Morning Commentary: Markets take a breather

Foreign Exchange - Morning Commentary
Markets take a breather
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David Atkinson
David Atkinson
Foreign Exchange Sales Manager
In sports, taking a little break for a travel day after a couple of tough losses and regrouping can be a good tactic…not that I am thinking about baseball or anything specific like that.  But, the parallels this morning are rather stark.  The financial news of the week remains focused on U.S. equity market volatility.  "Volatility" sounds so much better than "precipitous freefall."

After the S&P 500 and DJIA earned the distinction yesterday of erasing all their gains for the year, the rout continued into Asia, where the Nikkei lost 3.7%.  But then, it stopped there.  European equities are closing in positive territory and early U.S. trading seems to have stopped the bleeding in stocks, at least for now. 

The U.S. dollar is in tight ranges to its major counterparts.  The problems that weakened European currencies – Brexit, Italy, etc. – have not changed in the last 24 hours, but FX markets at least have decided for now that current prices reflect everyone's collective thinking and have hit the pause button.

Data this morning had durable goods orders rise 0.8% for September, above expectations.  Initial jobless claims rose to 215,000, a couple thousand more than expected.  The first look at September's U.S. trade deficit has it growing to -$76.04 billion, worsening from the August number of -$75.50 billion.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
  • The ECB kept its benchmark refi rate at 0.0 percent and its deposit rate at -0.4 percent as widely expected.  It also reaffirmed its plans to cap its bond purchases (QE) in December.  The post-meeting press conference gave no further significant clues to the ECB's next moves.
  • Germany's IFO survey was weaker than expected at 102.8 with its expectations component taking a hit. 
  • Norway’s central bank left rates unchanged with its benchmark rate at 0.75%.
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