[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.
[B]Odds on a Melbourne Cup Rate Cut?:[/B]
While the eyes of the Australian public are on Melbourne for the ‘race that stops a nation’, the eyes of the financial world turn to Sydney for the interest rate decision out of the Reserve Bank of Australia.
Last month the RBA left the Cash Rate on hold but surprising with their dovish tone. The statement that accompanied the decision gave the Aussie some buying interest, pushing the pair back above weekly trend line support that we have been watching price chopping around, but overall respecting.
Read our Odds on an RBA Melbourne Cup Rate Cut post in the Daily Market Update on the Vantage FX News Centre.
[B]RBA Hawkish? Huh?:[/B]
Following the Reserve Bank of Australia’s decision to yesterday leave interest rates unchanged, the Aussie dollar doesn’t really know where it is at the moment. Hawkish, hawkish, hawkish. All I read is hawkish. But how is this line hawkish?
“Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand.”
Is the RBA Hawkish? Read the blog in the Daily Market Update on the Vantage FX News Centre.
[B]Testify!:[/B]
Testifying on bank regulation before the House Financial Services Committee in Washington DC, Janet Yellen still managed to give markets some juicy monetary policy comments to sink their teeth into! While not delivering anything ground breakingly new, the fact that Yellen was able to reiterate the Fed’s stance that December was actually in play again is hugely significant.
Read more about Janet Yellen Testifying in the Daily Market Update on the Vantage FX News Centre.
[B]Thereof Dove:[/B]
The Bank of England overnight signalled that interest rates will not be lifted off record low levels any time soon. The Bank of England Monetary Policy Committee voted 1-0-8 (increase-decrease-hold) with Ian McCafferty the only dissenter.
Read more about Trading the Bank of England decision in the Daily Market Update on the Vantage FX News Centre.
[B]We’re Back On!:[/B]
Just some light Monday morning reading to ease you back into your trading week.
After Friday night’s NFP carnage, the majors have this morning opened with slight gaps down that they are quickly racing to fill. The following AUD/USD 5 minute chart shows the carnage and the open quite well:
Read more about How to Trade the Fed in the Daily Market Update on the Vantage FX News Centre.
[B]Week of the Acronym; Yuan and Retail:[/B]
Welcome back to your trading desks after markets long weekend. The calendar will tick over to December tomorrow, meaning the erratic run into Christmas is now upon us. But first, we have a HUGE week of data releases and central bank action which will see no serious traders going anywhere for the time being.
RBA, AUD GDP, NPF, ECB, ABCDEFGHIJKLMNOP! It certainly is the week of the acronym and with just about every big player or release coming up, you can see where today’s featured image comes from!
Read more about How to Trade the Forex Week Ahead on the Vantage FX News Centre.
[B]Build up to the RBA:[/B]
December the 1st? Wow, somebody tell me where 2015 went?!
With today also the 1st Tuesday of the month, the Reserve Bank of Australia meet today for what is expected to be a fairly uneventful release. After last week’s comments about chilling out (God I love the RBA), the market has all but priced out any chance of another cut before Santa drops down our chimneys.
Read more about how to trade the RBA decision on the Vantage FX News Centre.
[B]Data Dependant? ISM Back to Recession Territory:[/B]
With Glenn Stevens and the RBA chilling out into Christmas, the big overnight storyline was the slumping US manufacturing sector.
“USD ISM Manufacturing PMI (48.6 v 50.6 expected)”
How does ISM Back to Recession Territory affect the Fed? Read more in the Daily Market Update on the Vantage FX News Centre.
[B]ECB Today; Beware of the Crowded Trade:[/B]
It’s not a question of if, but rather by how much Draghi and the European Central Bank will increase its stimulus program tonight. Still fighting off the lingering effects of deflation on the stuttering European economy, Draghi has pledged to do whatever it takes to give the economy the kickstart required.
“Whatever it takes!”
Are you aware of the crowded EUR/USD trade? Read more in the Daily Market Update on the Vantage FX News Centre.
[B]Mario Draghi, was that Doing Whatever it Takes?:[/B]
Mario Draghi and the European Central Bank rocked markets to the core overnight, with cuts and stimulus that nowhere near met market expectations.
By reducing its deposit rate by only 0.1% to -0.3% (the market wanted -0.4% to -0.5%) and signalling that it would extend its QE stimulus program into March 2017 (the market didn’t even expect a hard date cap) at a current rate of €60 billion a month (again, €75 billion + spoken about), saying expectations were missed is certainly an understatement!
Are you trading the ECB fallout? Read more in the Daily Market Update on the Vantage FX News Centre.
[B]Up Periscope!:[/B]
With Friday’s US labour report coming in largely within expectations following Thursday’s Draghi induced carnage, the market felt it didn’t need to massively re-rate for a second day in a row. A largely uneventful set of accompanying numbers being the unemployment rate steady at 5.0% and the average hourly earnings at 0.2%, both as expected saw the majors barely blip.
“USD Non-Farm Employment Change (211K v 201K expected and 298K previously)”
How to trade NFP aftermath. Read more in the Daily Market Update on the Vantage FX News Centre