It has been a busy session on Thursday with plenty of political headlines to drive markets, coming alongside some secondary US data which mostly failed to meet expectations. Leading off during yesterday’s Asian session was the better than expected Australian employment data, which has seen the Aud$ rise sharply because the next RBA rate cut now seems to be on hold. This was followed by the early European news of a Brexit deal being finalised, causing Sterling to soar towards 1.3000 against the dollar before giving up some ground on doubts as to whether it will pass through the UK parliament at the Saturday sitting, tomorrow. The Brexit headline underpinned the ‘risk-on’ mood and came ahead of the news of a ceasefire in Turkey’s operation on Kurdish-led forces, brokered by the US’ in order to allow Kurdish troops to withdraw, and potentially halting the latest escalation in the Syrian war.
After a hectic session the US$ is lower by around 0.4% against the majors, with the Euro liking the Brexit outcome in reaching a 2 month high against the dollar, while US stocks remain bid as they approach their all time highs, underpinned by a spate of decent corporate earnings results. The metals were little changed while WTI rose by almost 2% , also liking the more positive risk sentiment.
In terms of data, the Philadelphia Manufacturing Business Index dropped -6 pts to 5.6 and missed expectation of 7.1 while the US initial jobless claims rose 4k to 214k in the week ending October 12, slightly above expectation of 212k. In other results, the monthly Industrial Production, Housing Starts and Capacity Utilisation all narrowly missed expectations while the Building Permits came in mildly higher than expected.
Looking ahead, Friday will commence with a heavy download of Chinese data, including the Q3 GDP (exp 6.1%yy), Industrial Production (exp 5.0%yy), Retail Sales (exp 7.8%yy) and Fixed Asset Investment (exp 5.4%yy) as well as the NBS Press Conference. The only event worth watching in Europe will be the EU Council Summit on Brexit, so expect some big swings in Cable, although the EU Current Account is also due. Note that the UK parliament will sit tomorrow – Saturday – in order to try and pass the Brexit agreement, so we may expect some serious gapping in Sterling either way on Monday; i.e. be square by the end of trade today! Ahead of that, the US session will be dominated by Fed speakers, including Kaplan/George/Clarida although there is little data to speak of. Have a good weekend.
Economic data highlights will include:
Fri: Japan National CPI, China Q3 GDP, September Retail Sales, Industrial Production, NBS Press Conference, German Wage Price Index, EU Current Account, Fed’s Kaplan Speech
Market moves, in brief:
FX: DXY 97.61 (-0.41%)
Bonds: US10Y; 1.758% (+0.90%), German 10Y; -0.406% (-4.62%), UK 10Y; 0.611% (-0.21%), Australian 10Y; 1.112% (+5.74%), NZ 10Y; 1.211% (+1.72 %), China 10Y; 3.164% (+0.03%)
Stock Indices: DJI; +0.18%, S+P; +0.35%, NASDAQ; +0.42%, EUStoxx50; -0.30%, FTSE100; +0.20%, Shanghai Composite; -0.05%,
Metals: Gold $1492 oz (+0.14%), Silver $17.55 oz (+0.92%), Copper $2.6000 lb (+0.41%), Iron Ore $90.00 per tonne (NYMEX) (-1.52%),
Oil: WTI $54.02 pb (+1.92%)
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