A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Not Brexit Today!
Share this story:
Alan Rose Foreign Exchange Senior Trader
There has been a lot of news overnight dominated by central bank activity but not by Brexit! In addition to all the central bank announcements, there has also been a large release of economic data from Asia, EZ, and the U.S. While there were a few upbeat surprises, most of the economic data came in weaker than forecast as reduced global trade volumes continue to negatively impact global growth.
However, markets have taken most of the negativity in stride. While Asian equities were mixed, EZ equities are all green and U.S. equities are scheduled to open higher despite another disappointing Durable Goods Order release. G7 interest rates are nearly unchanged and the U.S. dollar (DXY) remains range bound for the fourth consecutive day.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Japanese factory activity remains in contraction territory and fell to its lowest level in three years.
Purchasing Managers numbers for the EZ continued to show the region on the brink of contraction. German Manufacturing data is deep into contraction territory and is beginning to impact employment. The French PMI Service component came in much stronger than expected and provided a short term boost to the euro.
Indonesia cut interest rates for the fourth consecutive time trimming interest rates from 5.25% to 5.00%.
The ECB kept interest rates unchanged as expected at 0.0%. ECB President Mario Draghi presided over his last meeting today and offered a rather downbeat and gloomy assessment of the economy with risks remaining “on the downside.”
Norway kept interest rates unchanged at 1.50% after raising them last month.
Turkey cut interest rates by more than expected from 15.5% to 14%. Interest rates have fallen by 750 bps since July.
U.S. Durable Goods Orders for September fell by more than expected at -1.1% and the key component within the report (non-military capital goods orders excluding aircraft) fell for a second straight month down by 0.7%. Manufacturing fell deeper into contraction territory with the main gauge dropping to the lowest level since 2009.
Much of the negativity regarding many of the economic releases was anticipated so interest rates are largely unchanged on the session with equities remaining generally upbeat buoyed by headlines from China that it is committing to buying $20 billion of U.S. farm goods in year one. As we move toward Friday, expect more consolidation ahead as we prepare for the FOMC meeting next week.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Tune in for a guide to ETFs and investing strategies for potential long-term success. View in a browser Fidelity Fidelity Log in Creating a portfolio with ETFs: Why and how Creating a portfolio with ETFs: Why and how