The Antipodean currencies have been so far the strongest in the G10 basket despite declining iron ore prices which, in theory, should weigh on the Australian dollar. The metal’s price is dropping as much as 4% while the New Zealand dollar is waiting for results of the GDT milk auction (it’s carried out twice a month more or less). The AUD is rising 0.6% while NZD is going up 0.55% at the time of writing. On top of that, the US dollar index (USDIDX on xStation5) is trading lower 0.2% as investors seem to be a bit skeptical as for the FED’s meeting tomorrow.
The German ZEW index marked a substantial improvement in September when it comes to economic expectations which saw an increase from 10 to 17. In addition, the assessment of current conditions moved up from 86.7 to 87.9 – both readings quite easily beat forecasts.
The European equity markets have begun the day with modest losses after quite a disappointing session in Asia and fairly a positive one seen across the pond. The euro has gained a foothold immediately when the Europe’s desks have gotten started which could be a slight drag on the stocks listed on the DE30. At first, let’s have a look at a technical analysis.
The Japanese enjoyed a holiday on Monday as other markets stormed higher but they made sure to close the gap well on Tuesday. The JAP225 (Nikkei225) surged by nearly 2% as the yen weakened for another day vs the greenback and even more against other currencies.
Moves across the cryptocurrency market have subsided recently after the exceptionally hectic last week. For that reason, it’s worth getting back to the latest ECB’s meeting where Mario Draghi alluded to an idea of implementing a new cryptocurrency in Estonia. In short, Draghi didn’t beam with happiness to say the least.
In a month of central bank meetings we are yet to hear from the US Federal Reserve. The Fed has been known for announcing policy changes at the final meetings of a given quarter – they increased rates in December last year and then in March and June this year. A repeat is nearly out of question this time around but an equally important decision needs to be taken: how to reduce a giant balance sheet. Let’s take a quick tour on market expectations and instruments that could be affected.
Looking forward, we have two notable macro releases: US housing data and the API report on oil stocks. One needs to take into account that the latter might be affected by adverse weather conditions once again.