Market Drivers for October 16, 2015
Europe and Asia
NZD: CPI 0.3% vs. 0.2%
EUR: CPI -0.1% vs-0.1%
North America
CAD: Manufacturing Sales 8:30
USD: U if M 9:55 AM
It’s been a very quiet night of trade in Asian and European trade tonight with no new newsflow to move the market as most of the majors simply consolidated in narrow ranges.
The one notable exception was the weakness in commodity currencies which came off more than 50 points off their New York session highs on profit taking and some investor concern over growth. The Aussie was particularly weak after Goldman Sachs suggested that the RBA may cut rates in November in order to prevent further slowdown in the economy Down Under.
The investment bank is concerned that the EL-Nino pattern could trigger a severe drought in Australia causing problems for the agricultural sector which, along with the deep retrenchment in the mining sector, could tip the country into a recession.
The Aussie, which has rallied strongly over the past two weeks, appears now to have found stiff resistance at the .7400 level as the short covering rally looks to have exhausted itself. Unless the data from Down Under begins to improve over the next few weeks, the pair could drift right back to the .7000 level as investors begin to fear yet another RBA rate cut before the end of this year. For now it remains in a state of suspended animation.
In North America today the focus will be on the U of Michigan survey due at 13:55 GMT. The market is looking for a mild bump higher at 88.2 versus 87.2 the month prior. Any upside revision could help the buck in the US session as traders will take improving investor sentiment as a positive sign for the upcoming Christmas spending season. USD/JPY, which has been under assault ever since the FOMC minutes last week, could finally find its footing and stage a recovery rally towards the 119.50 level as the day proceeds.