Market themes of the Day: German Ifo index and ECB headline

What you need to know before markets open
Main themes:

• Business activity in the German private sector grew at the slowest rate for almost three-and-a-half years in October.
• "The Bank of Canada, like the Federal Reserve is looking for the neutral rate.  The BOC statement said they will judge the proper level by the effect that their increases have on economic activity.  But rate increases have a delayed impact. Is the Canadian economy the same as the last time the bank ventured into neutral territory in 2006?" the FXStreet senior market analyst Joseph Trevisani commented on the BoC's rate hike.
• Dallas Federal Reserve Bank President Robert Kaplan sees rates rising “likely” to 2.75% to 3% range in 2019.
• German Ifo business climate is expected to decelerate in October while ECB President is set to avoid telling the truth about Italy. Read more details in my ECB Preview here.

Europe

• German business activity grew at the slowest rate for almost three-and-a-half years in October with manufacturing PMI decelerating to 52.3 and services PMI decreased to 53.6.
• The Eurozone manufacturing PMI decelerated to 52.1 and services PMI fell to 53.3 in October.
• German Ifo business climate index is expected to decelerate to 103.0 in October.
• The ECB Governing Council is expectedly keeping the monetary policy unchanged with plans to end asset purchasing in December standing still. What will the ECB President Maio Draghi say about Italian budget and unexpectedly sharp deceleration in business activity in October? Read more details in my ECB Preview here.

Canada

• The Bank of Canada raised the overnight interest rate to 1.75% while dropping the previous language about gradual rate hikes, as the future path of interest rates will be determined by the actual economic development. For more details read my Analysis here.  

US

• The US new home sales fell 5.5% m/m in September.
• Federal Reserve Bank of Atlanta President Raphael Bostic said that unless data surprise on the downside, Fed should continue gradual rate hikes at least “a few more times”. Bostic expects Q3 GDP to rise strongly confirming that the US shifted to a higher gear and therefore there is no reason to keep Fed's “foot on the gas pedal”.
• Federal Reserve Bank of Cleveland President Loretta Mester said that the fundamentals of the economy are strong with no signs of pending US recession with a prolonged market downturn likely affecting US economic data. Fed is more sensitive to economic data as it is approaching a neutral stance.
• US durable good orders are expected to fall -0.9% m/m in September while core orders excluding transport are expected to increase 0.3% m/m.
• Initial jobless claims are seen increasing by 214K in the week ending October 14.
• Federal Reserve Governor Richard Clarida is scheduled to speak about the economic outlook and monetary policy at the Peterson Institute for International Economics Luncheon, in Washington DC at 16:15 GMT.
• Federal Reserve Bank of Cleveland President Loretta Mester is scheduled to speak at the New York University at 21:30 GMT.