26 Oct: Stocks rally strongly on positive profit results. Euro lower on cautious Draghi outlook. US Q3 GDP/PCE today.

By | October 26, 2018


Stock markets were in focus again on Thursday, reversing the previous session’s steep falls and trading sharply higher heading into the NY close. At the time of writing the S+P is up, 1.86%, DJI +1.63%, Nasdaq +2.95%, and comes after various corporate profit results outweighed expectations. Alphabet (Google) and Amazon will be reporting their results after the market closes and will help dictate the direction in Asia.

In the currency markets, the main action centred on the Euro, which is lower again following the ECB Meeting at which policy rates and the asset purchase program were left unchanged. ECB members remained confident on the economic outlook for the EU but acknowledged the risks, including protectionism and financial market volatility which has the potential to derail any recovery. As generally anticipated, the ECB reaffirmed that the €2.6 trillion asset purchase scheme will end this year and interest rates could rise after next summer. The Euro initially bounced on the news but then reversed lower after Mario Draghi Press Conference began where he again highlighted the risks around Italy and Brexit. Sterling was lower again too because of the ongoing fears of a no-deal Brexit. Elsewhere the currencies were choppy.

Gold is $10 off its highs while WTI is a bit higher, 0.7%, after a choppy session.

In terms of data, the US Core Durable Goods orders rose 0.1% last month, missing expectations for a 0.5% rise, while the weekly initial jobless claims increased by 5K to a seasonally adjusted 215K,  higher than economists’ forecast for a rise to 214K, and the September Pending Home Sales rose 0.5%, higher than the expected -0.1%.

The new Fed Vice Chair, Richard Clarida, has been speaking and won’t have pleased Donald Trump after saying that further US rate increases are warranted

Friday gets underway with the Tokyo CPI, ahead of next week’s Japan national CPI release. There is then nothing of real note (German Consumer Confidence) until the US session, although both Draghi/Coeure will be speaking and may create some waves for the Euro, but the main event will be the release of the Preliminary US Q3 GDP (exp 3.3%yy) and the US Personal Consumption/Expenditure (exp; Prices 2.0%, Core 1.8%qq). The Michigan Consumer Sentiment Index is also due expected to be @ 99. Have a good weekend.

EURUSD: 1.1366
Res  1.1380  1.1400  1.1430
Sup  1.1355  1.1335  1.1315
USDJPY: 112.58
Res  112.75  112.90  113.15
Sup  112.40  112.20  112.00
GBPUSD: 1.2815
Res  1.2830  1.2850  1.2865
Sup  1.2800  1.2785  1.2755
USDCHF: 1.0001
Res  1.0015  1.0045  1.0070
Sup  0.9970  0.9940  0.9915
AUDUSD: 0.7083
Res  0.7100  0.7120  0.7150
Sup  0.7065  0.7040  0.7020
NZDUSD: 0.6518
Res  0.6530  0.6545  0.6555
Sup  0.6505  0.6495  0.6480
S&P.fs: 2720
Res  2725  2740  2755.
Sup  2710  2695  2680
DJ30.fs: 25048
Res  25090  25215  25335.
Sup  24940  24845  24720
SPI200.fs: 5716
Res  5740  5755  5770
Sup  5705  5690  5670
XAUUSD: 1229
Res  1235  1240  1245
Sup  1225  1220  1215.
XAGUSD: 14.63
Res  14.75  14.85  14.95
Sup  14.60  14.50  14.40
WTI.fs: 67.29
Res  67.70  68.50  69.90
Sup  66.60  65.70  64.45