- European shares trade up to 1% lower as the chairman of the EBA warned that banks shouldn’t feel too safe even if they passed the stress test. The banking sector suffers the most. US stocks trade around 0.50% lower as well despite stronger US eco data. All in all, they keep up quite well amid the hawkish Fed.
- The Chairman of the European Banking Authority warned that even lenders that passed the AQR shouldn’t feel secure. Furthermore, he said that banks should be pushed to diversify sovereign bond holdings.
- EU sentiment indicators by the EC unexpectedly rose in October in a sign that the euro area has moved one step away from a renewed economic downturn. German inflation fell more than expected (see news)
- The Russian ruble snapped a long losing streak, the day before the country’s central bank was expected to raise interest rates to try to slow the currency’s slide. USD/RUB fell more than 4%.
- In the US, weekly jobless claims broadly stabilized at 287 000 in a sign that the recovery on the US labour market remains strong. The 4-week moving average of initial claims has only been lower once in the past 40 years compared to now. US Q3 GDP printed stronger than expected at 3.5% annualized (see news).
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Editors’ Picks
EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
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