- ECB cuts key rates by 25 bps in October monetary policy decision, as expected
- Lagarde opening statement: Economic activity has been somewhat weaker than expected
- Lagarde Q&A: All the data is headed in the same direction
- ECB sources: Policymakers expect to cut in December unless data shows marked turnaround
- US September retail sales control group +0.7% vs +0.3% expected
- US initial jobless claims 241K vs 260K estimate
- US September Industrial production -0.3% versus -0.2% expected
- October Philly Fed manufacturing index +10.3 vs +3.0 expected
- US October NAHB home builder sentiment 43 vs 42 expected
- Atlanta Fed Q3 GDPNow 3.4% vs 3.2% prior
- Canada's Trudeau to shuffle cabinet as he fends off party revolt
- EIA weekly crude oil inventories -2191K vs +1835K expected
- US says watching upcoming Putin-Xi meeting, expects to see deeping of support
- US August business inventories 0.3% vs 0.3% expected
- Some major Chinese banks are to lower deposit rates from Friday - report
- Reuters Poll: BOC to cut overnight rate by 50 basis points on Oct 23
Markets:
- Gold up $19 to $2692 in fresh record
- WTI crude oil up 37-cents to $70.77
- US 10-year yields up 8 bps to 4.10%
- S&P 500 flat
- AUD leads, JPY lags.
It was a lively day in terms of newsflow with the ECB decision as the main event. The euro fell after the rate cut on signs the central bank is behind the curve and oblivious to it. After falling to a two-month low of 1.0812, the euro stabilized later int the day and bounced 10 pips.
Much of the euro selling was the result of a broader US dollar bid due to strong retail sales and better-than-anticipated initial jobless claims. USD/JPY was a beneficiary as Treasury yields rose 4-9 bps across the curve and the pair broke through 150.00 and continued as high as 150.32, which is the best level since August 1.
Cable was stronger today but continues to range around 1.3000 following yesterday's post-CPI drop.
USD/CAD ended a nine-day winning streak this week but returned to its winning ways today, up 50 pips despite good performance from the other commodity currencies and stronger oil. There is a growing sense that Canada is disconnecting from Australia after today's sizzing Aussie jobs data.
In the metals market, gold marched to a fresh record, breaking the Sept 26 peak in the third day of gains. Higher yields and a stronger dollar were a headwind for gold but it's likely benefiting from the growing disappointment in Chinese equities. Later we get Chinese GDP, retail sales, house price data and industrial production.
