Newsletter – 27th October 2017

Morning Bulletin

Yesterday

  • The focus of yesterday’s trading was of course on the ECB’s monetary policy meeting and as widely expected benchmark interest rates were left on hold at 0.00%. It was the accompanying statement and press conference however that were closely watched.
  • The ECB and President Draghi had been drip-feeding information and preparing markets and investors for the potential tapering of their massive QE program for some months now and so it came as no great surprise when they announced yesterday that they would be cutting their asset purchases from €60Billion to €30Billion a month from the start of 2018.
  • Despite everything largely being in-line with expectations the Euro was still sold off in FX space, perhaps a result of what appeared a more Dovish stance from the ECB as they reiterated that interest rates would remain on hold for an extended period of time following the end of the asset purchase program (APP), and that they still stood ready to increase both the size and duration of the APP should Eurozone inflation tilt to the downside going forward.
  • Weighed down by the ECB, The Pound enjoyed a solid day’s trading against the Euro, closing up some 0.45% at 1.1273. However against it’s other major counterparts Sterling had a miserable day, struggling to find any real strength following a CBI Retail Sales report released late morning. The report showed there had been a sharp decline in sales during October, the decline of -36 was thew worst print since March 2009 and miles away from the growth of +15 expected.
  • Whilst the afternoon was dominated by the ECB there a number of US data releases:
    • Unemployment Claims 233K (235K Exp)
    • Goods Trade Balance -64.1Bn (-63.8Bn)
    • Prelim Wholesale Inventories m/m 0.3% (0.4% Exp)
    • Pending Home Sales m/m 0.0% (0.2% Exp)
Overnight

  • The Australian Government finds itself in crisis this morning as the High Court ruled that Deputy PM Barnaby Joyce was in fact ineligible to sit in parliament, as he was also a citizen of New Zealand when elected. The ejection of Joyce now means PM Malcolm Turnbull’s party have lost their once seat majority in the lower house.
  • Speaking yesterday evening Bank of Canada Gov Poloz suggested a lot of things would need to come together for the BOC to consider hiking interest rates again soon.
  • Japan National Core CPI y/y 0.7% (0.7% Exp)
  • Japan Tokyo Core CPI y/y 0.6% (0.5% Exp)
  • Australia PPI q/q 0.2% (0.4% Exp)
  • German Import Prices m/m 0.9% (0.5% Exp)
Today
  • Quiet end to the week where economic data is concerned.
  • There are just the two prints due this afternoon, however they are medium/high impact in nature so could still produce sizeable shifts, with US GDP and US Consumer Sentiment.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1259 -0.22
GBP/USD 1.3090 -0.52
EUR/USD 1.1625 -0.22
AUD/USD 0.7637 -0.27

 

Time (GMT) Region Data Release Forecast Previous
12.00 EUR ECB Member Weidmann Speaks
13.30 USD Advance GDP q/q 2.6% 3.1%
15.00 USD Revised UoM Consumer Sentiment 100.8 101.1