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TradeTheNews.com EU Market Update: Perceived dovish FOMC minutes continued to aid risk appetite in session; USD maintains soft tone
Thu, 09 Oct 2014 5:20 AM EST
***Notes/Observations***
- FOMC minutes perceived as dovish; Fed members concerned about overseas growth
and strong USD (Fist time Fed has referenced USD in this cycle) and thus the
USD experienced a corrective rebound
- (AU) Australia Sept Employment Change gives back all of its Aug gains (after
revisions) (-29.7K v -30.0Ke)
- Numerous European 10-year yields hit record lows in session (Spain, Belgium,
Finland and France)
***Key Economic Data in session***
- (JP) Japan Sept Preliminary Machine Tool Orders Y/Y: 34.8% v 35.5% prior
- (DE) Germany Aug Current Account
Balance: €10.3B v €13.8Be; Trade Balance: €14.1B v €17.7Be; Exports M/M:
-5.8% v -4.0%e; Imports M/M: -1.3% v +0.9%e
- (FR) France Aug Trade Balance: -€5.8B
v -€5.5Be
- (CZ) Czech Sept CPI M/M: % v -0.2%e; Y/Y:% v 0.9%e
- UN Foods and Agricultural Organization (FAO) Sept World Food Prices Y/Y:
191.5 v 196.6 prior (4-year low)
- (GR) Greece Sept CPI Y/Y: -0.8% v -0.3%e; CPI EU Harmonized Y/Y: -1.1% v
-0.3%e (19th straight month of declines)
- (GR) Greece July Unemployment Rate: 26.4% v 26.8%e (lowest since Dec 2012)
Fixed Income:
- (IE) Decent Ireland Debt Agency (NTMA) auction; sold €1.0B vs. €1.0B
indicated in 3.4% Mar 2024 IGB bond; Avg Yield: 1.630% (record low) v 2.315%
prior; Bid-to-cover: 2.5x v 2.74x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities***
Indices [Stoxx50 +0.8%, FTSE 100 +0.6% at 6,523, DAX +1% at 9,087,
CAC-40 +0.6% at 4,195, IBEX-35 +0.6% at 10,397, FTSE MIB +0.4% at 19,723, SMI
+0.6% at 8,573, S&P 500 Futures +0.2% at 1,967]
- Market Focal Points/Key Themes:
Equity markets open sharply higher following FOMC minutes and ahead of Draghi
comments, DAX outperforms despite sharp decline in Germany's Aug exports and
gains in Bunds (BMW and Siemens supported by broker commentary), FTSE 100 lags
on ex-dividends, Airlines generally have slight rebound, Gold miners supported
by rise in gold prices, Weakness in European IPO market (Energy services firm
Spie delays listing)
By Sector
- Technology [Exact Holding EXACT.NL +15% (takeover offer)
- Consumer Discretionary [Hays
HAS.UK (Q1 LFL fees +9%); N Brown Group BWNG.UK -7% (profit warning)
- Consumer Staples [Suedzucker
SZU.DE -4% (cautious outlook)
- Industrials [Maersk MAERSKB.DK
+2.5% (speculated approval of MSC shipping alliance), Wood Group WG.UK +2.5%
(reaffirmed outlook), BMW BMW.DE +2% (broker commentary), Siemens SIE.DE +1.5%
(broker commentary)]
- Healthcare [NicOx COX.FR +4%
(distribution agreement), Galapagos GLPG.BE +3% (data presentation)
- Stoxx50 sectors [Industrials
+1.5%, Technology +1.4%, Consumer Cyclical +0.9%, Basic Materials +0.8%,
Consumer Non-Cyclical +0.8%, Energy +0.8% Telecom +0.7%, Financials +0.1%;
Utilities -0.5%]
***Speakers***
- ECB Monthly Report noted that its policy underpined the anchoring of
inflation expectations (echoed Draghi post rate decision press conference)
- SNB's Danthine reiterated view
that currency floor remained central policy tool and key for stability. Europe
in recession is a big risk for Switzerland and that negative interest rates was
a possibility but not part of baseline scenario
- Bavaria Fin Min Soeder: Wants
federal govt to prevent the ECB from buying risky bond bundles
- German think-tank DIW cuts German
2014 and 2015 GDP forecasts. It now saw 2014 GDP growth at 1.3% (from
1.8% prior) and 2015 growth at 1.2% (from 2.0% prior)
- China PBOC official Wang Dan: To
allow mainland China residents to invest in overseas stocks
Currencies/Fixed Income:
- USD saw some of its recent rally diminish after what was perceived as dovish
FOMC minutes. Several members expressed concerns that the appreciation of USD
would have a negative impact on exports and inflation
- The EUR/USD rose for the 4th straight day and hit a 2-week high at 1.2790
area while USD/JPY probed 3-week lows under 107.75
- Numerous European 10-year yields hit record lows in session (Spain, Belgium,
Finland and France)
Political/In the Papers:
- (IT) Italy PM Renzi wins Senate confidence vote on labor reform proposal by
165-111 margin
- (RU) Russia parliament approves law allowing govt to seize foreign assets in
Russia in response to "illegal sanctions" in first reading - press;
Vote was 233 to 202
- (IN) India PM Modi said to give RBI govt veto power in meeting CPI goal. The
veto power over new monetary policy council that would focus on price stability
as main task.
