The GBP/USD pair held on its modest daily gains and seems to have entered a brief bullish consolidation phase above the 1.3200 handle.
Growing market conviction for an imminent BoE rate hike action this Thursday underpinned the British Pound and helped the pair to preserve overnight strong gains back above the 1.3200 handle.
However, resurgent US Dollar demand, led by a modest rebound in the US Treasury bond yields partly offset the positive sentiment. Adding to this, the US Employment Cost Index came in to show a rise of 0.7% q-o-q during the third quarter, up from previous quarter's 0.5% and broadly in-line with consensus estimates, and further collaborated towards keeping a lid on any further up-move for the major.
Today’s US economic docket also features the release of Chicago PMI and CB consumer confidence but is unlikely to be major game changer ahead of the key events lined up through the course of this week.
Tuesday, October 31, 2017
Canada: GDP is forecasted to rise by 0.1%
Analysts at TDS suggest that Canada’s industry-level GDP is forecasted to rise by 0.1% in August, led by a rebound in the manufacturing industry and they see upside risks for a 0.2% print.
“Retooling shutdowns at motor vehicle assembly plants single-handedly shaved nearly 0.1% from GDP in July and a partial rebound will provide a tailwind to growth in August. Outside of the manufacturing industry, growth conditions are far more mixed. Energy output may see a modest gain but utilities are likely to be a drag due to weaker demand caused by unseasonably cool weather.”
“The services sector will be weighed down by a pullback in retail sales though broadening job growth suggests activity continues to increase. Our forecast for a 0.1% increase is consistent with Q3 growth in the low-to-mid 2% range, which presents upside risks to the Bank of Canada's 1.8% projection from the October MPR. However, with the Bank focused on the supply side of the economy, we do not expect a modest upside surprise on GDP to change their bias and look for the next rate hike to come in January.”
“Retooling shutdowns at motor vehicle assembly plants single-handedly shaved nearly 0.1% from GDP in July and a partial rebound will provide a tailwind to growth in August. Outside of the manufacturing industry, growth conditions are far more mixed. Energy output may see a modest gain but utilities are likely to be a drag due to weaker demand caused by unseasonably cool weather.”
“The services sector will be weighed down by a pullback in retail sales though broadening job growth suggests activity continues to increase. Our forecast for a 0.1% increase is consistent with Q3 growth in the low-to-mid 2% range, which presents upside risks to the Bank of Canada's 1.8% projection from the October MPR. However, with the Bank focused on the supply side of the economy, we do not expect a modest upside surprise on GDP to change their bias and look for the next rate hike to come in January.”
Eurozone - Better growth, but less inflation
Analysts at BBH note that Eurozone reported better growth, but less inflation, than expected as the first look at Q3 GDP showed a 0.6% increase, and Q2 was revised to 0.7% from 0.6%.
“Growth is not the immediate challenge in the eurozone. Unemployment also continues to fall. At 8.9% in September, it is a new cyclical low. That the August figure was revised to 9.0% from 9.1% underscores the trend improvement.”
“On the other hand, price pressures eased. The headline pace slipped to 1.4%, but the real challenge to the ECB comes from the core rate, even though it does not directly target it. The core rate slipped to 0.9% from 1.1%. This indicates that it is not just energy prices, which Draghi had warned would likely drag inflation lower in the near-term. The key issue is what the ECB will do next September, as its course until then has been largely mapped out, with all the due caveats of its flexibility.”
“Growth is not the immediate challenge in the eurozone. Unemployment also continues to fall. At 8.9% in September, it is a new cyclical low. That the August figure was revised to 9.0% from 9.1% underscores the trend improvement.”
“On the other hand, price pressures eased. The headline pace slipped to 1.4%, but the real challenge to the ECB comes from the core rate, even though it does not directly target it. The core rate slipped to 0.9% from 1.1%. This indicates that it is not just energy prices, which Draghi had warned would likely drag inflation lower in the near-term. The key issue is what the ECB will do next September, as its course until then has been largely mapped out, with all the due caveats of its flexibility.”
Gold refreshes session lows
Gold finally moved out of its Asian session consolidation phase and touched a fresh session low level of $1272 in the past hour.
The metal stalled its recent recovery move and failed to build on its up-move back above 100-day SMA. A modest recovery in the US Treasury bond yields backed the US Dollar's goodish recovery move from lows and was eventually seen driving flows away from the non-yielding yellow metal.
Meanwhile, possibilities of some short-term stops being triggered, on a sustained retracement back below the $1275 region (100-day SMA), seems to have further aggravated the selling pressure and collaborated to the commodity's sharp slide over the past hour or so.
Even the prevalent cautious sentiment around equity markets failed to revive safe-haven demand, with the precious metal now eroding all of its previous session's modest recovery gains.
Traders now look forward to the US economic docket, which would influence the USD price-dynamics and provide some short-term impetus for dollar-denominated commodities - like gold.
The metal stalled its recent recovery move and failed to build on its up-move back above 100-day SMA. A modest recovery in the US Treasury bond yields backed the US Dollar's goodish recovery move from lows and was eventually seen driving flows away from the non-yielding yellow metal.
Meanwhile, possibilities of some short-term stops being triggered, on a sustained retracement back below the $1275 region (100-day SMA), seems to have further aggravated the selling pressure and collaborated to the commodity's sharp slide over the past hour or so.
Even the prevalent cautious sentiment around equity markets failed to revive safe-haven demand, with the precious metal now eroding all of its previous session's modest recovery gains.
Traders now look forward to the US economic docket, which would influence the USD price-dynamics and provide some short-term impetus for dollar-denominated commodities - like gold.
Subscribe to:
Posts (Atom)