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The market mood was a bit more positive in the U.S. session thanks to a rally in equities and stronger than expected consumer confidence data. Easing trade war concerns likely contributed to the rebound in risk as well.

Some of the gains might also be attributed to month-end profit-taking, but commodity currencies managed to stay ahead of the pack for the rest of the session.

  • U.S. S&P/CS Composite HPI up 5.5% vs. 6.0% forecast, 5.9% previous
  • U.S. CB consumer confidence index up from 135.3 to 137.9 in Oct
  • BOC Governor Poloz: Rates will need to rise to achieve inflation target
  • BOC official Wilkins: Wage gains to accelerate
  • OPEC and partners to cut oil production after U.S. elections?
  • New Zealand building consents down 1.5% after earlier 6.8% gain

Major Events/Reports:

Upbeat U.S. consumer confidence

It turns out Americans are still feeling optimistic about the economy and financial conditions as the October CB consumer confidence index jumped from 135.3 to 137.9, outpacing the consensus at 136.3.

This marks the index’s 18-month high and signals that spending could stay supported in the months ahead. After all, consumers are more likely to spend than keep their hands in their pockets if they’re confident that the economy could keep chugging on.

Components of the report revealed that the expectations index, which is based on the short-term outlook for income, business, and labor conditions, advanced from 112.5 to 114.6. However, jobs expectations turned out mixed as the proportion expecting more jobs in the months ahead decreased while those anticipating fewer jobs also decreased.

Hawkish BOC remarks

BOC head honcho Poloz and Senior Deputy Governor Wilkins testified before the House of Commons Standing Committee on Finance, sharing their thoughts on economic developments and future policy actions.

In his opening statement, Governor Poloz mostly reiterated his views during the BOC decision, citing that the Canadian economy has shown solid momentum and broad-based growth. He also pointed out that inflation is running close to target but warned that risks from trade and household debt remain.

But what drew bulls’ attention was Poloz’s remarks on how policy remains stimulative despite their latest rate hike, adding:

“The policy rate will need to rise to neutral to achieve our inflation target. That said, the appropriate pace of increases will depend on our assessment at each fixed announcement date of how the outlook for inflation and related risks are evolving.”

Meanwhile, BOC official Wilkins acknowledged that the Canadian economy is strong and that businesses were finalizing investment plans. She also mentioned that households are adjusting to higher rates and that wage growth could accelerate.

Risk-on moves

Some risk-on flows stayed in play for the most part of the session on easing trade jitters after Trump expressed optimism for a “great deal” with China earlier on. Wall Street also chalked up decent gains, buoyed by a pickup in chip and transport shares.

  • Dow 30 index is up 431.72 points to 24,874.64 (+1.77%)
  • S&P 500 index is up 41.38 points to 2,682.63 (+1.57%)
  • Nasdaq is up 111.36 points to 7,161.65 (+1.58%)

Gold returned some of its safe-haven shine but crude oil was also lower on speculations that the OPEC might cut production after the U.S. elections.

Major Market Mover(s):

USD

Stronger than expected U.S. consumer confidence allowed the Greenback to flex its muscles as this hinted that spending and growth could stay supported in the foreseeable future.

USD/JPY advanced from 111.69 to 113.04; USD/CHF is up to 1.0052; EUR/USD edged further down from 1.1381 to 1.1346, and GBP/USD is down to the 1.2700 handle.

Commodity Currencies

The Aussie and Kiwi stayed supported as trade war fears ebbed for the time being while the Loonie got a boost from hawkish BOC remarks.

AUD/USD climbed from .7087 to a high of .7118; NZD/USD rose to a high of .6574; USD/CAD is down to a low of 1.3108, AUD/JPY advanced to 80.30; NZD/JPY rallied to the 74.00 levels, and CAD/JPY recovered to 86.20.

Watch Out For:

  • 12:50 am GMT: Japanese preliminary industrial production m/m (0.3% dip expected, 0.2% uptick previous)
  • 1:30 am GMT: Australian quarterly CPI (gain from 0.4% to 0.5% expected)
  • 1:30 am GMT: Australia’s trimmed mean CPI (dip from 0.5% to 0.4% expected)
  • 2:00 am GMT: Chinese official manufacturing PMI (drop from 50.8 to 50.6 expected)
  • 2:00 am GMT: Chinese official non-manu PMI (dip from 54.9 to 54.7 eyed)
  • Tentative: BOJ monetary policy statement
  • 6:00 am GMT: Japanese consumer confidence index
  • 6:00 am GMT: Japan’s housing starts y/y (-0.7% expected, +1.6% previous)