KBC Market Research Desk
KBC Bank
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European equities eked out modest to moderate gains after WS held up well post FOMC and as the euro weakened versus the dollar (yesterday eve). US stock markets open with tiny losses.
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S&P has cut its rating on China by one notch to A+ weeks before the country is expected to launch a rare dollar bond, with the ratings agency citing rising economic and financial risks after a long period of heavy credit growth. The decision brings S&P's rating in line with those of Moody's and Fitch. No immediate impact on markets is expected.
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Norway's central bank kept its key deposit rate unchanged at 0.50%, but indicated it could raise interest rates sooner than earlier anticipated after taking stock of the country's improved economic outlook and growing signs of tightening by its counterparts around the world. EUR/NOK fell to 9.32 from 9.37 before the decision.
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The ECB announced plans to launch a new reference point for overnight interest rates, opening up a new alternative to the private-sector benchmarks that have been hit by scandal and are in the process of reform. Its new transaction-based overnight rate will serve as backstop to private sector benchmark rates and finalized before 2020.
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The Minutes of the Polish central bank meeting showed that the majority of its members were comfortable with keeping rates stable in coming quarters. Inflationary pressures remained limited despite favourable economic conditions, good labour market conditions and gradual wage growth. There were no imbalances building. Some members suggested any rise in inflation might be met with a rate hike, fearing the effects of negative real rates.
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Applications for unemployment benefits in the US unexpectedly declined last week, from 282k to 259k, as the Hurricane Harvey-related surge in Texas filings continued to reverse. The September Philly Fed Business outlook also beat forecasts, rising from 18.9 to 23.8 (vs 17.1 expected).
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
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Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.