Market Sentiment 16th of October

The calendar is light for the London session, however we will see the Final CPI print from the eurozone. A miss to the downside on either the headline or core readings will likely see euro pressured and increase the chances of an extension of QE. A positive deviation is less likely and may have less affect on the euro, as inflation is still extremely low. Take a look at he weekly news events overview here in order to learn more about interpreting these particular data points. Otherwise familiarize with the current market sentiment by reading my analysis below.

Current Market Sentiment:

The highlight of the NY session yesterday was CPI from the US which showed there could be some inflation in the housing sector, otherwise September prices didn’t show very much to lift expectations of an upcoming Fed move. Overall the CPI came in at -0.2% as expected with the year on year unchanged. The core however rose 0.2% in September which was at the high end of expectations, and year on year the core is moving higher, up 1 tenth to 1.9%. The USD saw immediate strength at the release, however some of the shine came off the dollar after both New York Fed and Philadelphia Fed Manufacturing Index came worse than expected.

US Weekly Initial Jobless Claims continue to be a bright spot in the labor market, falling 7,000 to 255,000 which is the lowest level in 42 years.

During Asia we saw consumer price data out of New Zealand that showed the consumer price index was up 0.3% in Q3, taking the annual rate to 0.4%. Earlier this week the RBNZ’s Wheeler said that some further easing in OCR seems likely, and the the greatest concern at this point lies around China. The NZD rallied immediately after the print, however it then paired those gains basically moved flat.

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