Markets overall held in tight ranges on Thursday amid further political and fiscal uncertainty.
Markets overall held in tight ranges on Thursday amid further political and fiscal uncertainty. US equities posted limited net gains, although confidence was fragile amid stimulus doubts. The dollar recovered some ground with a limited correction from 6-week lows amid a pairing of short positions.
The Euro was unsettled by further concerns over coronavirus developments and EUR/USD retreated to the 1.1800 area. As Brexit talks resumed, Sterling corrected after sharp gains the previous day with underlying economic reservations also important. Commodity currencies were held in tight ranges and failed to make headway as the dollar edged higher.
The Chinese yuan retreated on Thursday which also had some impact in limiting potential Euro support. There were also further reservations surrounding the Euro-zone recovery outlook which limited the scope for further single-currency backing, especially with a more cautious risk tone.
US jobless claims declined sharply to a 6-month low of 787,000 in the latest week from a revised 842,000 previously and below consensus forecasts of 860,000. Continuing claims also registered a sharp decline to 8.37mn from 9.40mn previously, although there was a small net increase in the number of pandemic compensation schemes. Existing home sales increased to an annual rate of 6.54mn for September from 5.98mn previously and above market expectations of 6.30mn.
Elsewhere the Kansas City Fed manufacturing index edged higher to 23 from 18 previously with some dollar support from the claims data.
There were further reservations over taking aggressive positions ahead of the US Presidential and Congressional elections.
Euro-zone consumer confidence declined to -15.5 for October from -13.9 previously and slightly weaker than expectations. There was also a surge in French coronavirus cases which further unsettled confidence. The dollar regained some ground and EUR/USD retreated to lows near 1.1810 amid an underlying consolidation tone. EUR/USD edged below 1.1800 on Friday with the latest PMI business confidence data watched very closely early in the European session.
Early in Thursday’s New York session House Speaker Pelosi stated that fiscal stimulus talks were on a good path, although market reaction was limited. USD/JPY was able to secure a marginal advance to the 104.70 area as caution prevailed and the US currency secured a wider recovery.
After the New York close, Pelosi stated that Democrat lawmakers did now want a pre-election vote on further stimulus unless the Senate is also going to vote and Senate majority leader McConnell stated that there was not enough time for a Senate vote which dampened any expectations of a pre-election stimulus.
The last Presidential election debate was a more civilised affair with more substance which may offer some net support to Trump’s ratings and markets will monitor opinion polls closely in the next few days. The stimulus developments will also continue to be important for risk appetite in the short term.
Japan’s flash PMI manufacturing index recorded slightly to 48.0 for October from 47.7 previously, but slightly below expectations and the 22nd successive reading in contraction territory. Equities overall were little changed with USD/JPY settling around 104.70 as the Japanese yen gained net ground.
Bank of England Chief Economist Haldane stated that the bank is studying negative interest rates, but this doesn’t mean that they will be used. He also stated that household spending had been remarkably resilient, although there was little comment on the outlook.
The CBI industrial trends index recovered to -34 for October from -48 previously and above consensus forecasts of -45 and output declined at the slowest rate since March, although there were still important reservations over the outlook and business confidence remained extremely fragile.
Chancellor Sunak announced substantial changes to the job support scheme with a sharp cut in employer contributions as the government will now contribute a much higher proportion. There were also fresh support measures in areas with tighter coronavirus reservations as upward pressure on spending continued.
There was little overall reaction with markets still focussing on Brexit developments as EU Chief Negotiator Barnier arrived in London with talks resuming on Friday.
Consumer confidence declined to 5-month low of -31 for October from -25 in September with consumers less confident over the outlook. Retail sales increased 1.5% for October, above consensus forecasts, and GBP/USD held near 1.3050 against a firmer dollar with the latest business confidence data watched closely in the session.
|07:00||GBP Retail Sales ex-Fuel (Y/Y)(SEP)||5.00%||4.30%|
|07:00||GBP Retail Sales ex-Fuel (M/M)(SEP)||0.50%||0.60%|
|07:00||GBP Retail Sales (M/M)(SEP)||0.40%||0.80%|
|07:00||GBP Retail Sales (Y/Y)(SEP)||3.70%||2.80%|
|08:30||EUR German Manufacturing PMI (M/M)(OCT)||52.5||56.4|
|08:30||EUR German PMI Composite(OCT)||52.5||54.7|
|08:30||EUR German PMI Services(OCT)||53||50.6|
|08:30||JPY All Industry Activity Index (M/M)||-||1.30%|
|08:50||Markit Mfg PMI(OCT)||-||51.2|
|09:00||Euro-Zone PMI Manufacturing(OCT)||51.9||53.7|
|09:00||Euro-Zone PMI Services(OCT)||50.5||48|
|09:00||Euro-Zone PMI Composite(OCT)||-||50.4|
|14:45||USD Manufacturing PMI(OCT)||-||53.2|
|14:45||USD Markit Services PMI(OCT)||-||54.6|
|14:45||USD Markit PMI Composite(OCT 01)||-||54.3|
|19:00||Monthly Budget Statement(OCT)||-||-200.0B|