FX News Today

ECB Heading for 20 bp Deposit Rate Cut: The ECB is heading for additional stimulus measures in December, with governing council members clearly pushing for further easing as Draghi and Praet once again raise the specter of deflation fears even as core inflation is moving higher. But while officials are not tiring of highlighting that the ECB cannot be the only player supporting growth, it seems pretty clear that central bankers are having their eye more on equity markets than the traditional long term inflation indicators the Bundesbank focused on. Boosting growth and keeping markets happy has become the centre focus and despite the fact that a move further into negative territory will put additional pressure on insurers and banks, a deposit rate cut in December, and likely a sizeable one is coming into focus.

Atlanta Fed centrist Lockhart said he’s comfortable raising rates assuming there’s no marked downturn in the economic outlook, but the path after lift-off may be “slow and halting” as the Fed attempts to find a potentially lower equilibrium. He said the criterion for lift-off has been met on the labor front, while inflation is expected to pick up amid little evidence of disinflation. He’s encouraged that the economy is growing at a moderate pace despite weak energy and export sectors. The rate complex has largely already bought into a December hike and is discounting this via curve flattening, though Lockhart is seen as the fourth most credible at the Fed, according to the WSJ survey, just behind Yellen, Fischer and Dudley

Fed funds futures continue to point to a 25 bp hike in December with close to 70% probability in the wake of the FOMC minutes on Wednesday, and along with recent Fedspeak and data. At this point it might take something extra ordinary to again delay a move, though we won’t put it past the markets to try via a tightening tantrum heading into the December 15-16 policy meeting. The futures market is also pricing in a shallow trajectory of hikes over the first half of 2016, with the implied March contract trading at 0.37% and July at 0.56%. The Fed has indicated it won’t follow the predictable 25 bp hikes seen during Greenspan’s tenure, but we don’t look for any outsized rate boosts in the early goings. Note that hawks take over the voting rotation in 2016 with Bullard, George, and Mester coming on board.

US leading indicators bounced 0.6% to 124.1 in October after falling 0.1% to 123.3 (August was revised slightly lower to 123.4 from 123.5). The index has risen in 6 of the 10 months to date and is above 124.0 for the first time since April 2006. Nine of the 10 components made positive contributions, led by the yield curve (0.22%), stocks (0.16%) and building permits (0.12%).

Main Macro Events Today

• ECB Draghi’s Speech: marketsexpect clues on the next month’s ECB meeting and to get Draghi’s view on how recent terrorist attack in Paris will impact on confidence in Europe.

• Canada Retail Sales Preview: We expect retail sales, due today, to fall 0.1% m/m in September (median +0.2%) after the 0.5% gain in August. The ex-autos sales aggregate is seen falling 0.4% m/m (median same at -0.4%) versus the flat reading in August, as a 7.9% plunge in gasoline prices drives both measures lower.

• Canada CPI Preview: We expect CPI to slow to a 0.9% y/y pace in October following the 1.0% y/y growth rate in September as lower gasoline prices again exert a drag. Core CPI is projected to grow at 2.1% y/y in October, matching the 2.1% in September.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

BoJ’s Kuroda: Concern about balance sheet won’t stop any more easing; with BoJ’s Kuroda adding that he doesn’t see problems in the financial system from continuing easing. At the same time Kuroda said there is the possibility that the current low rate of CPI may affect wage growth, and that the BoJ will be watching the 2016 wage talks with great interest. Speaking at the briefing following the policy meeting where the BoJ left rates unchanged, he said there is no need to change the view that price expectations are rising over the longer term. We expect the BoJ to add further stimulus in the future.

Germany’s Schaeuble would prefer higher interest rates. Not that that the comments from Germany’s Finance Minister will impress Draghi much, who seems to be heading for another cut in the deposit rate in December, even though he admitted that the low interest rate environment is very challenging for banks and insurers.

FOMC minutes: most participants thought liftoff conditions could be met by December, and hence wanted the statement to show a December hike could be appropriate. Indeed, that was the message read by the markets. The minutes also showed most officials also thought global risks had diminished. Officials also mostly agreed that the process of removing accommodation would be gradual. This is all consistent with subsequent Fedspeak since the October 27, 28 meeting. But there was nothing definitive in the minutes that the FOMC will pull the trigger in 5 weeks’ time.

US housing starts undershot estimates with an 11.0% October drop after small downward Q3 revisions, leaving a weaker than expected report despite a 4.1% rise in permits. Starts were hit by a big drop for multi-family units with a concentration of weakness in the South and West.

Main Macro Events Today

• ECM Monetary Policy Meeting Accounts are revealed today and are studied carefully for further information and details on the expected easing by the central bank.

• US Initial Jobless Claims: Claims for the week of November 14th are out today and should reveal a headline improvement to 267k (median 270k) after holding at 276k for the prior two weeks. The holiday season is typically a volatile time for claims and we expect November to set a slightly higher average of 266k for the month from 263k in October and 269k in September.

• US Leading Indicators: The October Leading Indicators report is expected to reveal a 0.5% (median 0.4%) headline following a -0.2% headline in September and two months of flat readings before that. Most component data has been stronger in October and the improvements in the stock market should help lift the headline. For the whole story read our preview.

