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Dollar domination from the previous trading session carried on for the rest of the day as the currency shrugged off downbeat housing reports.

On the flip side, the Japanese yen lagged behind its peers on rising global bond yields and improving risk appetite while the Loonie eventually gained its footing.

  • Canadian manufacturing sales rebounded 1.6% vs. projected 0.1% dip
  • U.S. building permits down from 1.27M to 1.22M vs. 1.25M forecast
  • U.S. housing starts down from 1.18M to 1.13M vs. 1.18M consensus
  • U.S. crude oil inventories fell by 5.7M barrels vs. projected drop of 4.7M
  • FOMC member Dudley: Fed on track to hike three times this year
  • Dudley: U.S. is operating in a tight labor market
  • FOMC member Kaplan: Watching 10-year yield and shape of yield curve closely
  • OPEC to push for nine-month output deal extension?
  • White House to announce next Fed Chair pick in the ‘coming days’

Major Events/Reports

More FOMC chatter

With most market participants biting their nails ahead of the December FOMC decision, it’s no surprise that remarks from voting members have been garnering more reactions than usual.

FOMC members Dudley and Kaplan participated in a panel discussion titled “Dallas and New York as Centers of Growth” and talked about how Trump’s tax reform might impact the economy.

Dudley went on to say that there is no imminent threat of a recession and that stronger wage inflation is just around the corner since the U.S. is operating with a tight labor market. Kaplan echoed these views in reiterating that the U.S. is at or close to full employment.

However, Kaplan added that he is watching bond yields closely to gauge future growth expectations. He warned that stimulus-oriented tax reform could harm the economy, something that Dudley also cautioned could be ill-timed.

Meanwhile, the Fed Beige Book also indicated that there were labor market improvements across majority of the districts. The U.S. economy reportedly expanded at a modest to moderate pace as retail spending rose slowly.

OPEC extension in the works?

Nope, it ain’t a done deal just yet! However, reports are circulating that the OPEC might push for a nine-month extension of its output deal past the initial March 2018 end-date.

If that happens, this production cap would keep roughly 1.8 million barrels per day off the market, easing global glut concerns and keeping prices supported until the end of the year. However, sources also noted that the oil cartel might not reach an agreement in the upcoming November meeting and might wait until early 2018 to decide.

Other sources shared that the OPEC is still looking at a range of six to nine months for the extension while another mentioned that the cartel probably won’t make any changes to output levels.

Downbeat U.S. housing data

The numbers from Uncle Sam came in the red but market participants were quick to take this in stride, knowing that data was affected by one-off factors from the recent hurricanes.

Building permits fell from a downgraded 1.27 million reading to 1.22 million in September, a new yearly low. Housing starts tumbled from 1.18 million to 1.13 million instead of holding steady as expected.

As many surmised, Hurricanes Harvey and Irma disrupted the construction of several single-family dwellings in the South during the month. Apart from that, labor shortages in September even before the hurricanes struck were also to blame for slower residential construction.

Nonetheless, Wall Street was in a cheery mood as all three equity indices closed in the green:

  • Dow 30 index is up 160.16 points to 23,157.60 (+0.70%)
  • S&P 500 index is up 1.90 points to 2,561.26 (+0.07%)
  • Nasdaq is up 0.56 points to 6,624.22 (+0.01%)

Major Market Mover(s):

CAD

The Loonie staged a rally a few hours into the New York session on upbeat Canadian manufacturing sales data,rumors of an OPEC nine-month deal extension, and a larger than expected draw in oil stockpiles.

USD/CAD tumbled from a high of 1.2534 to a low of 1.2453, CAD/JPY popped up to a high of 90.74, EUR/CAD is down to a low of 1.4686, and AUD/CAD fell to .9768.

JPY

The yen was the weakest performer for the day as safe-haven demand slowed and global bond yields surged.

EUR/JPY advanced from 132.52 to 133.40, GBP/JPY is up to 149.40, AUD/JPY rallied from 88.18 to a high of 88.87, and NZD/JPY is up to 80.94.

Watch Out For:

  • NZ First party leader Winston Peters to announce decision today
  • 1:30 am GMT: Australian employment change (14.1K expected, 54.2K previous)
  • 1:30 am GMT: Australia NAB business confidence index
  • 3:00 am GMT: Chinese GDP q/y (6.8% expected, 6.9% previous)
  • 3:00 am GMT: Chinese industrial production y/y (6.4% expected, 6.0% previous)
  • 3:00 am GMT: Chinese fixed asset investment ytd/y (7.7% expected, 7.8% previous)
  • 3:00 am GMT: Chinese retail sales y/y (10.2% expected, 10.1% previous)
  • 5:30 am GMT: Japanese all industries activity index (0.2% expected, -0.1% previous)