Industrial production for August for the euro area is due to be released today
|Market movers today
-
In the US today, the FOMC minutes from the September meeting are due out. The committee looked very divided at the September meeting with three members voting for an instant hike and three members signalling no hikes in 2016 at all (ten members are signalling one hike). Hence, it will be important to see the discussion they had.
-
Industrial production for August for the euro area is due to be released today. Industrial production saw a large monthly drop of 1.1% in July, led mainly by very weak German industrial production. We expect industrial production to rebound in line with the strong German figures. The recent manufacturing PMIs have also pointed towards an improving manufacturing sector, so we expect industrial production to remain solid in Q3.
-
There are no major data releases today in Scandinavia.
Selected market news
Yesterday, the German ZEW expectations surprised on the upside at 6.2 in October from 0.5 in September. It was at 19.2 in June prior to the UK's vote to leave the EU. The current situation component, which is less forward looking, was also better than expected at 59.5 in October compared to 55.1 in September. This is the highest level since January this year. The figures confirm the signal from the PMI and Ifo expectations from September that the euro area is so far resilient to the UK's decision to leave the EU. It looks as if GDP growth could surprise on the upside in H2.
The new Bank of England (BoE) member Michael Saunders communicated yesterday, in line with the current BoE communication, that it is OK if inflation overshoots its target if it is due temporarily to FX movements. If wages pick up, the BoE dilemma is ‘sharper'. Moreover, Saunders said that a weaker GBP is due to Brexit concerns but that the economy has not slowed as much as expected in the August report. In our view, the better-than-expected economic data means it is less likely that the BoE will cut rates in November. However, since the UK's Prime Minister, Theresa May, seems to be heading for a ‘hard Brexit', which means that business optimism could take a hit again, it cannot be ruled out completely that the BoE will ease further.
In general, it was a fairly calm session in global financial markets yesterday, slightly skewed towards risk-off sentiment. Stock markets were fairly calm but did move mainly downwards. In fixed income markets, yields in Germany decreased after the recent period of yields climbing higher. The 10Y German government bond yield fell by approximately 3bp and thus remains some few basis points above negative territory. Moreover, Brent oil decreased, though modestly, to USD52.4/bbl.
Today, it has been a quiet morning. Regarding risk sentiment, so far it has been mainly risk-off with Asian stock markets in the red and with the 10Y government bond yield in Japan down by approximately 1bp. However, Brent oil has climbed slightly higher to USD52.6/bbl at the time of writing.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.