The financial markets are trading rather quietly today with Japan and US on holiday. Major currency pairs and crosses are staying in Friday's range Euro is generally soft in spite of better than expected data. Eurozone Sentix investor confidence rose to 8.5 in October, up from 5.6 and beat expectation of 6.2. Sentix noted that "the euro zone's economy has according to investors now overcome the 'Brexit' induced shock." But, "the economy remains just on a moderate recovery path." German trade surplus widened to EUR 22.2b in August, versus expectation of EUR 19.3b. Swiss unemployment rate was unchanged at 3.3% in September.
ECB president Mario Draghi said over the weekend at the IMF annual meeting that "by year end or the first months of next year, (inflation) should pick up and move towards 1 percent, and later on, above 1 percent, essentially due to the base effect of energy prices." And, then inflation would continue rise "towards our objective to be reached by the end of the forecast horizon, 2018 or the beginning of the year after". Regarding Brexit, Draghi noted that it's a "very significant" event but "we don't know frankly what's going to happen" in medium term.
Fed Vice chair Stanley Fischer said that September's decision to keep interest rate unchanged was a "close call". He noted that there is "scope for further improvement in the labor market". However, "inflation continuing to run below our 2% target. And thus, policymakers "chose to wait for further evidence of continued progress toward our objective." Meanwhile, there is "little risk of falling behind the curve in the near future."
Looking ahead, the economic calendar is not too busy this week. US will be the main focus with FOMC minutes featured Also, retail sales will be released. There will also be a number of Fed officials scheduled to speak, including Fed chair Yellen on Friday. Here are some highlights:
- Tuesday: Australia NAB business confidence, home loans; German ZEW; Canada housing starts; US labor market conditions index
- Wednesday: Japan machine orders; Swiss ZEW; FOMC minutes
- Thursday: China trade balance; Japan tertiary industry index; Canada new housing price index; US jobless claims, import prices
- Friday: Japan PPI; China CPI, PPI; Swiss PPI; Eurozone trade balance; US retail sales, PPI, U of Michigan sentiment, business inventories