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US Open Preview – Dollar cautious ahead of US CPI; Europe joins in global stock sell-off
October 11, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day Ahead: ECB minutes and US CPI attracting attention
Thursday’s calendar features numerous releases that could spur positioning in the markets.
The European Central Bank will release minutes of the latest monetary policy meeting at 1130 GMT. While no surprises are expected after the central bank maintained the guidance that the asset purchase program will end in December 2018 and interest rates will remain steady until summer 2019, investors will be interesting to clarify central bank’s economic views and particularly its wage growth prospects. Especially after the ECB Mario Draghi increased hopes that a tighter labor market could provide support to the underlying inflation at his latest press conference. Still, he mentioned that the balance of risks surrounding growth has not changed, with traders probably shifting some attention to any comments related to the Italian fiscal burden and US trade protectionism as well.
Out of the US, the Consumer Price Index will come under the spotlight at 1330 GMT, while earlier at 1230 GMT weekly jobless claims – initial and continued – will be also awaited. . The number of initial benefits claimants for the week ending October 6 is anticipated to be 206k, little changed from the preceding week’s 207k.
The headline CPI is expected to stand at 2.4% y/y, the lowest since March, compared to 2.7% seen in the previous month while, on monthly basis, is predicted to remain unchanged at 0.2%. Excluding food and energy, the core index is expected to tick higher to 2.3% y/y from 2.2% y/y previously. After the aggressive sell-off in Wall Street and thus the free-fall in the US dollar, any upside surprise in the data could prove dollar-positive.
On the Brexit front, EU Brexit negotiator Michel Barnier said yesterday the parties had agreed on much of the withdrawal agreement ahead of a summit of the bloc’s 28 national leaders next week, driving sterling higher. Today any fresh evidence that the EU and the UK are coming closer to a deal could provide tailwinds to the pound.
In oil markets, the EIA weekly report due at 1500 GMT is expected to indicate a smaller increase in US crude oil stocks for the week ending October 5 relative to the preceding week – the increase is estimated at 2.620 million barrels versus the previous week’s build-up of 7.975 million barrels.
In terms of public appearances, ECB President Mario Draghi and ECB Board Member Benoit Cœure will be attending the IMF and World Bank Annual meetings in Indonesia today and the next two days.
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