Market Sentiment 13th of October

We don’t have a trade call for the London session. Currently we are awaiting for U.K. data including CPI, PPI, and RPI figures, as well as the German ZEW Economic Sentiment. We also have MPC members Vlieghe and McCafferty speaking.

Current Market Sentiment:

Yesterday’s NY session was all quiet on the data front, and a very thinly traded session due to U.S. and Canadian bank holidays, however we did hear from several policy makers. The Fed’s Lockhart for the most part followed the same script, stating that the Fed will remain data dependent, and that a 2015 rate hike is still on the table. Fed Member Evans repeated his stance that timing is less important than a slow gradual pace, and that he expects the Fed funds rate to remain under 1% through 2016. He also stated that Core PCE will likely remain below 2% through 2018.

We also heard comments from the ECB’s Vasiliauskas who spoke in a WSJ interview. He stated that the QE program is working, and “for the moment, I don’t see any need for additional stimulus, additional fine-tuning of the program.”

Finally, the BOC’s Poloz who said that increasing household debt levels are “a key vulnerability” for Canada which has been worsened by low interest rates, and that the BOC is “gathering empirical evidence about the effects of household debt levels on monetary policy,” and “conducting research specifically on financial imbalances in the household sector to determine the best way to minimize the risk of future crises.”

During Asia, most Asian equities traded lower ahead of the Chinese trade figures, likely helped by declines in the commodities market. Chinese trade figures came in mixed, while the headline number showed the trade surplus moving to record highs, this was actually a result of weakening imports but improving exports. September imports fell 17.7 % from a year ago after dropping 14.3% in August for the 11th consecutive decline, and the worst pace since May. On the other hand exports fell just 1.1%, much better than expected. Asian equities continue to trade lower. The AUD was not affected by the print.

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Source:: Market Sentiment 13th of October

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