DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 1% and the FTSE 100 futures contract in the U.K. rose 1%. Wall Street’s Tuesday rebound was led by a 1.7% gain in the Nasdaq Composite, while the Dow Jones Industrial Average and S&P 500 made more muted gains of 0.5% and 1% respectively. Oil prices fell Wednesday after a surprise rise in U.S. oil inventories added to persistent worries about fuel demand as a surge in coronavirus cases around the globe led to stricter containment measures. The industry body, the American Petroleum Institute, reported late Tuesday that crude oil inventories rose by 691,000 barrels in the week to Sept. 18, compared with forecasts for a drop of 2.3 million barrels. Official data is due out later Wednesday. U.S. crude futures traded 1.1% lower at $39.37 a barrel, while the international benchmark Brent contract fell 0.9% to $41.34. Gold futures rose 1,3% to $1,883.30/oz.
Cable is expected to weaken further in the next weeks. The pair GBP/USD is currently trading just below the 1.27 hurdle whilst further GBP weakness is not ruled out but in view of the oversold conditions, according to FX analysts, the next support at 1.2650 is likely out of reach for now. UK Foreign Minister Dominic Raab said today that the new coronavirus restrictions announced by the Prime Minister (PM) Boris Johnson a day before are serious and proportionate. GBP/EUR is trading at 1.0860 this morning, next support is at 1.0760 that we saw beginning of September which is the lowest since March. The conditions are also worsening in the UK where COVID-19 related deaths surge the most since July 14, with Tuesday’s death toll being 37. This justifies why British PM Johnson warned, “if R does not go below 1, there could be more restrictions.” On the other hand, BOE Governor Bailey raised concerns over the economic weakness even before the activity restrictions, which in turn highlights the importance of today’s preliminary readings of September month PMI numbers. The EUR/USD pair has bounced off two-month lows of 1.1672, still remains vulnerable at 1.1683, down 0.18% on the day. EUR/USD could extend the decline to the 1.1630 level ahead of 1.1600 in the next weeks. Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European currency and the related markets as well. Whilst the USD attracted some haven flows amid concerns about rising COVID-19 cases, comments by the ECB Executive Board member Fabio Panetta fuelled expectations for further policy easing this year and weighed on the shared currency. This comes amid worries that the economic recovery in the Eurozone is stalling, which further contributed to the downfall. The Dollar Index was up 0.2% at 94.237, climbing to a eight-week high, while USD/JPY was up 0.2% at 105.12.

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