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US Open Preview – Brexit hopes hold pound up; US PPI in focus
October 10, 2018 12:26 pmVideo
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Here are the latest developments in global markets:
Day Ahead: US delivers PPI ahead of CPI figures tomorrow; Canadian building permits on today’s calendar
President Donald Trump noted overnight that he is not happy with the Fed’s policy, saying that rates don’t have to rise this fast as inflation is under control. The disagreement between Trump and the Fed is not something new and the dollar’s positive performance today is a testament to that.
Looking at the calendar, at 1230 GMT, US producer prices for September are scheduled to be released. Predictions are for the headline PPI to remain steady at 2.8% y/y, while on monthly basis it is expected to accelerate to 0.2% from -0.1% in the previous month. Excluding food and energy items, core producer prices are anticipated to rise to 2.5% y/y from 2.3% y/y before. These prints may raise some speculation that US CPIs – due out tomorrow – could move in a similar direction, driving the US dollar higher in case the numbers pop up better than expected.
Readings on US wholesale inventories will be available at 1400 GMT.
In Canada, building permits for the month of August will be delivered at 1230 GMT, with analysts predicting the gauge to inch up to 0.5% m/m versus a decline of 0.1% in the prior month.
Later in the day, at 2350 GMT, Japan will publish PPI stats, though as usual the yen is not expected to react much on the data.
In energy markets, investors will be waiting for the API weekly report to indicate the change in US crude oil stocks for the week ending October 1, at 2030 GMT.
Six months before Britain leaves the EU, markets are positive that a deal related to divorce terms could be secured before the EU summit kicks off on October 17-18. Today people familiar with Brexit negotiations in Brussels reported that the EU is not expecting any new proposals on the Irish border from Britain and that both sides are working to narrow existing differences. Still, they remained optimistic that intense talks between the sides in the next five days could find a solution to the Irish backstop by Monday.
Elsewhere, numerous speeches are on the agenda. At 1400 GMT, the EU’s Brexit negotiator Michel Barnier will be speaking at the European Parliament, while regional Fed Presidents Charles Evans (non-voting member in FOMC in 2018) and Raphael Bostic (voting member) will be making remarks at 1615 GMT and 2100 GMT respectively. The day ends with a speech by Luci Ellis, RBA Assistant Governor at 2230 GMT.
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