Fundamental News
Today’s highlights:
• French Consumer Spending (MoM) + French GDA (QoQ) (Fra; 07:45 GMT)
• KOF Leading Indicators (CH; 08:00 GMT)
• ECB President Draghi Speaks (EU; 10:00 GMT)
• Italian 10-Year BTP Auction (Ita; 10:10 GMT)
• German CPI (MoM) (Ger; 13:00 GMT)
• Core PCE Price Index (MoM) + FOMC Member Rosengren Speaks + Personal Spending (MoM) (U.S; 13:30 GMT)
• Michigan Consumer Sentiment (U.S; 14:55 GMT)
• FOMC Member Dudley Speaks (U.S: 19:00 GMT)
According to an article published by Bloomberg News, a shutdown of the U.S. government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists say, as government workers from park rangers to telephone receptionists are furloughed. Mark Zandi of Moody’s Analytics Inc. estimates a three-to-four week shutdown would cut growth by 1.4 points. Moody’s projects a 3 percent rate of growth in the fourth quarter without a closure. A two-week shutdown starting Oct. 1 could cut growth by 0.3 percentage point to an annualized 2.3 percent rate, according to St. Louis-based Macroeconomic Advisers LLC. While, the International Monetary Fund urged U.S. lawmakers to quickly find a fiscal agreement to avoid a federal government shutdown and raise its $16.7 trillion borrowing limit. “This is important for the continuation of the recovery in the U.S. and beyond that in the global economy,” IMF spokesman Gerry Rice said in a press briefing in Washington yesterday.
Americans unexpectedly filed fewer claims for unemployment benefits last week, highlighting labor-market gains that are shoring up consumer confidence. Jobless claims dropped by 5,000 to 305,000 in the week ended Sept. 21, a Labor Department report showed yesterday in Washington.
Japan’s inflation accelerated to the fastest pace since 2008 in August on higher energy costs, underscoring pressure on Prime Minister Shinzo Abe to drive wage increases as he seeks to end 15 years of deflation. Consumer prices excluding fresh food increased 0.8 percent from a year earlier, the statistics bureau said today in Tokyo.
German inflation was probably unchanged at a three-month low in September, helping bolster domestic consumption in Europe’s largest economy. Annual consumer-price growth, calculated using a harmonized European Union method, was 1.6 percent, according to the median of 22 estimates in a Bloomberg News survey.
EUR/USD: The dollar traded higher against most major currencies on Thursday after U.S. weekly jobless claims defied market expectations decreasing by 5,000 to 305,000, fueling expectations that the Federal Reserve will begin tapering the pace of its monthly USD85 billion bond-purchasing program, which weakens the dollar by driving down interest rates to spur recovery. However, the gains were limited after softer-than-expected gross domestic product growth rates were released in the U.S and on concern a budget deadlock among U.S. lawmakers will send the nation to the brink of a federal government shutdown. Today, the EUR/USD was trading nearly flat at 1.34912 at the time of writing before the release of some important economic data in the Euro area. The events likely to affect the market are; the French Consumer Spending (MoM) (Forecast: 0.4% – Previous: -0.8%), the French GDP (QoQ) (Forecast: Unchanged at 0.5%), the ECB President Draghi Speech, the Italian 10-Year BTP Auction and the German CPI (MoM) (Forecast: unchanged at 0.0%). If better than expected data are released in the Euro area, it should be bullish for the Euro and bring some market corrections intra trade. Later in the day, the U.S will release the Core PCE Price Index (MoM) (Forecast: Unchanged at 0.1%), Personal Spending (MoM) (Forecast: 0.3% – Previous: 0.1%) and the Michigan Consumer Sentiment (Forecast: 78.0 – Previous: 76.8). Moreover, the FOMC Members, Rosengren and Dudley will make their speeches today. FOMC members are responsible for setting the benchmark interest rate and their speeches should be closely watched for indications on the future possible direction of monetary policy. Their comments may determine a short-term positive or negative trend. Investors should stay cautious and wait for data to come on market to get visibility. Volatility is expected on the market. The resistance level is at 1.35312 and the support level is at 1.34591.
USD/CHF: The USD/CHF traded higher yesterday after the U.S. Department of Labor revealed earlier that the number of individuals filing for initial jobless claims in the U.S. in the week ending Sept. 20 fell by 5,000 to a seasonally adjusted 305,000, from a downwardly revised 310,000 the previous week, keeping expectations alive for the Federal Reserve to begin tapering the pace of its monthly USD85 billion bond-purchasing program, which weakens the dollar by driving down interest rates to spur recovery. Today, the pair was trading slightly lower at 0.90900 at the time of writing before the KOF Leading Indicators on Switzerland. The KOF Leading Indicators Index, which is designed to predict the direction of the economy over the following six months, is expected to show some improvement to 1.47 from the previous reading of 1.36. If a higher than expected reading is released it should be taken as bullish for the CHF, while a lower than expected reading should be taken as bearish for the CHF. Later in the day, the U.S will release the Core PCE Price Index (MoM) (Forecast: Unchanged at 0.1%), Personal Spending (MoM) (Forecast: 0.3% – Previous: 0.1%) and the Michigan Consumer Sentiment (Forecast: 78.0 – Previous: 76.8). Moreover, the FOMC Members, Rosengren and Dudley will make their speeches today. FOMC members are responsible for setting the benchmark interest rate and their speeches should be closely watched for indications on the future possible direction of monetary policy. Their comments may determine a short-term positive or negative trend. Investors should also keep an eye on the data and news in the Euro area to get additional visibility as they will affect sentiments for risky assets. The resistance level is at 0.91376 and the support level is at 0.90550.
Silver: The price of silver was trading lower at 21.580 at the time of writing as sentiments were hit after an unexpected decline in U.S. jobless claims boosted speculation that the Federal Reserve will taper stimulus. Asset purchases weaken the greenback by driving down interest rates to spur recovery, which makes precious metal an attractive hedge. The events likely to affect the market are; the Core PCE Price Index (MoM) (Forecast: Unchanged at 0.1%), Personal Spending (MoM) (Forecast: 0.3% – Previous: 0.1%) and the Michigan Consumer Sentiment (Forecast: 78.0 – Previous: 76.8). Moreover, the FOMC Members, Rosengren and Dudley will make their speeches today. FOMC members are responsible for setting the benchmark interest rate and their speeches should be closely watched for indications on the future possible direction of monetary policy. Sentiments remain fragile. Investors should stay cautious on the commodity. The resistance level is at 22.093 and the support level is at 21.251.
