term.

Foreign Exchange

In early trading on Wednesday,September 14, Beijing time, the US dollar index fell slightly and is currently trading around 109.60. The dollar index fell 0.1 percent to 109.71 on Wednesday, a day after posting its biggest one-day percentage gain since March 2020, as U.S. consumer prices rose unexpectedly.

U.S. producer prices fell for a second straight month in August, recording the smallest annual increase in a year. The report also showed a modest rise in core producer inflation, a sign that blocked supply chains are loosening.

The yen rose against the dollar on Wednesday after the Bank of Japan made a currency inquiry that may be aimed at preparing for currency market intervention, while investors digested U.S. producer price data.

Financial markets have now fully priced in a rate hike of at least 75 basis points at the end of next week's Fed policy meeting.

The two-year U.S. Treasury yield, a bellwether for rate expectations, rose 2.2 basis points on Wednesday to 3.778 percent, after jumping as much as 18.5 basis points after Tuesday's consumer price data. The euro was little changed at $0.9972, while the pound was up 0.4% at $1.1534.

International News

1.Confidence among CEOs of major U.S. companies fell to a two-year low due to rising inflation and interest rates.

2.According to local US media reports, nearly 5,000 railroad workers at the International Association of Mechanics and Aerospace Workers (IAM) voted to reject an agreement with the largest freight railroad company in the United States and authorize a strike.

3.Fitch sharply lowered its global GDP forecast due to supply shocks and faster rate hikes by global central banks.

4.The Ukrainian presidential spokesman said that Zelensky was not seriously injured in a traffic accident in Kyiv.

5.According to the International Market News Agency (MNI), Kazaks, the European Central Bank Governing Council, said that the European Central Bank may continue to raise interest rates after February next year.

6.According to the official website of the U.S. Treasury Department, the United States imposed sanctions on ten individuals and two entities in Iran for their ties to the Iranian Revolutionary Guard Corps.

7.The EIA data released yesterday showed that EIA crude oil inventories in the United States recorded an increase of 2.442 million barrels in the week to September 9, which is expected to increase by 833,000 barrels, and the previous value increased by 8.845 million barrels.

8.The U.S. Department of Energy said the plan to replenish the Strategic Petroleum Reserve (SPR) does not include a price trigger and is not likely to be implemented until after fiscal 2023.

9.The IEA monthly report shows that due to the slowdown in economic growth, the IEA slightly lowered its forecast for global oil demand in 2022 to 99.7 million barrels per day and 101.8 million barrels per day in 2023. It also said that the United States is set to replace Russia as Europe's largest supplier of crude oil.

10. French Prime Minister Borne said that the energy price ceiling will be maintained next year, and the natural gas price increase ceiling will be set to 15% from January next year, and the electricity price increase ceiling will be set to 15% from February next year. After the EU was unlikely to impose a price cap on Russian gas, EU energy chief Simon Simson said he was analysing how to put a price cap on all EU gas imports.In addition, the EU also proposed a mandatory target to reduce electricity consumption by 5% during peak electricity prices and a voluntary target to reduce electricity consumption by 10%.

11. The SEC announced a draft rule to increase central clearing in the U.S. Treasury market, and hedge funds face stricter clearing rules for U.S. Treasury transactions.

12.The Bank of Japan plans to increase bond purchases as part of its regular operations, and sources said the Bank of Japan conducted a currency review, apparently in preparation for currency intervention.

Statement | Disclaimer

Disclaimer: The information contained in this material is for general advice only. It does not take into account your investment goals, financial situation or special needs. Mohicans Markets has made every effort to ensure the accuracy of the information as of the date of publication. Mohicans Markets makes no warranties or representations regarding this material. The examples in this material are for illustration only. To the extent permitted by law, Mohicans Markets and its employees shall not be liable for any loss or damage arising in any way, including negligence, from any information provided or omitted from this material.The features of Mohicans Markets products, including applicable fees and charges, are outlined in the product disclosure statements available on the Mohicans Markets website and should be considered before deciding to deal with these products. Derivatives can be risky and losses can exceed your initial payment. Mohicans Markets recommends that you seek independent advice.

Mohicans Markets, (Abbreviation: MHMarkets or MHM, Chinese name: Mai hui), Australian Financial Services License No. 001296777.