European FX Outlook: Autumn EC Forecasts are set to look brighter
|What you need to know before markets open:
• Stock markets declined and the safe haven asset classes like gold and Japanese yen inched higher on relatively uneventful Wednesday and Thursday.
• With the US President visiting Asia, the US tax reduction plan is the center of the market attention.
• Another round of Brexit talks resumes Thursday with no indication of a breakthrough. Both sides the UK and EU are hoping for an agreement by the end of the year, by the EU side sounding cautious.
Thursday’s market moving events
• China’s CPI rose 1.9% y/y in October while PPI rose 6.9% y/y, both inflation gauges exceeding the expectations.
• German trade balance is expected to reach a surplus of €21.1 billion in September.
• European Commission will publish its autumn economic forecasts.
• NIESR is expected to publish UK GDP forecast at 0.4% q/q.
• The US weekly jobless claims are expected to rise 232K for last week, up from 229K reported for the week ending October 28.
• Swiss SNB Governing Board chairman Thomas Jordan will deliver a speech titled “Independence of Central Banks after the Financial Crisis: The Swiss Perspective” at the Center for Financial Studies Presidential Lecture, in Frankfurt, Germany.
Major forex market movers
• After being boosted overnight NZD/USD stabilized just below $0.7000 level.
• Autumn economic forecast from European Commission is unlikely to steer the FX market waters, but will add up to the backround macro picture.
• Sterling benefited from quick resolution of political scandal in the UK with Patel resigning, but Brexit uncertainty weighs on the currency going further.
Wednesday’s macro summary
• China’s exports rose 6.9% y/y with imports rising by 17.2% y/y, broadly meeting the market expectations.
• French trade balance reached deficit of €4.7 billion in September.
• Canadian building permits rose 3.8% m/m in in September for the first time in three months, as strength in the non-residential sector outweighed some weakness in the residential sector.
• The RBNZ kept policy rate unchanged in line with expectations. The policy outlook remained dovish with the official Cash rate seen at 1.75% until March 2019.
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