The Morning Market Report – 26th October 2015

Daily Market News

The U.S. dollar slipped from a 2.5-month high against major global currencies despite news that China will introduce another round of monetary easing in the wake of its sixth rate cut since November. The announcement from the Peoples Bank of China came a day after the European Central Bank indicated plans to boost its bond-purchasing program in order to tackle a lack of inflation across the worlds largest economic bloc.

The Fed Open Market Committee will meet this week to discuss monetary policy and the possibility of the first U.S. rate hike in years. With dovish sentiment dominating the global dialogue of central banks, keep an eye on additional policy meetings from Sweden’s Riksbank, the Reserve Bank of New Zealand and the Bank of Japan.

Today’s Market Numbers: Thirty minutes into the trading session, the Dow Jones slid 21 points, while the Nasdaq dipped roughly 8.5 points. Markets were little changed in preparation for the meeting of the Fed Open Market Committee, which kicks off tomorrow.

Around the World: Statistics Singapore reported a large slump in the nation’s September industrial production levels… Spain’s PPI figure high negative 3.6%…. Brazil’s consumer confidence in October came in higher than expected. This evening, New Zealand – which had a market holiday today – will report its trade balance and import-export volumes for September, a reading that will affect the NZD/USD. Finally, Japan’s Corporate Services Price Index (CSPI) will be in focus late tonight.

Oil Prices in Focus: Oil prices were ticking higher as a busy week of economic data awaits. Early this morning, the United Arab Emirates oil minister announced expectations for a correction in oil prices in 2016 and a faster-than-anticipated recovery. WTI prices added 0.18%, while Brent prices gained 0.10%.

Forex Snapshot                                                                                 

The ICE U.S. dollar index (DXY) slipped 0.18% against a basket of currencies. Profit-taking comes just days after the People’s Bank of China announced another rate cut, the latest divergence on monetary policy between China and the United States. The Federal Reserve will meet for the seventh time this year; however, economists and the market do not anticipate a rate hike. The markets indicate that the Fed will likely hike rates in March.

EUR/USD: The euro gained 0.18% against the dollar after the German Ifo Business Climate Index came in higher-than-expected for October. The final number hit 108.2, beating expectations by 0.4 points, and suggested that its auto industry has remained largely resilient to the Volkswagen emissions scandal. The figured provided a boost a few days after the European Central Bank said that additional stimulus measures will be required in order to combat disinflationary pressures across the Eurozone.

GBP/USD: The cable gained 0.22% on news that the economic expectations of British manufacturing executives slipped significantly more than expected. The Confederation of British Industry reported a negative 18 figure, down significantly from the negative 8 expectation. The figure indicates that roughly 550 manufacturing companies anticipate a decline in order volumes. Meanwhile, the British Bankers’ Association reported fewer mortgage approvals over the last month than previously expected.

USD/JPY: The dollar dipped 0.50% against the yen after a key advisor to Prime Minister Abe Shinzo said that the Bank of Japan does not need to increase monetary easing so long as the labor market remains tight and that the nation should cut its corporate tax rate in the next fiscal year.

USD/CHF: The dollar added 0.41% against the Swiss franc.

AUD/USD:  The Australian dollar added 0.64% against the greenback.

USD/CAD: The U.S. dollar dipped 0.09% against the loonie.

Check back on Tuesday at when the Fed Open Market Committee kicks off a two-day meeting to discuss monetary policy, the United Kingdom announces third-quarter GDP, and Japan reports September retail sales growth.