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The Greenback (and risk sentiment) took hits today thanks to a combination of profit-taking and risk aversion due to Trump’s Fed Chair pick and Mueller’s investigations.

  • US core PCE index up by 0.1% in September as expected
  • US personal income up by 0.4% as expected vs. 0.2% previous
  • US personal spending up by 1.0% vs. 0.8% expected, 0.1% previous
  • New Zealand’s building consents down by 2.3% in September vs. 5.9% gain in August
  • Mueller files first charges against Trump aides
  • GOP to phase in tax cuts until 2022?

Major Events/Reports

Eyes on Mueller’s investigations

The biggest story of the hour is special counsel Robert Mueller filing charges against three of Trump’s key aids during the election.

Paul Manafort (Trump’s former campaign manager) and business partner Rick Gates were indicted in 12 counts including money laundering, tax evasion, failure to register as agents for foreign interests, and conspiracy to defraud the U.S. government.

Both have pled “not guilty” and have been ordered by a federal judge to be confined at home with bail set at $10M for Manafort and $5M for Gates.

Market players were more interested in the revelation that George Papadopolous, Trump’s former foreign policy adviser, secretly pled “guilty” to the FBI earlier this month for lying to FBI investigators over meeting contacts with connections to the Russian government regarding “thousands of emails” from Hillary Clinton.

Papadopolous is sentenced to four years in prison said to be cooperating with the investigations.

Not surprisingly, the POTUS had something to say:

Lower-tier U.S. reports

Personal income in the U.S. climbed 0.4% in September as expected with wages and salaries (+0.4%) leading the rebound.

Meanwhile, personal spending increased by 1.0% partly due to hurricane-related activity. The increase in spending marked the strongest since 2009 and reflects broad-based improvement for goods (+2.1%) and services (+0.5%).

Last but not the least is the core PCE price index, which maintained its 0.1% growth in September as markets had expected. This translates to an annualized gain of 1.3%, which is also in line with expectations. For reference, the Fed is targeting a 2.0% growth for its preferred inflation measure.

Overall risk aversion

The combination of political brouhaha, uncertainty over Trump’s Fed pick rumoured to be announced on Thursday, the possibility of the Republicans’ tax cuts being implemented more gradually than expected, and profit-taking took its toll on the Greenback and the U.S. bourses:

  • S&P 500 is up 8.24 points to 2,572.82 (-0.32%)
  • Dow 30 is down 85.45 points to 23,348.74 (-0.36%)
  • NASDAQ is down 2.30 points to 6,698.96 (-0.03%)

U.S bond yields are also in the red:

  • U.S. 10-year yield is down 0.84% to 2.370
  • U.S. 30-year yield is down 0.86% to 2.882

Major Market Mover(s):

USD

The Greenback was the biggest loser during the U.S. session as it was triple roundhouse-kicked by a slew of reports.

EUR/USD is up by 41 pips (+0.35%) to 1.1656;
USD/JPY is down by 47 pips (-0.41%) to 113.15;
USD/CHF is down by 48 pips (-0.48%) to .9941;
USD/CAD is down by 22 pips (-0.17%) to 1.2821, and
AUD/USD is up by 30 pips (+0.39%) to .7690.

Watch Out For:

  • 11:30 pm GMT: Japan’s household spending (y/y) (0.7% expected, 0.6% previous)
  • 11:30 pm GMT: Japan’s unemployment rate to remain at 2.8%?
  • 11:30 pm GMT: Japan’s preliminary industrial production (-1.6% expected, 2.0% previous)
  • 12:00 am GMT: Australia’s HIA new home sales
  • 12:00 am GMT: NZ ANZ business confidence
  • 12:00 am GMT: U.K.’s GfK consumer confidence (-10 expected, -9 previous)
  • 12:30 am GMT: Australia’s private sector credit to remain at -0.5%?
  • 1:00 am GMT: China’s manufacturing PMI to dip from 52.4 to 52.0?
  • 1:00 am GMT: China’s non-manufacturing PMI
  • BOJ to publish its monetary policy report
  • 5:00 am GMT: BOJ’s core CPI (y/y) (0.5% expected, 0.6% previous)
  • 5:00 am GMT: Japan’s housing starts (y/y) (-3.2% expected, -2.0% previous)