Thursday 22nd September: European Open Briefing

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Global Markets:

  • Asian stock markets: Shanghai Composite gained 0.75 %, Hang Seng rallied 1.30 %, ASX 200 gained 0.85 %, Nikkei closed for holiday
  • Commodities: Gold at $1337 (+0.45 %), Silver at $19.89 (+0.65 %), WTI Oil at $45.80 (+1.05 %), Brent Oil at $47.30 (+1.00 %)
  • Rates: US 10 year yield at 1.66, UK 10 year yield at 0.80, German 10 year yield at -0.01

RBNZ Rate Decision:

  • RBNZ Leaves OCR Unchanged at 2% As Expected
  • RBNZ: Monetary Policy to Remain Accommodative
  • RBNZ: A Decline in The NZ$ Is Needed
  • RBNZ: Further Easing Will Be Required
  • RBNZ: Weak Global Growth and Low Rates Putting Upward Pressure On NZ$
  • RBNZ: High NZ$ Makes It Difficult to Reach Inflation Target
  • RBNZ: Further Declines in Inflation Expectations Still a Risk
  • RBNZ: Strong Immigration Is Limiting Wages Pressure
  • RBNZ: House Price Inflation Remains Excessive, Macroprudential Having Moderating Influence
  • RBNZ: Outlook for Global Growth, Commodity Prices Remains Uncertain
  • RBNZ: Annual CPI Inflation Expected to Weaken in Sept Quarter

News & Data:

  • PBoC Fixes Yuan at 6.6513 (prev 6.6738)
  • RBA Gov Lowe: RBA View Is That a Flexible Medium-Term Inflation Target Remains the Right Monetary Policy Framework for Australia — RTRS
  • Lowe: Inflation Is Expected to Remain Low for Some Time, But Then to Gradually Pick Up as Labour Market Conditions Strengthen Further
  • Lowe: Housing Situation Is Somewhat More Comfortable Than It Was a Year Ago, Although We Continue to Watch Things Carefully
  • Lowe: The Economy Is Adjusting Reasonably Well to The Unwinding of the Biggest Mining Investment Boom in More Than a Century
  • Lowe: China Data Suggests No Major Interruption to Growth
  • RBA Gov Lowe: Further Cut in Rates Possible, Dependant On a Range of Factors – RTRS
  • Lowe: Expects Wages Will Rise as Unemployment Declines Further
  • Lowe: Lower $AUD Would Be Helpful
  • Asian shares surge, dollar falters on slow-motion Fed – RTRS
  • Fed keeps rates steady, signals one hike by end of year – RTRS

Markets Update:

The US Dollar weakened after the Federal Reserve decided to keep rates unchanged. While this was already expected, the fact that the Fed remains cautious and indecisive put the Dollar under pressure.

Volatility was lower than usual during and after the Fed event. USD/JPY had already seen a large decline yesterday as JPY shorts exited their positions post-BoJ and extended losses to 100.09 after the Fed. Further losses seem likely, with 100 support looking vulnerable.

EUR/USD is slowly moving higher, from 1.1185 to 1.1205 in Asia. GBP/USD also rallied post-FOMC and reached a high of 1.3060 in Asia. The commodity currencies gained overnight, although dovish comments from the RBNZ weighed on the New Zealand Dollar.

Upcoming Events:

  • 14:00 BST – US House Price Index
  • 14:00 BST – ECB President Draghi speaks
  • 15:00 BST – US Existing Home Sales
  • 15:00 BST – US CB Leading Index

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