24 October, 2017
The markets are turning their attention to who will become the next Chairperson of the Federal Reserve. President Trump recently commented that he is “very, very close” to deciding who will take the position after interviewing 5 candidates. The 5 shortlisted candidates are current Fed Chair Janet Yellen, who has held the position for the past 4 years, she holds a PhD in economics from Yale and has held numerous “Fed” roles, Kevin Warsh a Harvard Law graduate, financier and former governor of the Federal Reserve System, Fed Governor (since 2012) Jerome Powell, a lawyer and former investment banker, John Taylor, a Stanford University economist & Gary Cohn who is Trump’s chief economic advisor. The White House has stated that Trump will make his decision before he leaves for a trip to Asia in November.
With Japanese Prime Minister Shinzo Abe securing a decisive victory for his coalition party in the recent Japanese elections, the markets are looking for confirmation that his economic reforms will continue. With such ultra-easy monetary policy adopted by the Bank of Japan, the Yen has suffered from a degree of risk-off sentiment of late.
On Thursday, the ECB meets and President Mario Draghi is expected to announce the long-awaited start of tapering. The question the markets are posing is how the central bank will pare back a bond-buying program that started over 2 years ago? Currently, monthly bond purchases by the central bank totals some EUR60 Billion, with many analysts predicting that this will drop to between EUR20 to 30 Billion per month. At such a pace, it would make an increase in Eurozone interest rates highly unlikely until 2019. We can expect to see some extended volatility in EUR once the scale of tapering is announced.
EURUSD is slightly higher in early Tuesday trading. Currently, EURUSD is trading around 1.1765.
USDJPY is unchanged in early trading. Currently, USDJPY is trading around 113.35.
GBPUSD is 0.2% higher to currently trade around 1.3220.
Gold is unchanged overnight to currently trade around $1,282.75.
WTI is 0.2% higher in early trading. Currently, WTI is trading around $52.02.
Major data releases for today:
At 08:30 BST, Markit Economics will release German PMI (Composite, Services & Manufacturing) for October. Composite is forecast at 57.6 (from 57.7), Services is forecast to be unchanged at 55.6 and Manufacturing is forecast at 60.0 (from 60.6).
At 09:00 BST, Markit Economics will release Eurozone PMI (Composite, Services & Manufacturing) for October. Composite is forecast at 56.5 (from 56.7), Services is forecast at 55.7 (from 55.8) and Manufacturing is forecast at 57.8 (from 58.1).
At 14:45 BST, Markit Economics will release US PMI (Composite, Services & Manufacturing) for October. Composite previous was 54.8, Services is forecast at 55.2 (from 55.3) and Manufacturing is forecast at 53.5 (from 53.1).
The FOMC minutes highlighted some increased risks to the US economy particularly concerning trade relationships but the view still holds that the Fed should...
UK Consumer Price Index (YoY) (May) is expected out at 2.5% against 2.4% previously. Producer Price Index â€“ Input (YoY) (May) is expected...
UK Construction PMI (May) will be out with an expected headline number of 49.7 from a prior number of 52.5. The consensus is for a drop in the numbers...
UK Industrial Production (YoY) (Mar) is expected to be 3.1% against a previous 2.2%. Industrial Production (MoM) (Feb) is expected to be 0.2% against...
UK Budget Report will be released. This is a mini-budget and outlines the government’s updated budget for the fiscal year, including infrastructure...
The US Nonfarm Payrolls data released on Friday showed a strong increase in job creation and, combined with the lower than expected increase...
The Bank of Japan Interest Rate Decision was as expected and left unchanged at -0.1%. The Japanese 10-Year JGB yield target is around zero percent...
On Tuesday, the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week. That is almost twice...
This week will be dominated by Geo-Politics as the US Tax Bill needs to be reconciled between the Senate and House, whilst UK Prime Minister...