What mattered last week and a preview of the week ahead


What mattered last week:

  • Positive news flow continued last week with both China and the U.S. making trade war concessions which helped the S&P 500 close in on its July high.
  • The ECB announced significant monetary policy easing measures which exceeded all expectations, including QE to continue for as long as needed.
  • The removal of National Security advisor and policy hawk John Bolton goes some way to validating reports that President Trump was considering easing sanctions on Iran.
  • As the flow into risk assets gathered momentum, bond yields rallied strongly. The yield on U.S. 10-year treasury bond closing 33bp higher at 1.90%.
  • Gold closed the week -1.20% lower at U.S. $1488, dragging the Australian gold sector lower with it.
  • At the index level, the ASX200 closed the week 0.33% higher at 6670. Once again underperforming the S&P 500 which posted a 0.85% gain for the week.
  • In FX, the AUDUSD posted its third straight week of gains, finishing the week near .6880.

For the week ahead, the key events are:

Australia: RBA meeting minutes, house price index (Tuesday), labour force (Thursday).

  • RBA September minutes (Tuesday): The minutes are expected to affirm a clear easing bias remains in place.
  • August labour force (Thursday): After a strong rise of +41k in July, the market is looking for a deceleration in headline employment to +10k, while the unemployment rate is expected to tick up from 5.2% to 5.3%.

New Zealand: Global dairy price auction, Westpac consumer confidence and current account (Wednesday), Q2 GDP (Thursday).

China: Fixed asset investment, industrial production, retail sales (Monday), house price index (Thursday).

Japan: Balance of trade (Wednesday), BoJ interest rate decision (Thursday), inflation (Friday).

  • BoJ interest rate decision (Thursday): The BoJ is not expected to change monetary policy but is expected to remain dovish.

U.S.: Industrial production, capacity utilisation (Tuesday), housing starts and building permits (Wednesday), FOMC interest rate decision (Thursday), existing home sales (Friday).

  • FOMC (Wednesday): The market is pricing in a 97% chance of a 25bp cut to the Fed Funds rate to a range of 1.75% to 2.00%. The commentary is likely to be dovish keeping open prospects of another 25 bp cut before year-end.

Canada: Inflation (Wednesday), retail sales (Friday).

Euro Area: German and EA ZEW economic sentiment (Tuesday), current account (Thursday), German PPI (Friday).

UK: Inflation (Monday), BoE interest rate meeting and retail sales (Thursday).

  • BoE interest rate meeting (Thursday): In their last scheduled meeting before Brexit October 31, the BoE is expected to keep interest rates on hold at 0.75%.

Disclaimer

TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)

Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.

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