Overview
- Dollar trading near 13-session high
- European stocks decline as investors await ECB meeting
- UK’s growth data beats expectations
US Markets
Markets are pricing in for a more hawkish Federal Reserve leader. Donald Trump is expected to choose the next Fed chair before November 3rd and investors believe the US president favours Stanford University Professor John Taylor.
Taylor is said to prefer higher rates and is an advocate of unwinding the easy-money programme the Fed has adapted. The election of Taylor would be bullish for the dollar.
Currently, the dollar is 0.2% stronger against a basket of major currency pairs.
US stocks are trading lower as the prospect of a more hawkish Fed chair has caused investors to shy away from risker assets.
The Dow Jones is marginally weaker after rising 0.7% in yesterday’s trading session. On Wall Street, the S&P 500 has lost 0.05% after ending 0.2% higher yesterday.
European Markets
European bourses are mixed ahead of tomorrow’s European Central Bank’s meeting. The conference is expected to shed light on tapering plans and perhaps give clarity on how the bank plans to unwind its stimulus policies.
The eurozone proxy, the DAX 30, is 0.1% lower, while France’s CAC 40 is 0.2% higher. Spain’s IBEX 35 is 0.4% higher as Spain’s Prime Minister Mariano Rajoy has taken steps towards stripping power from the Catalan government and to call fresh elections.
The euro is holding steady ahead of tomorrow’s ECB meeting. The single currency is now 0.15% higher against the dollar.
The pound is marching higher after third-quarter data showed the UK economy has beaten growth expectations, with Prelim GDP q/q coming in at 0.4%.
Sterling is 0.8% stronger against the euro and 1% stronger against the dollar. The positive data makes it highly likely that the Bank of England will raise rates next week.
Asia-Pacific Markets
Beijing failed to announce a successor to Xi Jingping, while it did reveal the membership for the Politburo Standing Committee. The lack of detail on Xi’s replacement raises the possibility that the leader will remain in power far into the next decade. China’s index, the China A50, is 0.4% higher.
The Nikkei 225 fell 0.7%, ending its 16-session rally as investors began to take profits at the highs. The Japanese yen is 0.13% weaker against the dollar and 0.3% lower against the euro.
Commodity Markets
Gold is at its lowest level in three weeks, slipping 0.2% to trade at $1273.40.
Crude oil, the US benchmark, is 0.42% lower despite speculation that OPEC and its allies will extend supply cuts. Brent oil, the international benchmark, is 0.14% lower, trading at $58.40.
