ECB cuts key rates by 25 bps in October monetary policy decision, as expectedLagarde opening statement: Economic activity has been somewhat weaker than expectedLagarde Q&A: All the data is headed in the same directionECB sources: Policymakers expect to cut in December unless data shows marked turnaroundUS September retail sales control group +0.7% vs +0.3% expectedUS initial jobless claims 241K vs 260K estimateUS September Industrial production -0.3% versus -0.2% expectedOctober Philly Fed manufacturing index +10.3 vs +3.0 expectedUS October NAHB home builder sentiment 43 vs 42 expectedAtlanta Fed Q3 GDPNow 3.4% vs 3.2% priorCanada’s Trudeau to shuffle cabinet as he fends off party revoltEIA weekly crude oil inventories -2191K vs +1835K expectedUS says watching upcoming Putin-Xi meeting, expects to see deeping of supportUS August business inventories 0.3% vs 0.3% expectedSome major Chinese banks are to lower deposit rates from Friday – reportReuters Poll: BOC to cut overnight rate by 50 basis points on Oct 23
Gold up $19 to $2692 in fresh recordWTI crude oil up 37-cents to $70.77US 10-year yields up 8 bps to 4.10%S&P 500 flatAUD leads, JPY lags.
It was a lively day in terms of newsflow with the ECB decision as the main event. The euro fell after the rate cut on signs the central bank is behind the curve and oblivious to it. After falling to a two-month low of 1.0812, the euro stabilized later int the day and bounced 10 pips.
Much of the euro selling was the result of a broader US dollar bid due to strong retail sales and better-than-anticipated initial jobless claims. USD/JPY was a beneficiary as Treasury yields rose 4-9 bps across the curve and the pair broke through 150.00 and continued as high as 150.32, which is the best level since August 1.
Cable was stronger today but continues to range around 1.3000 following yesterday’s post-CPI drop.
USD/CAD ended a nine-day winning streak this week but returned to its winning ways today, up 50 pips despite good performance from the other commodity currencies and stronger oil. There is a growing sense that Canada is disconnecting from Australia after today’s sizzing Aussie jobs data.
In the metals market, gold marched to a fresh record, breaking the Sept 26 peak in the third day of gains. Higher yields and a stronger dollar were a headwind for gold but it’s likely benefiting from the growing disappointment in Chinese equities. Later we get Chinese GDP, retail sales, house price data and industrial production.
This article was written by Adam Button at www.forexlive.com.
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