European Outlook: Asian stock markets rallied, with the Nikkei closing up 1.7%, ASX and Hang Seng also surged more than 1%. The Nikkei 225 closed at the highest level since 1992, underpinned by corporate earnings and the yen’s weakness against the dollar, while the turmoil in Saudi Arabia sent energy prices surging higher. U.K. and U.S. stock futures are also up as the front end WTI future climbed above USD 57 per barrel. The local calendar today has U.K. house price numbers, Eurozone retail PMIs and Eurozone retail sales. Earlier German production data released, which corrected -1.6% m/m in September, more than anticipated. After the strong 2.6% m/m rise in the previous month, this was only a partial correction that still left the annual rate at a healthy 3.6% y/y and with orders continuing to surge ahead, production seems to have taken a breather at the end of the third quarter.
Reserve Bank of Australia held the cash rate at 1.50%, matching widespread expectations. Governor Lowe said the low level of interest rates is supporting the economy. The Board judged that holding rates steady would be “consistent with sustainable growth in the economy and achieving the inflation target over time.” The AUD appreciation since mid year is “expected to contribute to continued subdued price pressures in the economy.” The Bank’s forecast remains “for inflation to pick-up gradually as the economy strengthens.” Finally, the Bank’s growth forecasts are largely unchanged, with growth expected to pick-up and average around 3% over the next few years. AUDUSD bumped higher to 0.7965 from 0.7680 on the as-expected result, but has quickly returned to 0.7680.
Main Macro Events Today
- ECB & BoC – ECB President Draghi is due to deliver opening remarks at the ECB Forum on Banking Supervision, in Frankfurt at 9:00 GMT. Later, Bank of Canada Governor Poloz speaks to the CFA Montreal and Montreal Council on Foreign Relations, at 17:55 GMT.
- Fedspeak – will be highlighted by a Chair Yellen acceptance speech at the Paul H. Douglas Award for Ethics in Government, though one would imagine that there will be little of policy substance here as she begins the transition to Chair-nominee Powell. . Moderate Fed Vice Chairman Quarles will take part in a discussion on financial regulation before the Clearing House Annual Conference.
- Eu Retail Sales – Expectations – rise at 0.6% for September from -0.5%.
- US Jolts Job Openings – Expectations – at 6.09M from 6.08M in August.
Charts of the Day
Support and Resistance Levels
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