It has been another mixed session for currency markets, with Sterling being the star performer after the stronger than expected GDP data boosted the chance of a November BOE rate hike. On the other side of the coin, the Aud$ has been the laggard on the back of the miss in the CPI expectation, yesterday, suggesting that the RBA will be on hold for a while to come. The US$ and the Yen are mixed, while the Euro and the Chf are both slightly firmer ahead of today’s ECB meeting, with the Euro being underpinned by the German IFO business climate rose to 116.7 in October, up from 115.3, beating expectation of 115.1 in making the reading the highest level on record. In other markets, stocks have seen a bit of a pullback as they eye the technical breakout in the 10 year bond yield chart, which is now trading above 2.4%. Gold, Silver and WTI are all pretty much unchanged after a pretty tight session for each of them. In terms of US data, sales of new U.S. single-family homes unexpectedly rose in September, hitting their highest level in nearly 10 years. New Home Sales surged 18.9% to a seasonally adjusted annual rate of 667,000 units against expectations of a fall of 0.9% to 555,000 units.
Thursday will kick off in Asia with the NZ trade data, the Australian import/export price index and a speech from the RBA’s Debelle. It becomes rather tame after that though, until the main event of the session, being the ECB Interest Rate Decision. While no change is expected, the market pretty much assumes that Mario Draghi will announce a tapering of the QE program from Eur 60 bio to Eur 30 bio per month and to prolong the agenda for a further 9 months. Unless he is more hawkish than expected I suspect the Euro will be a sell, either way. There is also a chance that Donald Trump may find time to announce the next head of the Fed if he can leave off fighting with members of his own party. A possible negative coming from all this is the possibility that the tax reform plans may not be able to pass in the Senate and this would put a dent in the otherwise bullish outlook for the dollar. US data today will consist of the weekly Jobless Claims, the Provisional Wholesale Inventories, the Goods Trade Balance and the Pending Home Sales. FOMC member Kashkiri will also be speaking.
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|ASX SPI: 5879|