MARKETS BUZZING AHEAD OF US Q3 DATA
The global financial markets were buzzing ahead of an active Friday session. Less than 24 hours earlier, the European Central Bank (ECB) announced major changes to its bond-purchase program in a move that caught some traders by surprise.
Europe will see a light release schedule on Friday, including a German report on import prices and a French release on consumer confidence. Spain will also issue September retail sales figures at 07:00 GMT.
ECB Governor Peter Praet is scheduled to deliver a speech at 07:15 GMT, with investors keen on understanding the central bank’s justification for its latest policy move.
In the United States, the Commerce Department will issue its preliminary third-quarter GDP report at 12:30 GMT. The estimate is expected to show quarterly growth of 2.5% year-over-year, following a gain of 3.1% in Q2 that was the biggest in years.
Later in the day, the University of Michigan will release the final consumer sentiment index for October.
Meanwhile, energy traders will be keeping close tabs on the weekly rig count courtesy of Baker Hughes Inc.
Earlier in the day, the Japanese government said national consumer prices rose 0.7% annually in September, unchanged from the previous month. So-called core inflation, which strips away volatile food prices, rose by a similar amount.
Core inflation in Tokyo also strengthened to 0.6% annually in October, from 0.5% the previous month.
In-line Japanese inflation data failed to lift the yen, with the USD/JPY continuing well north of 114.00. The pair was last seen trading at 114.13, having gained 0.1% from the previous session. The greenback is currently riding three-month highs against a basket of currencies that includes the yen. The USD/JPY is pushing further into bullish territory, but analysts say initial upside is likely to be capped around 114.50. However, the pair has made impressive gains over the past two weeks, signaling the return of the dollar bulls.
The euro came undone on Thursday after the ECB extended its bond-purchase program. The EUR/USD exchange rate has plunged nearly 200 pips as a result, with prices now hovering near 1.1640. The common currency is now eyeing support levels as low as 1.1360, which corresponds with the 200-DMA. The market has clearly broken to the downside as traders evaluate the ECB’s latest shift in policy.
Oil prices have been on a tear as of late, encouraged by supply-side optimism from the likes of OPEC. Saudi Arabia has signaled its preparedness to drain the supply glut well into 2018, helping crude prices recover to six-month highs. US oil prices are fast approaching $53 a barrel. The market appears primed for further upside, although the fundamentals could dictate short-term trends in investor appetite.