Thursday 19th November: European Open Briefing

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Thursday 19th November: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 1.05 %, Shanghai Composite fell 0.05 %, Hang Seng rose 1.20 %, ASX 200 gained 1.60 %
  • Commodities: Gold at $1075.70 (+0.65 %), Silver at $14.20 (+0.80 %), WTI Oil at $42.28 (+0.75 %), Brent Oil at $44.50 (+0.59 %)
  • Rates: US 10 year yield at 2.26, UK 10 year yield at 1.92, German 10 year yield at 0.50

News & Data:

  • BoJ Leaves Monetary Policy Unchanged As Expected
  • BoJ Votes 8-1 To Keep Monetary Base Target Unchanged, Kiuchi Dissenting
  • BoJ: Japan's Economy Has Continued To Recover Moderately
  • BoJ: To Watch Risks, Adjust Policy As Appropriate
  • BoJ: To Continue QQE Until Stable 2% Inflation Maintained
  • BoJ: Easing Is Exerting Intended Effects
  • BoJ: Inflation Expectations Rising From Longer-Term View
  • Japan Trade Balance (Oct): JPY 111.5Bln (exp JPY -246.3Bln prev rev JPY -115.8Bln)
  • Japan Exports (YoY) Oct: -2.1% (exp -2.0% prev rev 0.5%)
  • Japan Imports (YoY) Oct: -13.4% (exp -8.6% prev rev -11.0%)
  • Japan All Industry Activity Index (MoM) Sep: -0.2% (exp 0.2% prev -0.2%)
  • PBoC Fixes Yuan Reference Rate At 6.3791 (prev 6.3796)

FOMC Minutes:

  • Officials most agreed on gradual accommodation removal
  • Members wanted to convey that Dec lift-off may be appropriate
  • Most officials said lift-off conditions could be met by December
  • A couple FOMC members worried that language change sent too strong of a December signal
  • Saw downside risks from global economic and financial conditions as having diminished

Markets Update:

The FOMC minutes did not reveal anything new and the US Dollar weakened across the board. Overnight, the Bank of Japan left rates and QE unchanged and the press conference is scheduled for 06:30 GMT. USD/JPY settled around 123.60 at the NY close, but came under pressure as Tokyo opened and eventually fell to 123.10. Key support now lies at 123.00 and 122.40.

EUR/USD reached a low of 1.0620 post-FOMC, but caught a bid at the Asian open and rallied to 1.0720. Resistance is now seen at 1.0760 and 1.0805. GBP/USD extended gains overnight to 1.5294 after several days of consolidation between 1.5150 and 1.5250. The focus is now on UK retail sales, which will be published today at 09:30 GMT. The market is expecting a 0.5 % decline month-on-month and 4.2 % increase year-on-year.

Upcoming Events:

  • 07:00 GMT – Swiss Trade Balance
  • 09:30 GMT – UK Retail Sales
  • 12:30 GMT – ECB Meeting Minutes
  • 13:30 GMT – US Initial Jobless Claims
  • 15:00 GMT – US CB Leading Index
  • 15:00 GMT – US Philadelphia Fed Manufacturing Index

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