Summary:

• New rumors concerning the ECB’s QE programme didn’t significantly affect EUR
• USD stays on hold awaiting crucial inflation and retail report from the US
• Antipodean currencies advance on the back of rising commodity prices, the Chinese data disappoints though

 The Friday morning didn’t bring a higher volatility. European stocks kept slightly above the yesterday’s close, whilst EUR and USD stayed calm as the first one almost ignored the latest rumors form ECB and the latter has awaited the crucial data from the US. We note that AUD, NZD and GBP managed to post a bit higher returns against USD. Antipodean currencies were propped up by rising commodity prices, whilst the pound picked up on the report that the EU may offer the UK a transition period before Brexit. 

Although we are still approximately two weeks before the ECB meeting, first rumors have already emerged. According to Reuters European Central Bank policymakers are in broad agreement to prolong asset purchases at a lower volume at their October meeting with views converging on a nine months extension. The sources said that there is a dispute when it comes to how much the QE program should be slashed and a reduction ranges from 25 billion EUR to 40 billion EUR per month. Nevertheless, the EUR reaction to the report was little.

The trade data from the second largest economy in the world China which could be seen a bit disappointing at least on the surface. Namely, trade balance shrank massively from ca. $42 billion to almost $28.5 billion in September mainly on the back of an increase in imports which moved up as much as 18.7% yoy while exports rose 8.1% yoy – both gauges were higher compared to the prior month though. Nevertheless, industrial metals are on the rise today which supports Antipodean currencies – AUD is gaining over 0.3% and NZD is up more than 0.25% against USD.

As far as currencies are concerned, it’s worth mentioning that the GBP is set to end Friday with the first weekly gain in a month. The UK pound recovered after yesterday’s slump as the new reports emerged saying the EU is ready to offer the UK a 2-year transition deal. On the other hand, Jean Claude-Juncker of the European Commission indicated new issues in regard to Brexit talks which limited somewhat the strength of GBP.

Oil prices have had a successful week as of yet and they are expected to end up with a notable increase (the biggest weekly gain since mid-September) following three fundamental reports released by OPEC, EIA and IEA earlier this week. All of them spelt out quite the upbeat outlook for the commodity prices, however, the devil is in the details as usual.

The CPI figures form the US are in the spotlight today as the inflation has become the crucial issue for Fed in regard to rate hike path. Hence, it’s a very significant event for the USD. Moreover, we get the retail sales data also from the US. Keep in mind that the reading could be afflicted by the hurricanes, hence it ought to be treated with a grain of salt. Besides, there are a few central bankers out today and the preliminary UoM indices for October will be published as well.