Friday 9th October: European Open Briefing

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Global Markets:

  • Asian stock markets: Nikkei up 0.80 %, Shanghai Composite gained 0.40 %, Hang Seng rose 1.85 %, ASX rallied 1.05 %
  • Commodities: Gold at $1144 (-0.05 %), Silver at $15.69 (-0.50 %), WTI Oil at $49.70 (+0.55 %), Brent Oil at $53.28 (unch)
  • Rates: US 10 year yield at 2.09, UK 10 year yield at 1.82, German 10 year yield at 0.59

News & Data:

  • FOMC Minutes: Many members see lift off conditions to be met this year
  • FOMC Mins: Almost all participants expect inflation below 2% in near term
  • Australia Home Loans (MoM) Aug: 2.9% (exp 4.7% prev 0.3%)
  • Australia Investment Lending (MoM) Aug: -0.4% (prev 0.5%)
  • Fed’s Williams: Sees Nothing In Sep NFP’s That Undercuts Strengthening Labour Market
  • Williams: Surprised Some Thought NFPs Were Dismal
  • Williams: If Hit By Future Shock Fed Could Consider Negative Rates, QE, Or Forward Guidance — RTRS
  • Williams: Central Banks Need Strategies To Deal With Recurring Near 0% Interest Rates — RTRS
  • BoE Gov. Carney: Fed hike timing is not decisive for UK, China is important but also not decisive: BBG
  • BoE Carney: Anyone who says with certainty timing of BoE hike is wrong; decision will come into sharper relief around the turn of the year

Markets Update:

The US Dollar weakened further after the release of the FOMC meeting minutes. The minutes did not reveal much new and were pretty much in line with the comments made in the past two months. The US central bank thought the economy was close to warranting a rate hike in September, but they wanted stronger evidence that a global economic slowdown will not knock the US economy off course.

EUR/USD price action remains rather choppy. It rallied to 1.1327 after the FOMC minutes release, but eventually fell back to 1.1270 in Asia. Short-term techs are mixed and suggest further consolidation is likely. The key levels to watch are 1.1240 & 1.1170 to the downside and 1.1327 & 1.1458 to the topside. GBP/USD fell sharply after dovish comments from the Bank of England, but quickly retraced the entire move and reached a fresh intraday high in the NY session. In Asia, Cable traded within a 1.5340-70 range and is currently consolidating around the highs. Resistance is now seen at 1.5410.

USD/JPY volatility remains very low. There was not much of a reaction to the FOMC minutes and the pair consolidated within a 15 pips range in the Asian session. Meanwhile, commodity currencies strengthened further, with the AUD/USD slowly approaching 0.73 and NZD/USD on its way to 0.67 (it briefly touched the level after the FOMC minutes release).

Upcoming Events:

  • 09:00 BST – Norwegian CPI
  • 13:30 BST – Canadian Employment Change
  • 13:30 BST – Canadian Unemployment Rate
  • 14:10 BST – FOMC Member Lockhart speaks
  • 18:30 BST – Chicago Fed President Evans speaks

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