It has been a mixed session following on from the Fed decision to keep rate on hold. The US$ is a little lower, particularly against the Jpy, which has seen good gains since Fed Chair, Jerome Powell indicated that it would take a sharp turn higher in inflation for the FOMC to contemplate a rate hike. This, along with some negative trade-talk headlines, caused the Jpy to surge higher, which along with Gold/Silver (+1.06%/+1.39%) were the main beneficiaries of the Fed decision. Elsewhere, the US$ is mixed, while stocks and oil are lower as trade and economic worries took control, with the decline being initiated by a report suggesting that China may resist signing a comprehensive trade deal with the US and that negotiations are unlikely to progress beyond Phase 1 without current tariffs being removed. Also not helping the mood was the Chicago Purchasing Managers Index, which fell to 43.2 for October, its lowest level since Dec. 2015, or the US PCE which slowed to 1.3%yy in September, below expectations of 1.4%, while the core PCE slowed to 1.7% but matched expectations. US consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2%, in line with expectations.
Earlier in the session, the Eurozone GDP grew 0.2% qq in Q3, unchanged from Q2’s rate, beating expectation of 0.1% qq, and grew 1.1% yy. The EU CPI slowed to 0.7% yy in October, down from 0.8% yy, matching expectation, while the core CPI accelerated to 1.1% yy, up from 1.0% yy and beat expectation of 1.1% yy. The EU Unemployment rate was unchanged at 7.5%, above expectation of 7.4%.
Friday will begin with the Australian AIG/CBA, Japan and China Mfg PMIs, which will be closely followed by the Q3 PPI (exp 0.3%qq, 1.8%yy), the RBA Commodity Index, and the Caixin China Manufacturing PMI. It all gets rather thin in Europe, with just the UK Mfg PMI due for release, until the US session when the action will ramp up with the release of the October US Jobs/NFP/Average Hourly Earnings/Participation Rate (exp 3.6%, 85K, 0.3%mm, 63.2%). Have a good weekend.
Economic data highlights will include:
Fri: Australian PPI, Australian/Japan, Caixin China Manufacturing PMIs, US Jobs/NFP/Average Hourly Earnings data, ISM Mfg PMI/Prices Paid
Market moves, in brief:
FX: DXY 97.32 (-0.14%)
Bonds: US10Y; 1.684% (-5.1%), German 10Y; -0.405% (-13.8%), UK 10Y; 0.54% (-8.81%), Australian 10Y; 1.152% (+0.23%), NZ 10Y; 1.317% (+0.85%), China 10Y; 3.269% (-1.22%)
Stock Indices: DJI; -0.52%, S+P; -0.30%, NASDAQ; -0.14%, EUStoxx50; -0.44%, FTSE100; -1.12%, Shanghai Composite; -0.35%,
Metals: Gold $1512 oz (+1.10%), Silver $18.11 oz (+1.39%), Copper $2.6395 lb (-1.73%), Iron Ore $82.75 per tonne (NYMEX) (-0.84%),
Oil: WTI $54.14 pb (-1.33%)
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