[B]End of Quarter Indices Squaring:[/B]
Another quarter down and the run into Christmas is now in sight! While not the greatest result overall for stock indices, the day traders were thrown a bone overnight with some nice little rallies in both Europe and the US.
The rallies were more to do with end of quarter position squaring after a period of sustained selling than any fundamentals, although the month’s ADP employment report beating expectations did give the markets hope for Friday’s NFP number.
Read the full End of Quarter Indices Squaring post in the Daily Market Update on the Vantage FX News Centre.
[B]NFP Friday Scenarios:[/B]
Another quarter down and following last week’s Fed remarks on October being in play, tonight’s NFP number takes on added significance.
The September jobs report number is expected to show that the US economy has managed to shrug off external concerns and a recent stock market price action roller-coaster, and continue to print numbers keeping the average moving in the right direction for the Fed to act on.
Read the full NFP Friday Scenarios post in the Daily Market Update on the Vantage FX News Centre.
[B]Fed Unable to Help the RBA:[/B]
First quickly moving through Friday’s BIG NFP miss:
“USD Average Hourly Earnings m/m (0.0% v 0.2% expected)”
“USD Non-Farm Employment Change (142K v 201K expected)”
“USD Unemployment Rate (5.1% v 5.1% expected)”
An ugly set of numbers no matter which way you look at them and probably the last nail into the coffin of a 2015 rate hike. As the futures market all but prices out a hike this year, that September liftoff expectation we were speaking about not that long ago is all but a distant memory now!
Read the full RBA Preview post in the Daily Market Update on the Vantage FX News Centre.
[B]RBA Unmoved:[/B]
Yesterday’s Reserve Bank meeting, while largely uneventful in terms of systematic changes in policy or direction, did have quite the effect on price with the Aussie Dollar putting in a solid 100 pip gain for the day.
The RBA held off the slight temptation that it surely had to cut rates again, leaving the cash rate on hold at 2.00% and not giving the markets much fat to chew on in terms of guidance either.
Read today’s Daily Market Update on the Vantage FX News Centre.
[B]BoJ Unchanged while the Buck Splutters:[/B]
Ah the cherry blossom filled Japanese countryside. So peaceful… Now lets ruin it with some currency talk shall we!
Yesterday saw the Bank of Japan leave monetary policy unchanged, giving a slight boost to the Japanese Yen in the process. With no change to their famed quantitative easing program largely expected, the USD/JPY sellers looking for a miss were left out in the cold.
Giving some traders a reason to look for a miss in expectations and play for a USD/JPY pop, was a belief that recent weakness in Japanese data would push the central bank to prolong its QE program further.
Read the full BoJ Review in the Daily Market Update on the Vantage FX News Centre.
[B]Cable FOMC Conundrum:[/B]
The British Pound was the big story overnight, experiencing a wild 100 pip V shaped swing as Cable first fell on the Bank of England decision and then gained it all back as the FOMC minutes came into play.
Read the full Cable FOMC Conundrum post in the Daily Market Update on the Vantage FX News Centre.
[B]The Calm Before the Storm:[/B]
A whole string of bank holidays to start the week with Japan off (again!) in observance of Health-Sports Day, while the US and Canada are also off for Columbus Day and Thanksgiving respectively. The most notable to Forex markets is of course the US holiday, but just remember that today sees US bond markets closed while stock markets remain open. Forex markets will likely see reduced liquidity to start the week with the possibility of erratic price action on the back of it.
Read The Calm Before the Storm post in the Daily Market Update on the Vantage FX News Centre.
[B]Lego City Oil:[/B]
With the US holiday behind us, the true trading week starts today with the major fundamental news hitting the wires being a report citing that OPEC has continued to boost Crude Oil production despite its issues.
The price of Oil came under pressure overnight, sold hard throughout the session after secondary sources cited in OPEC’s monthly report stated huge supply increases despite the forecast slowdown in demand, most notably from the Chinese market.
Read the Lego City Oil blog in the Daily Market Update on the Vantage FX News Centre.
[B]Possible EUR/JPY and NZD/JPY Correlation Trade:[/B]
Today’s NZD/JPY chart follow’s on from yesterday’s look at EUR/JPY, with both pairs poised precariously at resistance.
Using the Correlation Matrix in the Vantage FX MT4 SmartTrader Tools Package to take a look at how the pairs move in relation to one another, you can see that the two bring up a high correlation reading.
Read the Correlation Trading post in the Daily Market Update on the Vantage FX News Centre.
[B]Aussie Run Tackled:[/B]
After a solid NINE sessions of gains, the Aussie Dollar’s rally has come to an end with a thud. The rally was the currency’s third longest since it was floated in 1983.
Taking a look back at yesterday’s data, we saw an inability for the Aussie to rally on increased Business confidence in the morning, before Chinese imports slid for the 11th straight month and the Aussie rolled over.
Read the Aussie Run Tackled blog in the Daily Market Update on the Vantage FX News Centre.
