Market movers today
The main event will be the press conference following the ECB meeting. Since rates have reached the bottom, focus will be on the details of the ABS and covered bond purchase programme see ECB Preview Draghi will reveal details on ABS andcovered bond programmes, 30 September. We expect the press conference to revolve around the ECB’s new ‘soft target’ of a balance sheet expansion. Draghi did not interpret last week’s low TLTRO take-up as a disappointment but insisted that the December auction is needed in order to assess the success of the programme. Hence, it seems evident that the ECB will be in waiting mode for the next couple of months. While the pressure on the ECB to use outright Quantitative Easing (QE) in public assets is increasing, it is still premature to take this step in our view. Instead, we believe Draghi will continue to strike a very dovish tone and reiterate that the ECB is ready to use QE if necessary.
US jobless claims are expected to rise a bit after hitting very low levels in the past two weeks. Consensus is for a rise to 297k from 293k the previous week.
Danmarks Nationalbank will publish FX reserves.
Selected market news
The US stock market closed yesterday’s session markedly lower on the back of weaker-than-expected US data. Most importantly, ISM manufacturing in September declined more than expected to 56.6 from 59.0, see ISM manufacturing declines - moredownside risk in coming months, 1 October. In addition, Markit US manufacturing for September was revised lower to 57.5 from 57.9. It should be remembered that this comes on the back of similar large downward revisions of final manufacturing PMIs in, for example, Germany and China suggesting possible weakness in global manufacturing activity in late September. The September US auto sales released yesterday also showed a substantially larger-than-expected decline to 16.3m/ann. (consensus 16.8) from 17.5m/ann.. On the other hand, the ADP employment report for September released yesterday still suggests a decent labour market report for September tomorrow.
In the US the S&P 500 closed yesterday’s session 1.3% lower and Asian stock markets are also markedly lower this morning with Nikkei down 2.0%. Mainland China and Hong Kong are closed for a public holiday. Ten-year US government bond yields plunged 11bp to 2.39% and the FX market has weakened across the board, albeit there continues to be considerable pressure on the Russian rouble and the Brazilian real.
In Hong Kong demonstrators threaten to escalate demonstrations and start occupying public buildings if Hong Kong chief executive Leung does not resign, see BBC News. Hence, there is risk of escalation in Hong Kong later today and on Friday.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD eases below 1.0850 on renewed USD strength
EUR/USD stays under pressure and trades in the red below 1.0850 in the European session. Although the ZEW survey for Germany and the Eurozone showed a noticeable improvement in economic sentiment, broad USD strength doesn't allow the pair to gain traction.
GBP/USD drops below 1.2700 on notable US Dollar demand
GBP/USD is extending the downside below 1.2700 in the European trading hours on Tuesday. The ongoing bullish momentum in the US Dollar, despite sluggish US Treasury bond yields, undermines the pair. Mid-tier US housing data are coming up next.
Gold price struggles to lure buyers, holds steady above one-week low ahead of FOMC meeting
Gold price ticks lower amid reduced Fed rate cut bets, elevated US bond yields and stronger USD. Geopolitical tensions could lend some support to the safe-haven XAU/USD and help limit losses.
Why is the crypto market crashing?
The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms.
Canada CPI Preview: Inflation pickup could scale back bets on early interest-rate cut
The Canadian Consumer Price Index is expected to have risen by 3.1% YoY in February. The BoC shows no rush to lower its interest rate. The Canadian Dollar maintains its multi-day lows against the US Dollar around 1.3540.