European Outlook: Topix and Nikkei rallied and are targeting fresh highs, boosted by technology companies and retailers as markets start to focus on earnings. Elsewhere gains were more mooted and Hang Seng and CSI 300 swung between gains and losses. U.S. stock futures are higher, UK100 futures slightly down, but for the Eurozone a Bloomberg report that the ECB is considering halving asset purchases next year, but with a longer than anticipated 9 months extension could help the GER30 to finally crack the 13000 mark and keep Bunds underpinned. Brexit risks meanwhile are weighing on U.K. markets as hopes of early trade talks were dashed by Barnier yesterday, although there is still the hope of a transition period, which would at least give more time for talks.
FX Updates: EURUSD opened in N.Y. at 1.1860 highs, and spent much of the remainder of the session slowly grinding lower, basing at 1.1827 after the London close. The pairing traded under both its 50- and 20day moving averages, before reclaiming the levels into the close. Dovish fallout from Wednesday’s FOMC minutes continued to provide some support, though Friday’s U.S. CPI report may end up being a weight on the euro should data come in warm, as expected. Talk of a no-deal exit from the EU has been increasing, with five rounds of negotiation having reached “deadlock,” according to the EU’s chief Brexit negotiator, Barniar. He also said that the EU would agree to a two-year transitory period, to buy more time after actual Brexit occurs in March 2019. Cable surged to $1.3290 after EU’s Barnier’s comments.
Main Macro Events Today
- US Retail Sales – Expectations – At 1.7% in September vs -0.2% in August, or 0.3% ex-auto.
- US CPI – Expectations – CPI is forecast to surge 0.6% in September from 0.4% due to the surge in petroleum price.
- ECB – ECB Vice President Vitor Constancio is due to speak at 12:30 GMT.
- FOMC Speeches – Boston Fed dove Rosengren opens a policy conference by his branch at 12:30 GMT. Evans is back on the economy and policy from 14:25 GMT, Kaplan takes Q&A at a CFA conference from 15:30 GMTand Powell is invited to speak at the Boston Fed conference from 17 GMT.
Charts of the Day
Support and Resistance Levels
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