Thursday 29th October: European Open Briefing

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Thursday 29th October: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei down 0.35 %, Shanghai Composite gained 0.15 %, Hang Seng fell 0.30 %, ASX lost 1.40 %
  • Commodities: Gold at $1159 (-1.40 %), Silver at $15.89 (-2.50 %), WTI Oil at $45.75 (-0.40 %), Brent Oil at $48.86 (-0.65 %)
  • Rates: US 10 year yield at 2.08, UK 10 year yield at 1.80, German 10 year yield at 0.47

News & Data:

  • Japan Industrial Production (MoM) Sep, P: 1.0% (exp -0.6% prev -1.2%)
  • Japan Industrial Production (YoY) Sep, P: -0.9% (exp -2.6% prev -0.4%)
  • Australia HIA New Home Sales (MoM) Sep: -4.0% (prev 2.3%)
  • Australia Export Price Index (QoQ) Q3: 0.0% (exp 0.6% prev -4.4%)
  • Australia Import Price Index (QoQ) Q3: 1.4% (exp 1.5% prev 1.4%)
  • Singapore Unemployment Rate (Q3): 2.0% (exp 2.1% prev 2.0%)
  • PBoC Fixes Yuan Reference Rate At 6.3596 (prev 6.3536)

FOMC Statement:

  • FOMC leaves rates unchanged
  • Fed says labour market slack has diminished since early this year
  • Fed says risks nearly balanced, monitoring global developments
  • Fed sees solid gains in household spending, business investment
  • Fed: Survey-based measures of inflation outlook remained stable
  • Fed repeats it sees inflation rising toward 2% in medium term
  • Fed: Pace of job gains `slowed,' unemployment `held steady'
  • Fed repeats housing improved further, exports been `soft'

Reserve Bank of New Zealand Statement:

  • RBNZ leaves rates unchanged
  • RBNZ: Further cuts seems likely
  • RBNZ: Appropriate to watch and wait
  • RBNZ: Stronger NZD means lower OCR would be necessary

Markets Update:

The US Dollar strengthened across the board after the FOMC statement, which was more hawkish than the market anticipated. The Greenback gained against all major currencies, except the Japanese Yen. USD/JPY rallied to 121.20 after the statement, but failed to sustain momentum and eventually fell back to 120.70 in Asia. With the pair struggling and no major US data until next week's NFP release, further consolidation seems likely. EUR/USD fell from 1.1060 to 1.09 post-FOMC and the next major support level now lies at 1.0805, which is the low of May & July 2015. The British Pound didn't decline as much as the Euro, with GBP/USD down roughly 90 pips after the FOMC. The next notable support level lies at 1.5200, the October 14th low.

Commodities currencies suffered as well, although the Canadian Dollar received some support from the sharp rise in Oil prices. AUD/USD fell from 0.72 to 0.7120 after the FOMC and extended losses overnight to 0.7080. NZD/USD found good support at 0.6620 and bounced from there back to 0.67, but quickly ran out of momentum. It fell back to .6650 and a retest of the .6620 support level seems likely.

Upcoming Events:

  • 08:55 GMT – German Unemployment Rate
  • 08:55 GMT – German Unemployment Change
  • 10:00 GMT – Euro Zone Consumer Confidence
  • 12:30 GMT – US GDP
  • 12:30 GMT – US Initial Jobless Claims
  • 13:00 GMT – German CPI
  • 13:10 GMT – FOMC Member Lockhart speaks
  • 14:00 GMT – US Pending Home Sales

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