31 Oct: Fed cut rates, US$ slightly weaker, stocks firm. BOJ Meeting today. EU GDP, CPI Later

By | October 31, 2019

As expected, the Fed cut interest rates for the third time this year in a move to ensure that the US economy weathers a global trade war without slipping into a recession, but signalled its rate-cut cycle might be on hold for the time being. Fed Chair Powell said that he believes monetary policy is currently in a good place, which the market saw as a slightly hawkish sign and initially bought the US$ although the price action was mostly close to previous levels and was generally rather choppy. By the end of his Press Conference most of the dollar’s gains had been given back and the choppy conditions seem set to continue, with the dollar actually turning a little lower and ending up under some mild downside pressure by the end of the session. Of particular interest, US$Jpy made a new trend high in reaching levels last seen on August 1st, but then turned lower as the US$ weakened and is currently back below 109.00.

Ahead of the FOMC announcement, the Q3 US GDP grew at 1.9% annualised, just slightly down from the Q2 reading of 2.0%, and beat expectation of 1.6%. The headline PCE slowed to 1.5% qq, down from 2.4% qq, and missed expectation of 2.0% qq but Core PCE accelerated to 2.2% qq, up from 1.9% qq, and beat expectation of 2.1% qq. The ADP figures showed that private employers in the US added 125,000 jobs in October, slightly above economists’ expectations.

Thursday is going to be another busy schedule, beginning with the NZ Building Permits (exp 2.3%mm), Business Confidence (exp -54.1) and Activity Outlook (exp -2.6%), which all be closely followed by the Australian Building Permits (exp 0.5%mm), Q3 Private Sector Credit (exp 0.2%mm),  China Mfg/Non-Mfg PMIs (exp 49.8/53.9) and the BOJ Monetary Policy  Meeting, where the general consensus is that the BOJ will stay on hold although I notice that a couple of banks are suggesting the chance of a minor easing from -0.1% to -0.2%. From Europe will come the EU Preliminary Q3 GDP (exp 0.1%qq, 1.1%yy), CPI (exp 0.7%mm) and Unemployment (exp 7.4%) as well as a speech from the ECB’s de Guindos, while the US session will focus on the US Personal Consumption/Expenditure, Jobless Claims and the Chicago Purchasing Managers Index. Have a good day.

Economic data highlights will include:

Thur: NZ Building Permits, Activity Outlook, Japan Industrial Production, Australian Private Sector Credit, Import/Export Index, Building Permits, China Manufacturing/No-Manufacturing PMI, BOJ Meeting/Interest Rate Decision/Press Conference, Japan Housing Starts, Construction Orders, EU GDP, CPI, Unemployment, US Personal Consumption/Expenditure Index, Jobless Claims, Chicago Purchasing Managers Index

Market moves, in brief:

FX: DXY 97.51 (-0.17%)

Bonds: US10Y; 1.782% (-3.20%), German 10Y; -0.356% (-1.05%), UK 10Y; 0.592% (-4.56%), Australian 10Y; 1.149% (-3.57%), NZ 10Y; 1.719% (-2.57 %), China 10Y; 3.310% (+0.85%)

Stock Indices: DJI; xxxx%, S+P; xx%, NASDAQ; xxxx%, EUStoxx50; xxxx%, FTSE100; xxxx%, Shanghai Composite; -0.50%,

Metals: Gold $1495 oz (+0.52%), Silver $17.86 oz (+0.33%), Copper $2.682 lb (-0.35%), Iron Ore $83.45 per tonne (NYMEX) (+0.23%),

Oil: WTI $54.88 pb (-1.14%)

EURUSD: 1.1143
Res  1.1150  1.1165  1.1180
Sup  1.1130  1.1115  1.1100
USDJPY: 108.80
Res  109.05  109.30  109.60
Sup  108.65  108.45  108.20
GBPUSD: 1.2898
Res  1.2905  1.2935  1.2965
Sup  1.2865  1.2830  1.2795
USDCHF: 0.9896
Res  0.9905  0.9925  0.9945
Sup  0.9885  0.9865  0.9845
AUDUSD: 0.6891
Res  0.6895  0.6910  0.6925
Sup  0.6875  0.6860  0.6835
NZDUSD: 0.6373
Res  0.6380  0.6395  0.6405
Sup  0.6360  0.6345  0.6330
S&P.fs: 3044.78
Res  3045.00  3060.00  3075.00
Sup  3030.00  3015.00  3000.00
DJ30.fs: 27107.50
Res  27140.00  27215.00  27320.00
Sup  27030.00  26930.00  26815.00
SPI200.fs: 6664
Res  6685  6710  6730
Sup  6650  6640  6620
XAUUSD: 1494.87
Res  1500.00  1505.00  1510.00
Sup  1490.00  1485.00  1480.00
XAGUSD: 17.85
Res  17.90  18.05  18.20
Sup  17.70  17.60  17.45
WTI.fs: 54.81
Res  55.60  56.20  56.90
Sup  54.35  53.75  53.10

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