The FX markets have been mixed today, with the commodity bloc trading firm against the US$ ahead of today’s NZ data and Australian CPI, while the EU majors are under pressure after some poor data that sent the Euro lower. Eurozone GDP growth slowed sharply to 0.2% qq in Q3, down from 0.4% qq, missing the expectation of 0.4% qq. Annual growth slowed to 1.7% yy, down from 2.2% yy also missing expectation of 1.9% yy. At the same time the Economic Sentiment Indicator, Industrial Confidence, Services Sentiment and Business Climate figures all missed expectation, doing EurUsd no favours, which now sits precariously above the 1.1300, August low/200 WMA.
Cable is back down near its 2018 lows after an awful CBI sales number (index @ 5, vs 20 expected) and a warning from S&P that a No-deal Brexit may push UK into recession and could trigger a rating downgrade. End of month demand for EurGbp also did little to help Sterling. Elsewhere the Aud and the Kiwi were bid as US$CNY held off the 7.00 line in the sand, which, in turn has been assisted by the better days in stocks.
The metals were mildly lower and WTI choppy, but unchanged at the end of the day.
US10Y treasury yields firmed slightly from 3.10% to 3.118%, the 2Y yield was up from 2.83% to 2.85%.
In terms of US data, the US Conference Board’s consumer confidence index rose to an 18-year high of 137.9 in October, helping to underpin the US$, with a solid labour market and tax cuts more than countering the current stock market rout and elevated trade tensions.
Wednesday begins with a busy Asian session, including some secondary NZ data the Building Permits, Activity Outlook and Business Confidence, ahead of the Australian Private Sector Credit (exp 0.4%mm), CPI (exp 0.4%qq, 1.9%yy), the China Mfg (exp 50.6)/Non-Mfg (exp 54.9) PMIs and the BOJ Interest Rate Decision – where no change is expected so all the focus will be on the Press Conference/Statement and the quarterly outlook. The EU will look to the Preliminary EU CPI (exp 2.2%yy, Core: 1.0 %.), EU unemployment (exp 8.1%) while the US will have the ADP Jobs data and comes ahead of Friday’s US jobs report.
Economic data highlights will include:
Wed: NZ Building Permits, ANZ -NZ Activity Outlook, Business Confidence, Australian Private Sector Credit, CPI, China Mfg/Non-Mfg PMIs, BOJ Interest Rate Decision/Press Conference/Statement, Japan Housing Starts, Construction Orders, Consumer Confidence Index, German Retail Sales, EU Unemployment, CPI, US ADP Jobs data, Chicago Purchasing Managers Index.
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