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Danske Bank A/S
Market Movers
German factory orders for August are expected to rebound slightly after a drop of 1.4% m/m in July. We look for a bounce of 0.3% m/m (consensus 0.5% m/m). The data are quite volatile but have generally been strong going into the summer with some signs of levelling off the past few months. Germany is quite exposed to emerging markets (EM) through its exports and the data will provide some insight in how much the EM weakness is hitting Germany.
FOMC member John Williams (dove/neutral, voter) will speak tonight about the economic outlook. Focus will be on how he views the situation following Friday’s weak job report.
Selected Market News
The US, Japan and 10 other Pacific Rim nations have agreed on a trade deal, which essentially will cover 40% of the global economy. Although the short-term economic effect from the Transpacific trade deal is limited, it will likely have significant impact on global trade in the medium term. It also more puts pressure on the EU to conclude its negotiations with the US on a Transatlantic trade deal.
US ISM non-manufacturing dropped to 56.9 in September from 59.0 in August, which was weaker than expected. It follows a string of disappointing key figures for the US economy released last week, e.g. ISM manufacturing and the job report. ISM nonmanufacturing comes from a very high level though, and is now in more normal territory still pointing to above-trend growth in the US service sector.
The broad based improvement in risk sentiment in financial markets since the beginning of the week has been supportive for commodity prices. More notably, the price on Brent crude has risen firmly above USD49/bbl tracking the 2-3% gain in equity markets yesterday.
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Editors’ Picks
EUR/USD comes under pressure near 1.0630
Further gains in the Greenback encourage sellers to maintain their control over the risk complex, forcing EUR/USD to retreat further and revisit the 1.0630 region as the US session draws to a close.
GBP/USD stays firm amid BoE, Fed commentary and US data
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.