US indices extend gains
The wave of risk appetite optimism unleashed by the latest ECB easing moves has continued into today’s Asian session, with the US30 index extending the current rally to an eighth day. However, Asian bourses were not admitted to the party, with China shares dipping 0.3% after a senior US Administration official debunked speculation that US President Trump was mulling an interim trade deal to avoid the implementation on the next set of tariffs on November 1. Hong Kong markets were closed for a public holiday, which affected volumes.
Draghi brings the bazooka (video)
Source: MarketPulse
Aussie posts modest gains
In the currency spectrum, the yen was sold mildly amid positive risk appetite while gold slid 0.12% to 1,497.20, negating any of the gains made yesterday. The Australian dollar eked out small gains to 0.6868 and possibly has eyes on the 100-day moving average at 0.6904, though the lack of momentum between opening and closing prices for the past four days could make it a difficult target.
AUD/USD Daily Chart
Source: OANDA fxTrade
Core US inflation heats up
Core consumer prices in the US rose more than expected in August, but this is not seen denting market expectations that the Federal Reserve will trim rates at next week’s meeting. Prices excluding food and energy rose 2.4% from a year earlier last month, which equaled the level seen in July 2018 which in turn was the highest since 2008. The headline CPI number came in at a below-forecast 1.7% y/y.
Despite the uptick in core inflation, market pricing is still assigning a 98% probability of a 25 bps cut at the meeting on September 18 which, if confirmed would extend the list of central banks that are eager to prime the easing pumps.
US retail sales to close the week
After an eventful week, the only major event to monitor today is the release of US retail sales data for August. Sales are expected to rise 0.2% from a month prior, a marked slowdown from July’s 0.7% increase. The provisional reading for the University of Michigan’s September sentiment index is also due, and is seen improving slightly to 90.9 from 89.8 in August.
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