• US Philadelphia Fed Index: The November Philly Fed should reveal a headline improvement to 0.0 (median -0.5) from -4.5 in October and -6.0 in September. The already released Empire State Index for the month improved to -10.7 from -11.4 in October. We expect producer sentiment to remain steady in November with the ISM-adjusted average of all measures holding at 50 from September.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

ECB’s Mersch: No indication yet of economic pessimism after Paris. The Executive Board member said in a speech in Frankfurt that “we should shy away from drawing premature conclusions about whether the terror attacks will have any economic impact”, adding that “we have no indication of any economic pessimism as a result of the Paris attacks, let alone weaker hard data”. He warned that “doom-and-gloom talk is not warranted at this stage”. Clearly, with the attacks less than a week away, we don’t have any data yet that fully reflects the impact of the events and Mersch is right, it is too early to draw conclusions, even if markets seemed to stabilise relatively quickly. The fact that Bund futures dropped on the comments highlights though just how sensitive markets are to central bank remarks ahead of the December council meeting.

Asian stock markets are narrowly mixed, with Chinese equities under pressure for a second day, after President Xi Jinping said the economy is facing “considerable downward pressure”. Japanese markets struggled to make headway as the Yen advanced. GBP is under pressure and the EUR is little changed against USD. Oil prices meanwhile are slightly higher.

US NAHB home builder sentiment index fell 3 points to 62 in November, from an upwardly revised 65 in October (was 64). It’s the first decline since May, but it’s from a post-recession high, with the 65 level the best since 2005. The current single family sales index dipped to 67 from 70. The future sales index dropped to 70 from 75. But the index of prospective buyers traffic rose to 48 from 47. Homebuilders continue to cite low inventories as problematic, while the stronger labor market and expanding economy are beneficial.

US industrial production slid 0.2% in October. Capacity fell to 77.5%. Those missed expectations. The 0.2% September decline in production was not revised, though August was nudged up to 0.1% from -0.1% previously. September capacity utilization was revised to 77.7% from 77.5%. Manufacturing improved last month, rising 0.4% after declines in June, August, and September. Motor vehicle/parts production picked up, rising 0.7%. Excluding vehicles/parts, manufacturing was up 0.4%. Machinery production increased 0.3%. Computer, electronics production was up 0.1%. Utilities slumped 2.5%, however, with Mining down 1.5%.

The 0.2% October U.S. CPI headline and core price gains both beat estimates, with little in the way of rounding errors from respective gains of 0.200% and 0.202%. We saw the expected small 0.3% energy price rise with a 0.2% food price gain, but medical care prices surged 0.8% alongside a firm 0.4% tobacco price rise.

Main Macro Events Today

• US Housing Starts: October housing starts are out today and should reveal a 2.2% decline to a 1,180k (median 1,160k) headline from 1,206k in September.

• US Building Permits: We expect permits to rise to 1,150k from 1,105k and completitions to edge up to 1,030k from 1,028k in September.

• FOMC Minutes:  markets focus on the Fed minutes to find out clues on whether the Fed is still likely to raise rates in December and what might be the rate hike path in 2016.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

Canada’s consumer confidence improved to 58.3 in week ended November 13, according to the Nanos Economic Mood Index. That follows a 58.3 figure in the prior week and leaves the strongest level since the 58.4 seen in the week ending October 17. The index slumped to 53.6 in the final week of February and was a run of 52 and 53 readings from late July through mid-September. But confidence has returned (although the index remains below the peak 60.6 seen in mid-July of 2014), which could be expressed through retail sales gains in Q4 as consumer spend gas price savings and take advantage of low interest rates.

Canada existing home sale rose 1.8% m/m in October (seasonally adjusted) following the 2.1% drop in September. Not surprisingly, sales strength was led by growth in Vancouver and Toronto. BoC Senior Deputy Governor Wilkins expressed confidence in the bank’s call for a soft landing in the housing sector, and this report does not present a new challenge to her view.

Boston Fed dove Rosengren leaned towards a quicker hike given risks like faster growth in commercial real-estate in a lengthy FT.com article over the weekend. Basically it is the old unintended consequences theory that might be forcing a stretch for yield or returns in a zero rate environment, as employment and inflation goals come within reach. He also said that the recent October jobs report was “pretty unequivocally positive,” though he was less certain about nascent signs of wage growth. Rosengren did hint that the policy divergence with other countries was boosting the dollar, though offset somewhat by domestic demand. If that divergence grew too far, however, it could imply a more gradual U.S. policy path than otherwise. Note, Rosengren is number 8 in terms of policy signaling, according to a WSJ survey.

Bundesbank cautiously optimistic on growth. The German central bank said in its latest monthly report that the labour market is in a “very good condition”, and that “the positive labour-market and wage outlook, as well as the strong immigration, create the conditions for spirited consumption in the economy to continue and for overall growth in the medium term to exceed potential”.

Main Macro Events Today

• UK October CPI (Core Consumer Price Index) is released today. No change is anticipated and the figure is expected to come in at 1%.
• German ZEW investor sentiment was expected to improve slightly to 5.0 (median 6.1) from 1.9 but mainly on the back of hopes of further stimulus measures, so the number itself would not remove pressure on Draghi to act again. There also is the risk of a downside surprise, as late responses will have been impacted by the Paris attacks, so uncertainty is higher than usual, as the number will depend very much on when the answers came in.
• US CPI: October CPI is out today and should show a 0.1% (median 0.2%) headline increase with an accompanying 0.1% (median 0.2%) increase for the core. This comes on the heels of a 0.2% headline decline in September and a 0.2% increase for the core in that month. Data in line with this forecast would leave the headline flat y/y and the core figure at 1.8% y/y.
• US Industrial Production: October industrial production data should reveal an unchanged (median 0.1%) rate for the headline following the 0.2% decline in September and a 0.1% drop in August. The capacity utilization rate is expected to remain steady at 77.5% (median 77.5%) for a second month.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.