Risk-taking persisted and even intensified during the morning London session, so the safe-havens yen and Swissy got another beating.
The Aussie and the Kiwi, meanwhile, were able to extend their gains. However, neither the Kiwi nor the Aussie were able to claim the top spot since that honor goes to the Loonie.
The euro is also noteworthy since it slumped when word got around that German Chancellor Merkel has no plans to run for the CDU Party Chair, before quickly bouncing back up when word also hit the wires that Merkel plans to stick around as Chancellor.
- U.K. net lending to individuals: £4.7B vs. £4.1B expected, £4.3B previous
- Mortgage approvals in the U.K.: 65.27K vs. 65.00K expected, 66.10K previous
Oil benchmarks slumped during the earlier session and some still in the red for the day. However, they were able to stage a broad-based recovery during the morning London session.
Market analysts blamed oil’s earlier slide on concerns over global growth. As for the later recovery in oil prices, that appears to have been driven by a Bloomberg report which claimed that China plans to slash the car purchase tax by 50% from 10% to 5%, which would naturally mean higher demand for oil products as well.
- U.S. WTI crude oil was up by 0.44% to $65.72 for the session
- Brent crude oil was up by 0.42% to $77.60 for the session
Rumor about German politics
According to a Reuters report and the tweet below from SPIEGEL editor Melanie Amann, German Chancellor Angela Merkel supposedly no longer plans to run as CDU Party Chair during the December party conference.
— Melanie Amann (@MelAmann) October 29, 2018
But before political uncertainty can flare up, however, a later tweet from DPA claimed that even though Merkel has no plans to run for re-election as party chair, Merkel plans to stay on as Chancellor.
— dpa (@dpa) October 29, 2018
According to unnamed sources cited in a Reuters report, the BOJ is supposedly thinking about tweaking its bond-buying program.
The Reuters report then went on to note that:
“Several ideas are under consideration, such as reducing the frequency of the BOJ’s bond purchases or making slight changes to the timing of its government debt purchases to encourage more trading activity between financial institutions.”
However, the sources also reportedly say that the BOJ is not in a hurry to introduce any of the planned tweaks. Also, if (or when) the BOJ does finally tweak its monetary policy, the BOJ plans to do so in a way that “won’t trigger excessive volatility.”
Very risk-friendly start in Europe
After last week’s beating, the major European equity indices are starting the week with an intense bout of risk-taking that propelled the major European equity indices broadly higher.
At first, market analysts attributed the risk-friendly vibes to the positive earnings report for HSBC, which sent banking shares higher, as well as bargain-buying after last week’s beat-down.
However, auto shares surged higher late into the session when Bloomberg released a report claiming that China supposedly plans to slash the car purchase tax from 10% to 5%.
And quite naturally, market analysts quickly began attributing the risk-friendly vibes to that Bloomberg report.
- The pan-European FTSEurofirst 300 was up by 1.54% to 1,407.98
- Germany’s DAX was up by 2.02% to 11,426.32
- The blue-chip Euro Stoxx 50 was up by 1.27% 3,180.65
Major Market Mover(s):
JPY & CHF
Risk-taking prevailed, so the safe-havens yen and Swissy continued to bleed out.
USD/JPY was up by 42 pips (+0.38%) to 112.37, CAD/JPY was up by 42 pips (+0.50%) to 85.80, NZD/JPY was up by 33 pips (+0.46%) to 73.50
USD/CHF was up by 12 pips (+0.12%) to 0.9995, CAD/CHF was up by 18 pips (+0.24%) to 0.7632, NZD/CHF was up by 13 pips (+0.20%) to 0.6538
The Loonie was bid higher across the board during the session and is now the second top-performing currency of the day after the Kiwi.
There were no direct catalysts for the Loonie’s strength, but it looks like the Loonie was tracking the recovery in oil prices during the session.
USD/CAD was down by 16 pips (-0.12%) to 1.3096, EUR/CAD was down by 17 pips (-0.11%) to 1.4920, GBP/CAD was down by 25 pips (-0.15%) to 1.6800
Watch Out For:
- 12:30 pm GMT: U.S. personal income (0.4% expected vs. 0.3% previous) and personal spending (0.4% expected vs. 0.3% previous)
- 12:30 pm GMT: U.S. core PCE price index (0.1% expected vs. 0.0% previous)
- 2:30 pm GMT: British Chancellor of the Exchequer Philip Hammond is expected to present the latest budget