Danske Research Team
Danske Bank A/S
Market movers today
The main event is the Fed meeting tonight. Given the recent market turmoil, the Fed is likely to reiterate the ‘considerable time’ forward guidance and the ‘significant underutilisation’ description of the labour market. We expect the Fed to end asset purchases as has been signalled by several members recently and we only see 30-40% likelihood of the Fed mentioning the possibility of QE4. We have changed our Fed first hike forecast from April to June next year due to the lower inflation outlook and slower growth outside US (for more see Fed preview: softer tone on inflation but bar for QE4 is high, 28 October).
In the euro area the ECB’s Bank Lending Survey for Q4 is due for release. After the ECB’s Asset Quality Review and stress tests showed that supply side constraints on credit growth should be limited, it will be particularly interesting to see whether demand for credit and loans continues to increase. In Q3 demand for credit and loans increased but we could see some setback for enterprises in Q4 following the latest weakness in economic data.
Norwegian retail sales and business and consumer confidence will be in focus in Scandinavia. For more on Scandi markets see page 2.
Selected market news
The European Commission has said it is likely to approve France and Italy's 2015 budgets after both countries made adjustments to their first proposals, submitted earlier this month. France said on Monday that it would cut its budget deficit next year by an additional EUR3.6bn, boosting the country’s structural adjustment efforts to above 0.5% as an update to the original draft budget. According to BBC EU Economic Affairs Commissioner Jyrki Katainen said ‘I cannot immediately identify cases of particularly serious non-compliance which would oblige us [to reject the plans]’. For further details see FT.
Deputy Governor of the Bank of England, Jon Cunliffe, said yesterday that softening in pay and inflation data ‘implies that we can afford to maintain the current degree of monetary stimulus for a longer period than previously thought’.
Japan's industrial production rose at its fastest pace in September since the beginning of the year with an increase of 2.7% m/m beating consensus expectations of 2.2%. It thus rebounded from the August reading of -1.9% decline and it is further evidence that the effect of the shock from this spring’s VAT hike is fading and that activity is lifting again as was also suggested by last week’s flash estimate for October manufacturing PMI. USD/JPY is little changed at 108.10 this morning but the Japanese stock index Nikkei has advanced 1.5% this morning.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.