• Small gains seen in most indices with US making new record highs
  • UK100 also on the rise as GBP falls following construction PMI miss
  • NZDUSD falls to test key level after sharp drop in GDT
  • Bitcoin falls lower as recent rise is tested

It’s been a fairly steady session for stocks today, with the US500 managing to eke out a small gain at the time of writing and post yet another all-time high. The UK100 has seen a bigger percentage increase and moved up to its highest level in more than 3 weeks, receiving a further boost from the drop seen in the pound. 

The depreciation in sterling came after a second successive day with a negative economic release, with the construction PMI falling to a 13-month low. Coming on the back of a disappointment in the manufacturing equivalent just yesterday, the recent rise in the pound is being put to the test, and should we get further weakness in tomorrow’s services PMI – which is seen as the most important of the trio – then a deeper pullback may be on the cards. 

Wednesday will also see the DE30 trade once more, with the German benchmark closed today for a bank holiday. With the index ending Monday close to a record high, bulls will have the all-time peak in their cross-hairs no doubt. The divergence seen between German and Spanish stocks has grown more pronounced in recent sessions following the Catalan independence vote and a look at the bond market reveals that the relative yield spread has as of yet, failed to support such a disparity. 

On the whole today has been fairly mixed for the US dollar, but there have been notable gains seen against the GBP, ZAR and NZD. The South African Rand fell to its lowest level against the buck today with talk of a possible downgrade by credit rating agencies weighing on ZAR and sending the USDZAR pair to a 5-month high.

 The most recent reading for the Global Dairy Trade (GDT) auction has shown a fairly large drop of 2.4% which ends a run of 3 successive increases. Not only is the decline itself a bad sign for milk prices, but also the size of the drop. You have to go back to May to see a bigger swing on the prior result. The sharp decline is a blow in particular for the New Zealand dollar, with the Kiwi a major exporter of milk. The NZDUSD has fallen back towards its lowest level of the day following the release and price is now not far from the late-August low of 0.7130.

Bitcoin seems to be losing some of its appeal since the beginning of this week following the Chinese clampdown which has come into effect since October 1st. Price has fallen lower by around 3% today and a failure to close above 4400, as well as a test of a rising trendline mean that the next session or two could be key in determining the direction of the next sustained move. Meanwhile, Goldman Sachs mulls over helping its customers trade Bitcoin (BTCUSD) and other cryptocurrencies.