Dollar Drops to 10 Month Low Versus Euro

Dollar Drops to 10 Month Low Versus Euro

The dollar dropped to fresh 10-month lows against the euro and four-month lows versus the Aussie dollar the ‘miss’ in the September NFPs. For many, this data is confirmation that the Fed’s unpopular – for capital markets like US equities – decision to Taper its stimulus program would be pushed all the way until March 2014. Yet, it is interesting to note that the dollar reaction was more restrained than the debt resolution and the S&P 500’s exuberance was significantly weaker than the average bullish performance last week. What are we to derive from this? One element of this restrained is the level of speculation surrounding the looser monetary policy conditions. Assets like US equities in particularly seem like they never doubted an ongoing support system. And, in the absence of a ‘relief’ rally on risk, tepid jobs and stimulus don’t exactly spell out the beginning of a long-term bull trend. A more prolific problem that may develop traction moving forward is outright doubt that stimulus will be maintained that long or even be effective in its moral hazard gearing. What happens if the S&P 500 drops even with QE3 at full tilt…

British Pound Looking to BoE Minutes as GBPUSD Faces 1.6250

Where the interest rate outlook for the US may be at the bearish extreme with markets expecting the accelerator depressed on stimulus through the next five months, the sterling is on the opposite end of the spectrum. Rates-sensitive markets have made it clear that the Bank of England’s (BoE) foreword guidance for benchmark rates to be held until 2016 are not believed. An expectation for the first hike to come in 2015 was further reinforced last week when the central bank’s chief economist voiced implicit support of the more hawkish time frame. We will see whether these expectations are indeed overblown or on track with the upcoming BoE minutes. Should the language soften on the adamant dove stance with the GBPUSD so close to 1.6250 – a multi-year resistance – a break may be in store. However, expectations are already stretched; and the group has not strayed from its original guidance. Furthermore, the argument of a hike two years out over three years out doesn’t present a particularly strong bullish line beyond short-term repricing. The greater risk is for a dovish hold and bearish response for the pound.

Australian Dollar Rally on 3Q CPI More Successful for AUDNZD

With rate making a consistent recovery from the discounts of persistent rate cuts just months ago, the Australian dollar has found recovery traction with a timid risk appetite supporting carry. Yet, the shift so far for the Aussie yield projection has only made the transition to rate cuts to a flat forecast. We have yet to see a material outlook for rate hikes take root. The slow build up was put into jeopardy early this morning when the third quarter consumer inflation (3Q CPI) figures crossed the wires. With the annual, headline reading expected to slow to 1.8 percent and thereby drop out of the RBA’s preferred range, fear of another near-term cut began to creep back in. The 2.2 percent reading mitigated those fears, but it didn’t move forward the time frame on the first hike. Without active carry appetite, this data my garner little strength.

Euro: Greece Readies Troika Demands, 

ECONOMIC DATA

GMT	Currency	Release	Survey	Previous	Comments
0:00	AUD	DEWR Skilled Vacancies (MoM) (SEP)		0.3%	Inflation looks to hit its lowest level since the June 2012 print. A continuation below 1.8% could strike concern among members of the RBA and may warrant comments at the next meeting.
0:30	AUD	Consumer Price Index (QoQ) (3Q)	0.8%	0.4%
0:30	AUD	Consumer Price Index (YoY) (3Q)	1.8%	2.4%
0:30	AUD	CPI RBA Trimmed Mean (QoQ) (3Q)	0.6%	0.5%
0:30	AUD	CPI RBA Trimmed Mean (YoY) (3Q)	2.1%	2.2%
0:30	AUD	CPI RBA Weighted Median (QoQ) (3Q)	0.6%	0.7%
0:30	AUD	CPI RBA Weighted Median (YoY) (3Q)	2.3%	2.6%
1:45	CNY	MNI Business Sentiment Indicator (OCT)
2:00	CNY	China Economic Survey - Bloomberg (OCT)
6:45	EUR	French Business Survey Overall Demand (OCT)		-14	August’s 98 print was the best business confidence index in manufacturing since the fall of 2011.
6:45	EUR	French Own-Company Production Outlook (OCT)		13
6:45	EUR	French Production Outlook Indicator (OCT)	-11	-10
6:45	EUR	French Business Confidence Indicator (OCT)	98	97
8:30	GBP	BBA Loans for House Purchase (SEP)	39500	38228	The print is approaching 2012 highs, but far below pre-crisis levels.
11:00	USD	MBA Mortgage Applications (OCT 18)		0.3%	Import price indexes for September were delayed due to the government shutdown.
12:30	USD	Import Price Index (MoM) (SEP)	0.2%	0.0%
12:30	USD	Import Price Index (YoY) (SEP)	-1.0%	-0.4%
13:00	USD	House Price Index (MoM) (AUG)	0.8%	1.0%
14:00	CAD	Bank of Canada Interest Rate Decision	1.0%	1.0%
14:00	EUR	Euro-Zone Consumer Confidence (OCT A)	-14.5	-14.9	If the print beats prior, it will be the best reading since the Euro-crisis began.
14:30	USD	DOE U.S. Crude Oil Inventories (OCT 18)	3000K		WTI Crude broke below $100 Tuesday for the first time since July.
14:30	USD	DOE U.S. Distillate Inventory (OCT 18)	-1800K
14:30	USD	DOE U.S. Gasoline Inventories (OCT 18)	-1000K
21:45	NZD	Trade Balance (New Zealand dollars) (SEP)	-680M	-1191M	Kiwi strength remains vulnerable after it spiked to 6 month highs post-NFP print.
21:45	NZD