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time
(Add 4 hours for GMT equivalent)
- (UK) House of Commons By-Elections in Clacton, Middleton & Heywood
- (MX) Mexico Sept ANTAD Same-Store Sales Y/Y: No est v 3.7% prior
- 05:30 (ZA) South Africa Aug Total Mining Production M/M: 0.5%e v 0.4% prior;
Y/Y: -5.6%e v -7.7% prior; Gold Production Y/Y: No est v -14.6% prior; Platinum
Production Y/Y: No est v -45.2% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills
- 05:30 (HU) Hungary Debt Agency (AKK) to sell Floating Bonds
- 06:00 (DE) German Chancellor Merkel meets with Poland PM Kopacz in Berlin
- 06:00 (IE) Ireland Sept CPI M/M: No
est v 0.2% prior; Y/Y: No est v 0.4% prior
- 06:00 (IE) Ireland Sept CPI EU Harmonized M/M: No est v 0.3% prior; Y/Y: No
est v 0.6% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (UK) Bank of England (BOE)
Interest Rate Decision: Expected to leave Interest Rate unchanged at
0.50% and maintain Asset Purchase Target (APT) at £375B
- 07:00 (ZA) South Africa Aug Manufacturing Production M/M: +0.3%e v -3.6%
prior; Y/Y: -3.6%e v -7.9% prior
- 07:00 (RU) Russia Gold and Forex Reserve w/e Oct 3rd: No est v $456.9B prior
- 07:00 (BR) Brazil Oct IGP-M Inflation (1st Preview): 0.1%e v 0.3% prior
- 07:00 (CZ) Czech Central Bank comments on Sept CPI data
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (US) Initial Jobless Claims:
295Ke v 287K prior; Continuing Claims: 2.41Me v 2.398M prior
- 08:30 (CA) Canada Aug New Housing Price Index M/M: 0.1%e v 0.0% prior; Y/Y:
1.5%e v 1.4% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (MX) Mexico Sept CPI M/M: 0.5%e v 0.4% prior; Y/Y: 4.2%e v 4.2% prior;
CPI Core M/M: 0.3%e v 0.2% prior
- 09:45 (US) Fed's Bullard speaks on
Monetary Policy in St. Louis
- 10:00 (US) Aug Wholesale Inventories M/M: 0.3%e v 0.1% prior; Wholesale Trade
Sales M/M: 0.3%e v 0.7% prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) ECB's Draghi speaks on
Monetary Policy in Washington DC
- 13:00 (US) Treasury to sell $13B in 30-Year Bond Reopening
- 15:40 (US) Fed's Williams Speaks on the Economy in Las Vegas
- 19:00 (PE) Peru Central Bank Interest Rate Decision: Expected to leave
Reference Rate unchanged at 3.50%
- 19:50 (JP) Bank of Japan (BOJ) Sept. 3-4 meeting minutes
- 20:45 (AU) RBA's Edey Panel Participation at FINSIA Conference
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