Daily Market Update 5th October 2016
ECONOMIC DATA OF THE DAY
| Time | CY | Indicator | Forecast | Actual | Previous |
|---|---|---|---|---|---|
| 07:00 | SK | CPI YoY | 0.70% | 1.20% | 0.40% |
| 08:30 | TA | CPI YoY | 0.40% | -- | 0.57% |
| 09:00 | PH | CPI YoY | 2.10% | -- | 1.80% |
| 19:00 | US | MBA Mortgage Applications | -- | -- | -0.70% |
| 22:00 | US | Durable Good Orders | 0.00% | -- | 0.00% |
| 22:00 | US | Factory Orders | -0.20% | -- |
SPEECHES
- 09:30 – NZD – RBNZ Governor Wheeler speaks in Whangarei (not public)
- 15:45 – EUR – Bank of Spain Governor Linde speaks in Madrid
- 20:05 – USD – Feb’s Lacker speaks at West Virginia economic outlook meeting
OVERNIGHT NEWS
FED SPEECH:- Richmond Federal Reserve President Jeffrey Lacker said the central bank should embrace a strategy of raising interest rates before inflation spikes like it did in 1994. He said:
- “Prudent pre-emptive action can help us avoid the hard-to-predict emergence of a situation that requires more drastic action after the fact.”
- "Pre-emptive increases in the federal funds rate are likely to play a critical role in maintaining the stability of inflation."
- The Fed should raise rates gradually "but not too gradually". Lacker argued economic history suggests the fed funds rate should be about 1.5 percentage points higher than its current level given the current rate of joblessness and inflation.
- "This is the basis for the strong case I have articulated for raising our interest rate above its current low level,"
ECB:
- The European Central Bank will probably gradually wind down bond purchases before the conclusion of quantitative easing, and may do so in steps of 10 billion euros ($11.2 billion) a month, according to euro-zone central-bank officials. They didn’t exclude that QE could still be extended past the current end-date of March 2017 at the full pace of 80 billion euros ($90 billion) a month.
FOREIGN EXCHANGE (INDICATIVE RATES)
| Currency | Last | % Change | Overnight Range |
|---|---|---|---|
| DXY | 96.17 | 0.50 | 95.74 - 96.44 |
| EURUSD | 1.1204 | -0.06 | 1.1138 - 1.1239 |
| USDJPY | 102.90 | 1.23 | 101.58 - 102.97 |
| AUDUSD | 0.7620 | -0.72 | 0.7608 - 0.7691 |
| GBPUSD | 1.2728 | -0.89 | 1.2720 - 1.2861 |
COMMODITIES (INDICATIVE RATES)
| Currency | Price USD | % Change | Overnight Range |
|---|---|---|---|
| Gold | 1268.44 | -3.29 | 1267.08 - 1313.12 |
| Silver | 17.80 | -5.38 | 17.73 - 18.90 |
| Oil (BRENT) | 50.87 | -0.04 | 50.34 - 51.55 |
| Oil (WTI) | 48.69 | -0.25 | 48.26 - 49.26 |
COMMODITIES
Precious Metals: Nickel headed for biggest two-day loss in seven months, sliding 2.6% yesterday on view Philippine mines will not be shut even after the country widened its mining crackdown.
Oil: Both WTI and Brent are trading close to August peak. With signs of overbought, we may see prices pulling back soon as Bloomberg reports OPEC’s overall production increased by 170k b/d in Sept. from previous month to 33.75m b/d.
FOREX NEWS
- U.S. stocks suffered losses as the dollar rallied to near two month high. The S&P 500 dropped 10.71 points to 2,150.49, led by utilities which closed down by 2.2%.
- Alphabet Inc. climbed up 0.5% after the tech company launched a new smartphone and its Google Home “personal assistant” speaker system.
- Delta Air Lines Inc. edged up by 0.4% after it reported a smaller annualised decline in September (3% yoy, comparing to Aug 9.5%) in unit revenue.
- European stocks rose for a sixth day and hit near-two week highs as Deutsche Bank continued to recover and as U.K. stocks rose to the high since May 2015, boosted by a sinking pound over Brexit worries and better than expected construction activity in September. The STOXX 600 index rose 0.8% to 346.10. In London the FTSE 100 rallied 1.3% to 7,074.34.
- Deutsche Bank regained some more ground and rose by 1.5% after HSBC said that despite its obvious operational shortcomings, fears over the bank's solvency were overdone, thus maintained the 'hold' rating.
- LVMH Moët Hennessy Louis Vuitton jumped 3% after it purchased a controlling stake in German luggage maker Rimowa.
Dollar Holds Near Two-Week High as Rate Rise Speculation Revives
The dollar held near a two-week high after data and comments this week from Federal Reserve officials revived speculation of an interest-rate increase later this year.
The greenback jumped the most against its major peers since Sept. 16 on Tuesday after Fed Bank of Richmond President Jeffrey Lacker urged the central bank to tighten policy to stem a likely quickening of inflation. That followed remarks Monday by Fed Bank of Cleveland President Loretta Mester that the economy is ripe for a rate increase and a report that showed U.S. manufacturing expanded in September. Jobs data due later this week is forecast to show a pickup in the pace of hiring.
Read the full article at bloomberg.com
