US Open Preview – Pound cheers on Brexit optimism and BoE rate guidance
November 1, 2018 1:26 pm
Here are the latest developments in global markets:
FOREX: Pound pairs were trading notably higher early in the European session, benefiting on reports the EU and the UK have reached a tentative agreement to allow British financial services companies to have a continued access to European markets after Brexit. It should be kept in mind though that the UK’s Brexit negotiator said that “nothing is agreed until everything is agreed”. On the monetary policy front, all nine BoE policymakers voted to keep rates steady at 0.75%, while slightly lowering growth projections for 2018 and 2019 to 1.3% and 1.7%, from 1.4% and 1.8% previously respectively. Yet, the BoE expressed that it expects inflation to hold above 2.0% in the next two years, flagging a steeper rate path in case of an orderly Brexit. Pound/dollar rallied to 1.2912 after the rate announcement (+1.12% on the day) and pound/yen jumped to 145.75 (+1.10%). News on whether a EU-UK meeting will take place this month could spur positioning in the markets. Euro/dollar followed cable higher, rebounding from a 2 ½-month low of 1.1299 touched yesterday, to 1.1396 (+0.76%) despite political risks in Italy and Germany hanging in the background. Dollar/yen was flat, slightly below the 113 round-level. The dollar index slipped by 0.71% on the back of a stronger euro and pound. Aussie/dollar and kiwi/dollar surged by 1.46% and 1.64% respectively. Earlier, Australia’s trade surplus arrived surprisingly higher, while rising hopes for a Brexit deal could have also been helpful for the typically risk-on antipodean currencies. Dollar/loonie slumped to a one-week low of 1.3088 (-0.50%), while dollar/swissie pulled back to 1.002 (- 0.57%) after topping at 1.009 on Wednesday, the highest since May 2017.
STOCKS: European stocks started the month mostly on the upside, capitalizing on upbeat earnings results. The British FTSE 100, though, which closed near three-week highs on Wednesday was uanble to increase momentum on the back of a stronger pound. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 climbed by 0.42% and 0.11% respectively at 1215 GMT, with telecommunications and financials offsetting declines in energy. The German DAX 30 rose by 0.46%, the French CAC 40 flattened, the Spanish IBEX 35 gained by 0.52%, while the Italian FTSE MIB surged by 0.66%. In corporate news the Dutch bank ING printed stronger than expected profits despite being fined previously, while earnings results from Credit Suisse disappointed. In Asia, Japanese stock indices closed lower, while Chinese higher. In the US, futures tracking S&P 500, Nasdaq 100, and Dow Jones were up by around 0.35%, pointing to a positive open.
COMMODITIES: Oil markets were printing losses as US crude inventories continued to rise for the sixth straight week according to the EIA weekly report, while in a monthly statement the agency said that US crude stocks reached record highs in August. Specifically, WTI crude and Brent retreated to one-month lows, weakening by 0.40% and 0.60% respectively. In precious metals, gold posted a big bounce towards $1,228.70/ounce (+1.18%) after bottoming at three-week lows yesterday.
Day Ahead: BOE keeps rates steady with Carney conference underway; US ISM manufacturing PMI & Australian retail sales in focus as well
The British pound surged today mainly on hopes the EU and the UK could reach a common ground on Brexit, with the conclusion of the BoE policy meeting adding more sparkle to the currency. The Bank kept the policy rate steady at 0.75% with a 9-0 vote as was widely expected. Also, besides the rate decision and the meeting minutes, BOE released its quarterly Inflation Report, which will be discussed more by Governor Mark Carney at a press conference that commenced at 1230 GMT.
Weekly US initial and continued jobless claims data are scheduled for release at 1230 GMT. Individuals applying for unemployment benefits for the first time are yet again expected to remain below the 300k threshold that’s associated to a healthy labor market. Specifically, projections are for initial claims to stand at 213k from 215k in the preceding week.
Moreover, October’s final Markit manufacturing PMI will be released at 1345 GMT, with data on construction spending and ISM’s manufacturing PMI following at 1400 GMT. Predictions call for the ISM manufacturing PMI for October to inch down by 0.8 points to 59.0.
Australian retail sales for September are due at 0030 GMT. Month-on-month, sales are expected to expand by 0.3%, the same pace as in August but on a quarterly basis the figure is predicted to tick lower, growing by 0.4% from 1.2% in the previous month. The Australian dollar saw an aggressive bullish rally today; better-than-expected releases would endorse this bullish attitude.
In terms of public appearances, Bank of Canada Senior Deputy Governor Wilkins will be giving a speech at 1700 GMT.
Apple, the world’s largest company by market cap, will be releasing quarterly results after the closing bell on Wall Street.
Here are the latest developments in global markets:
Day Ahead: BOE keeps rates steady with Carney conference underway; US ISM manufacturing PMI & Australian retail sales in focus as well
The British pound surged today mainly on hopes the EU and the UK could reach a common ground on Brexit, with the conclusion of the BoE policy meeting adding more sparkle to the currency. The Bank kept the policy rate steady at 0.75% with a 9-0 vote as was widely expected. Also, besides the rate decision and the meeting minutes, BOE released its quarterly Inflation Report, which will be discussed more by Governor Mark Carney at a press conference that commenced at 1230 GMT.
Weekly US initial and continued jobless claims data are scheduled for release at 1230 GMT. Individuals applying for unemployment benefits for the first time are yet again expected to remain below the 300k threshold that’s associated to a healthy labor market. Specifically, projections are for initial claims to stand at 213k from 215k in the preceding week.
Moreover, October’s final Markit manufacturing PMI will be released at 1345 GMT, with data on construction spending and ISM’s manufacturing PMI following at 1400 GMT. Predictions call for the ISM manufacturing PMI for October to inch down by 0.8 points to 59.0.
Australian retail sales for September are due at 0030 GMT. Month-on-month, sales are expected to expand by 0.3%, the same pace as in August but on a quarterly basis the figure is predicted to tick lower, growing by 0.4% from 1.2% in the previous month. The Australian dollar saw an aggressive bullish rally today; better-than-expected releases would endorse this bullish attitude.
In terms of public appearances, Bank of Canada Senior Deputy Governor Wilkins will be giving a speech at 1700 GMT.
Apple, the world’s largest company by market cap, will be releasing quarterly results after the closing bell on Wall Street.
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