[B]Retail Sales Headache:[/B]
US retail sales missed expectations for September, further raising doubts that the Fed will have the fundamentals behind them to raise interest rates this calendar year. If you’re clinging onto the thin possibility that the jackpot USD long trade is still in play, this is just yet another reason to reconsider your stance.
“USD Core Retail Sales m/m (-0.3% v -0.1% expected)”
“USD Retail Sales m/m (0.1% v 0.2% expected)”
Read about the US Retail Sales Headache in the Daily Market Update on the Vantage FX News Centre.
[B]Balloon Crew:[/B]
With a 0.2% rise in September core US consumer prices, hope has been given that inflation is at least moving in the right direction toward the Fed’s 2% target.
“USD CPI m/m (-0.2% v -0.2% expected)”
“USD Core CPI m/m (0.2% v 0.1% expected)”
Read about trading US Inflation in the Daily Market Update on the Vantage FX News Centre.
[B]BoJ Happy:[/B]
Welcome back to your desks for the start of another important week in the trading world which features central bank action from Australia, Canada and the Eurozone.
But first of all, we turn the clocks back to Friday afternoon where Japan’s finance minister Tarō Asō, cited a surplus of money in the economy combined with weak domestic demand in his comments to public broadcaster NHK, re-assuring markets that the BoJ is unlikely to expand it’s QE program in the near term.
Read our Asian Session Focus in the Daily Market Update on the Vantage FX News Centre.
[B]RBA Minutes – As You Were:[/B]
A little later than normal for today’s Daily Market Update, but with the already old news that is the RBA Meeting Minutes coming mid morning, a recap is probably more useful than a preview anyway.
Read our RBA Minutes recap in the Daily Market Update on the Vantage FX News Centre.
[B]Fighting out of the Red Corner:[/B]
“Good morning and welcome to a battle for the ages to decide who will gain the right to call the Canadian election title belt their own. Fighting out of the Red corner, wearing white trunks with Maple insignia and weighing in at 150 lbs, 5 ounces. Representing the Liberal Party of Canada, Justinnnnn Trudeauuuu!”
Yes, that is Canada’s new Prime Minister elect, expected to take office during November. Justin Trudeau, campaigning for the Liberal Party against the current Conservative government led by Stephen Harper, has swept to power on the back of promises to stimulate Canada’s flailing economy with a new wave of fiscal spending.
Read how to trade the Canadian Election fallout in the Daily Market Update on the Vantage FX News Centre.
[B]Canadian Club:[/B]
In yesterday’s Daily Market Update, we took a look at trading the Bank of Canada interest rate decision in the wake of elections which saw the Liberal’s Justin Trudeau sweep to victory.
Our thinking was that with a new government coming in with a mandate of implementing a wide range of fiscal stimulus measures, Poloz and the Bank of Canada may have some of the work done for them in the coming months and that cutting rates again might not be the ideal situation to play for.
“CAD Overnight Rate on hold at 0.50% as expected”
Read our Bank of Canada Trading recap in the Daily Market Update on the Vantage FX News Centre.
[B]Play the Expectation:[/B]
Trading isn’t about what happens, it’s about what markets expect to happen in the future. There is no clearer example of this than last night’s European Central Bank interest rate decision and accompanying press conference from Super Mario Draghi.
Read our Draghi and EUR/USD: Play the Expectation post in the Daily Market Update on the Vantage FX News Centre.
[B]China Cuts and the Swiss Ramble:[/B]
Welcome back to Monday Asia in what looks an action packed week.
Friday saw the People’s Bank of China cut their benchmark rate by another 0.25% to 4.35%. This is the 6th cut of official interest rates in the last 12 months! Interestingly enough, the control that the PBOC has, allows it to cut rates for ‘businesses and commercial purposes’ but not for mortgages. This is intended to guard against the formation of a housing bubble. Wouldn’t the RBA and RBNZ love that!
Read our China Cuts and the Swiss Ramble post in the Daily Market Update on the Vantage FX News Centre.
[B]USD Heading into FOMC:[/B]
With FOMC on Thursday morning, our focus shifts to the US dollar and its effect on the majors.
The bottom line is that the strong US Dollar is a problem for the Fed. In an economy of stunted growth with company after company featuring problems that a high USD poses for their bottom line in their reporting, you know you have a problem. The high USD doesn’t exactly help domestic inflation either and if you add in China and Europe’s race to the bottom then the Fed has got itself in a bind.
Read what to expect for USD Heading into FOMC in the Daily Market Update on the Vantage FX News Centre.
[B]Mixed Markets, Wait and See:[/B]
The US Dollar pulled back into its weekly range against the majors as US data missed expectations and tomorrow’s FOMC meeting saw markets continue to settle and square up.
US data overnight included a 1.2% fall in Core Durable Goods orders for the previous month, as well as a drop in Consumer Confidence in October. CB Consumer Confidence is measured as an index based on surveyed households which was expected to stay steady around 102.5 but instead missed down at 97.6.
Read our Mixed Markets, Wait and See post in the Daily Market Update on the Vantage FX News Centre.