The US$ ended Friday under some mild downside pressure, while stocks were mixed, despite some upbeat data that saw the US Retail Sales rise by 0.4% to in August, above expectations of 0.2% although the ex-auto sales rose by only 0.0% mm, below expectation of 0.1% mm. The Michigan Consumer Sentiment Index also beat expectations, coming in at 92.00, above the expected 90.9. The dollar was unable to make any real headway though and was placed under some downside pressure because of Sterling, which rallied by 150bp as hopes grew of some progress by Boris Johnson in solving the issue of the Irish border backstop, which has been a key Brexit stumbling block. This helped to underpin the Euro, which had a choppy session following Thursday’s ECB meeting, closing slightly higher against the dollar. Elsewhere most pairs were fairly rangebound although the Kiwi looked heavy all day and ended near its lows. In other markets, Gold fell by 0.7%, while Silver was 3.65% lower, in part because US yields were higher after the US data, with the US10Y now back at 1.9%.
WTI was choppy but pretty much unchanged but that will not be the case this morning. Markets are yet to open, but WTI will see a gap higher following the drone attack in Saudi over the weekend. I would stay away until things settle down, and I would imagine we could eventually see a drift back to previous levels as supply comes back online.
There will be plenty of action this week with no less than 4 central bank decisions due, although the BOE, BOJ and the SNB will all be in the shadow of the Fed, at which a 25bp rate cut is pretty much written into the pricing despite the fact that most Fed officials are generally upbeat about the economy. As far as the other central banks go, the BOJ and the BOE are thought likely to stay on hold, while the SNB will possibly follow the lead of the ECB and cut rates into even further negative territory..
Aside from central bank activity, there will be plenty of action elsewhere, beginning today with the China Retail Sales, Industrial Production and NBS Press Conference, although there is little else on the calendar later in the session and trader are likely to stand aside until the FOMC on Wednesday. Tuesday sees the Minutes of the previous RBA Meeting and then later, the German/EU ZEW Economic Sentiment Survey, while Wednesday will see inflation data from the UK and the EU. Thursday will host the BOJ, BOE and SNB decisions although before any of those, the Australian Unemployment data will create some volatility for the Aud$, while Friday will be a quiet session, with just the Japan CPI, German PPI and the UK Public Sector Net Borrowing Requirements on the calendar. Have a good week.
Note that WTI and the metals are now open. Both have seen a gap higher on the back of the drone attack in Saudi, while the stock indices are opening a little lower. It will be volatile in the short term, I suspect, and I would stand aside at these levels. In the currency markets, the only moves so far are in the Jpy related pairs, which have seen renewed safe-haven demand; i.e. a stronger Jpy
Economic data highlights will include:
Mon: China Retail Sales, Industrial Production, NBS Press Conference, US New York State Empire Mfg Index
Tue: Australian House Price Index/Investment Lending for Homes, RBA Minutes, China House Price Index, German/EU ZEW Economic Sentiment Survey, US Industrial Production, Capacity Utilisation, NAHB Housing Market Index, API Weekly Crude Oil Stock Inventory, Global Dairy Trade Index
Wed: NZ Current Account, Japan Merchandise Trade Balance, Australian WBC Leading Index, UK CPI, PPI, RPI, EU CPI, US Housing Starts, Building Permits, FOMC Meeting/Statement/Press Conference/Projections,
Thur: NZ GDP, Australian Unemployment, BOJ Meeting/Interest Rate Decision, SNB Meeting/Interest Rate Decision, EU Current Account, UK Retail Sales, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, US Current Account,
Fri: Japan CPI, NZ Credit Card Spending, German PPI, UK Public Sector Net Borrowing Requirements, BOE Quarterly Bulletin
Market moves, in brief:
FX: DXY 98.20 (-016%)
Bonds: US10Y; 1.900% (+6.82%), German 10Y; -0.452% (+16.06%), UK 10Y; +0.679% (+17.99%), Australian 10Y; 1.168% (+0.80%), NZ 10Y; 1.33% (+2.70 %), China 10Y; 3.088% (0.00%)
Stock Indices: DJI; +0.14%, S+P; -0.07%, NASDAQ; -0.22%, EUStoxx50; +0.32%, FTSE100; +0.31%, Shanghai Composite; +0.75%,
Metals: Gold $1488 oz (-0.70%), Silver $17.45 oz (-3.63%), Copper $2.704 lb (+2.40%), Iron Ore $94.77 per tonne (NYMEX) (+0.67%),
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