Originally published by AxiTrader
Markets Overview:
- Equities: Hang Seng (-0.18 %), CSI 300 300 (+1.02 %), KOSPI (+0.25 %), S&P/ASX 200 (-0.07 %), Japanese markets closed
- Commodities: Crude Oil $45.74 (+0.88 %), Brent Oil $47.36 (+1.07 %), Natural Gas $2.77 (-0.7 2%), Gold $1302.20 (+0.42 %), Copper $222.65 (-0.18 %)
What traders are talking about:
US Dollar weakens as elections back in focus
The Fed meeting is behind us, and traders are now again fully focused on next week's US presidential election. Yesterday's Fed announcement was almost a non-event, with little new information. Though, there have been a few changes in the statement, most notably the change of "inflation has continued to run below" to "inflation has increased somewhat, but is still below target". The FOMC also dropped the line "inflation is expected to remain low" and replaced it with "inflation is expected to rise to 2 % over the medium term". Inflation expectations have increased, and the latest statement reflects this.
What surprised markets a bit was that FOMC member Rosengren withdraw his vote for a rate hike, leaving only two dissents. However, markets were not shaken by that, and expectations for a December rate hike increased after the statement was released, according to the FedWatch Tool. The probability of a Dec rate hike stands now at 71.5 % vs. 68.4 % previously.
Dollar under pressure
The Greenback is feeling the heat amid concerns about the US elections. It extended losses against the major currencies overnight, especially against the Yen. While Tokyo was closed today for a public holiday, there was decent volatility in USD/JPY which declined from 103.45 to a low of 102.55 so far.
The Kiwialso strengthened overnight, and climbed to a high of 0.7330 overnight. However, the Aussie is still struggling with strong resistance ahead of the 0.77 level. It traded in a 0.7640-85 range overnight.
Strong Chinese data
The Caixin Services PMI figure for October came in at 52.4, an improvement from last month (52.0 prev.) and the strongest in four months. The composite PMI arrived at 52.9 (vs. 51.4 previously), the fastest pace of rising in more than three years. Caixin noted for the services PMI that total new order growth strengthened and that services companies expanded their payrolls for the second month in a row. Caixin concluded that the economy continued to expand in October and at a stronger growth rate.
Yuan rallies
The Yuan strengthened overnight amid broad USD weakness. The PBoC set the USD/CNY mid-point at 6.749 for today (vs. 6.7562 yesterday), while USD/CNH (offshore Yuan) fell from 6.7713 to 6.7640 earlier in the session.
Aussie trade data
The Australian trade balance for September stood at -A$1.227 billion vs. an expected deficit of A$1.70 billion. The smaller than expected deficit was driven by a boost in exports, which rose 2 % (vs. 0 % previous). Meanwhile, imports decreased by 1 %.
Bank of England
The focus today will be on the Bank of England rate announcement & inflation report, followed by a speech by BoE Governor Carney. While the BoE is expected to keep rates unchanged, the inflation report and Carney speech should be more interesting. Earlier this week, Carney revealed that he will stay at the BoE until June of 2019, after rumours appeared that he might resign.
Economic Calendar:
- 09:30 GMT - UK Services PMI
- 10:00 GMT - Euro Zone Unemployment Rate
- 12:00 GMT - Bank of England Interest Rate Decision
- 12:00 GMT - Bank of England Inflation Report
- 12:00 GMT - Bank of England Meeting Minutes
- 12:30 GMT – Bank of England Governor Carney speaks
- 12:30 GMT - US Initial Jobless Claims
- 13:45 GMT - US Services PMI
- 14:00 GMT - US ISM Non-Manufacturing PMI