The U$ is sharply lower (DXY -0.6%),while stocks soared by around 2% after Fed Chair Powell said that the policy rate was ‘just below’ neutral, easing worries of a faster pace of interest rate hikes next year. This comes less than 2 months after saying rates were probably “a long way” from that point, and one day after Fed Vice Chair Clarida backed further interest rate hikes while noting the importance of monitoring economic data. Seems like a pretty confused outlook to me, and now we will look for further muddying of the waters, with the release of the FOMC Minutes, due later in the session.
Elsewhere, Cable staged a partial recovery assisted by the move in the dollar although the BOE has warned that crashing out of the EU without a deal could trigger a deep and damaging recession, with worse consequences for the UK economy than the 2008 financial crisis. The commodity currencies are sharply higher, with both the Aud and the Kiwi making strong gains closing near their highs. Note though that the Iron Ore price has collapsed by around 11% today, a huge fall and may impede further gains for the Aud$, in particular.
Looking ahead to Thursday, which will kick off with the NZ, ANZ Activity Outlook and Business Confidence, to be followed by the Australian, October, New Home Sales and CAPEX (exp 1%) data. The BOJs Masai will also be speaking in the Asian time zone. Europe will be pretty busy, with the focus on the German Preliminary CPI (exp 0.1%mm, 2.4%yy; HICP 0.1%mm, 2.4%yy), while the US will also be busy, with the Personal Consumption/ Expenditure figures – (Price Index, exp 0.2%mm 1.9%yy – Oct, Personal Spending exp +0.4% – Oct), Pending Home Sales (exp +0.5%). The focus though is likely to be on the FOMC Minutes as traders look to see what the Fed have in store for December, and then for 2019. After the Fed statements of the last 24 hours, be very nimble. Have a good day.
Economic data highlights will include:
Thur: NZ Activity Outlook, Business Confidence, Australian HIA New Home Sales, German Unemployment, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Personal Consumption/Expenditure, Pending Home Sales, FOMC Minutes
|INDICES / COMMODITIES|