ECONOMIC DATA

GMT	Currency	Release	Survey	Previous	Comments
0:00	AUD	DEWR Skilled Vacancies (MoM) (SEP)		0.3%	Inflation looks to hit its lowest level since the June 2012 print. A continuation below 1.8% could strike concern among members of the RBA and may warrant comments at the next meeting.
0:30	AUD	Consumer Price Index (QoQ) (3Q)	0.8%	0.4%
0:30	AUD	Consumer Price Index (YoY) (3Q)	1.8%	2.4%
0:30	AUD	CPI RBA Trimmed Mean (QoQ) (3Q)	0.6%	0.5%
0:30	AUD	CPI RBA Trimmed Mean (YoY) (3Q)	2.1%	2.2%
0:30	AUD	CPI RBA Weighted Median (QoQ) (3Q)	0.6%	0.7%
0:30	AUD	CPI RBA Weighted Median (YoY) (3Q)	2.3%	2.6%
1:45	CNY	MNI Business Sentiment Indicator (OCT)
2:00	CNY	China Economic Survey - Bloomberg (OCT)
6:45	EUR	French Business Survey Overall Demand (OCT)		-14	August’s 98 print was the best business confidence index in manufacturing since the fall of 2011.
6:45	EUR	French Own-Company Production Outlook (OCT)		13
6:45	EUR	French Production Outlook Indicator (OCT)	-11	-10
6:45	EUR	French Business Confidence Indicator (OCT)	98	97
8:30	GBP	BBA Loans for House Purchase (SEP)	39500	38228	The print is approaching 2012 highs, but far below pre-crisis levels.
11:00	USD	MBA Mortgage Applications (OCT 18)		0.3%	Import price indexes for September were delayed due to the government shutdown.
12:30	USD	Import Price Index (MoM) (SEP)	0.2%	0.0%
12:30	USD	Import Price Index (YoY) (SEP)	-1.0%	-0.4%
13:00	USD	House Price Index (MoM) (AUG)	0.8%	1.0%
14:00	CAD	Bank of Canada Interest Rate Decision	1.0%	1.0%
14:00	EUR	Euro-Zone Consumer Confidence (OCT A)	-14.5	-14.9	If the print beats prior, it will be the best reading since the Euro-crisis began.
14:30	USD	DOE U.S. Crude Oil Inventories (OCT 18)	3000K		WTI Crude broke below $100 Tuesday for the first time since July.
14:30	USD	DOE U.S. Distillate Inventory (OCT 18)	-1800K
14:30	USD	DOE U.S. Gasoline Inventories (OCT 18)	-1000K
21:45	NZD	Trade Balance (New Zealand dollars) (SEP)	-680M	-1191M	Kiwi strength remains vulnerable after it spiked to 6 month highs post-NFP print.
21:45	NZD

ECONOMIC DATA

GMT	Currency	Release	Survey	Previous	Comments
0:00	AUD	DEWR Skilled Vacancies (MoM) (SEP)		0.3%	Inflation looks to hit its lowest level since the June 2012 print. A continuation below 1.8% could strike concern among members of the RBA and may warrant comments at the next meeting.
0:30	AUD	Consumer Price Index (QoQ) (3Q)	0.8%	0.4%
0:30	AUD	Consumer Price Index (YoY) (3Q)	1.8%	2.4%
0:30	AUD	CPI RBA Trimmed Mean (QoQ) (3Q)	0.6%	0.5%
0:30	AUD	CPI RBA Trimmed Mean (YoY) (3Q)	2.1%	2.2%
0:30	AUD	CPI RBA Weighted Median (QoQ) (3Q)	0.6%	0.7%
0:30	AUD	CPI RBA Weighted Median (YoY) (3Q)	2.3%	2.6%
1:45	CNY	MNI Business Sentiment Indicator (OCT)
2:00	CNY	China Economic Survey - Bloomberg (OCT)
6:45	EUR	French Business Survey Overall Demand (OCT)		-14	August’s 98 print was the best business confidence index in manufacturing since the fall of 2011.
6:45	EUR	French Own-Company Production Outlook (OCT)		13
6:45	EUR	French Production Outlook Indicator (OCT)	-11	-10
6:45	EUR	French Business Confidence Indicator (OCT)	98	97
8:30	GBP	BBA Loans for House Purchase (SEP)	39500	38228	The print is approaching 2012 highs, but far below pre-crisis levels.
11:00	USD	MBA Mortgage Applications (OCT 18)		0.3%	Import price indexes for September were delayed due to the government shutdown.
12:30	USD	Import Price Index (MoM) (SEP)	0.2%	0.0%
12:30	USD	Import Price Index (YoY) (SEP)	-1.0%	-0.4%
13:00	USD	House Price Index (MoM) (AUG)	0.8%	1.0%
14:00	CAD	Bank of Canada Interest Rate Decision	1.0%	1.0%
14:00	EUR	Euro-Zone Consumer Confidence (OCT A)	-14.5	-14.9	If the print beats prior, it will be the best reading since the Euro-crisis began.
14:30	USD	DOE U.S. Crude Oil Inventories (OCT 18)	3000K		WTI Crude broke below $100 Tuesday for the first time since July.
14:30	USD	DOE U.S. Distillate Inventory (OCT 18)	-1800K
14:30	USD	DOE U.S. Gasoline Inventories (OCT 18)	-1000K
21:45	NZD	Trade Balance (New Zealand dollars) (SEP)	-680M	-1191M	Kiwi strength remains vulnerable after it spiked to 6 month highs post-NFP print.
21:45	NZD