25 Oct: Stocks down again, Euro too, on weak PMIs ahead of today’s ECB Meeting.

By | October 25, 2018

 

The Euro is sharply lower on Thursday after a series of weak PMIs point to a further slowdown in the EU economy and were not a good lead into today’s ECB Meeting at which Mario Draghi’s Press Conference will be keenly watched. A notably bearish tone would keep the Euro under further pressure. Elsewhere in the EU, the standoff between Italy and EU over the budget continues, with the Italian government not seeming to be in the mood to back down on the 2019 deficit target. Sterling is also weak again today on the latest Brexit impasse.

In terms of data, the EU PMI manufacturing dropped to 52.1 in October, down from 53.2 and missed expectation of 53.1, a 26-month low. The PMI services dropped to 53.3, down from 54.7, also missing expectations of 54, while the PMI composite dropped to 52.7, down from 54.1, both also at 2 year lows.

Stock markets have had an equally tough day (DJI -1.61%, S+P -2.0%, Nasdaq -3.4%), as mixed corporate earnings and weak US housing data (New Home Sales – 5.5%mm) fuelled anxiety that rising prices will crimp economic growth. Treasuries rallied for a second day on demand for haven assets with the US10Y down sharply, at 3.10%.

The metals were choppy but steady at the end of the day while WTI was also little changed after touching its lowest level (65.97) in almost two-months after a pledge by Saudi Arabia to meet any shortfall that materialises from Iranian sanctions.

Thursday will begin with the NZ Trade Balance ahead of a busy European session where the ECB Meeting and Mario Draghi’s press conference will be the main focus. Also due in Europe will be the German IFO Business Climate/Expectations and the German Consumer Confidence Survey.  The US will also be busy, with the main attraction being the September Durable Goods Orders (exp -0.9%mm, Ex-Transportation; +0.3%mm), along with the Pending Home Sales (exp -0.1%mm), Wholesale Inventories, Kansas Fed Mfg Activity and weekly Jobless Claims. The Fed’s Clarida and Mester will both be speaking.

Thur: NZ Trade Balance, German Consumer Confidence Survey, German IFO Business Climate/Expectations, ECB Interest Rate Decision, US Pending Home Sales, Durable Goods Orders, Goods Trade Balance, Kansas Fed Mfg Activity

CURRENCIES
EURUSD: 1.1390
Res  1.1415  1.1450  1.1470
Sup  1.1375  1.1350  1.1315
USDJPY: 112.29
Res  112.50  112.75  112.90
Sup  112.15  111.95  111.60
GBPUSD: 1.2881
Res  1.2895  1.2910  1.2925
Sup  1.2865  1.2845  1.2825
USDCHF: 0.9974
Res  0.9990  1.0025  1.0065
Sup  0.9935  0.9895  0.9860
AUDUSD: 0.7065
Res  0.7075  0.7090  0.7110
Sup  0.7055  0.7040  0.7020
NZDUSD: 0.6524
Res  0.6535  0.6545  0.6555
Sup  0.6515  0.6505  0.6495
INDICES / COMMODITIES
S&P.fs: 2684
Res  2700  2715  2730
Sup  2670  2655  2640
DJ30.fs: 24797
Res  24890  24980  25075
Sup  24745  24640  24550
SPI200.fs: 5836
Res  5740  5755  5770
Sup  5705  5690  5670
XAUUSD: 1231
Res  1235  1240  1245
Sup  1225  1220  1215
XAGUSD: 14.67
Res  14.75  14.85  14.95
Sup  14.60  14.50  14.40
WTI.fs: 66.30
Res  67.05  67.70  68.50
Sup  65.70  64.45  63.50