The forex markets opened the week rather steadily except that the Aussie is under clear pressure. Sentiments were weighed down by concern over slow down in the Chinese economy, and that's reflected in broad based weakness in Asian equities. Meanwhile, the Aussie extends recent decline against dollar for its close tie with China. Sterling recovers from Friday's pull back but lacks follow through momentum so far. Meanwhile, Euro and yen are staying in tight range in general.
The ECB governing council member Ignazio Visco said over the weekend that the central bank was " bold enough to reduce interest rates to a level that was unexpected to the market." and there may not be a "next step". recent fall of Euro's exchange rate was the "right response" and with that, the ECB might not need to add stimulus. Meanwhile, he said there was "misunderstanding" about TLTROs as a failure. He noted that the "second tranche" is more important than first and some banks postponed borrowing until December.
The BoC governor Stephen Poloz talked down the significance of the higher than expected inflation number in August. He said "so much of the uptick in inflation that we've seen over the last five or six months has been in what we call one-off categories." And he emphasized that the Canadian economy has a "significant amount of room to grow". And he also added that "the idea is to get the economy back to normal, and then inflation would be sustainably at target, not just accidentally."
New Zealand dollar was mildly higher today after Prime Minister John Key got a record election victory and returned to power. Key's National Party won 48 of vote in the ballot over the weekend and secured the first single party majority in the parliament since introduction of proportional representation back in 1996. Finance minister Bill English said that "a third term is critical for embedding the direction and increasing growth potential."
The economic calendar is rather light today with only Eurozone consumer confidence and US existing home sales featured. The upcoming week isn't too busy neither. Here are some highlights:
- Tuesday: China HSBC PMI manufacturing; Eurozone PMIs; Canada retail sales; US house price index
- Wednesday: New Zealand trade balance; Japan manufacturing PMI; Swiss UBS consumer indicator; German Ifo; US new home sales
- Thursday: Eurozone M3; US durable goods, jobless claims
- Friday: German Gfk consumer sentiment; US GDP final