The Japanese Yen and Swiss Franc opened the week higher on risk aversion. European stocks are trading generally lower with major indices down more than -1% at the time of writing. Sentiments were dragged down by worries over solvency of Deutches Bank as German Chancellor ruled out any state assistance. IMF has also recently stated that the bank posts the biggest systematic threat to global finance. Sterling is hardest hit by weak sentiments but Euro is being supported by better than expected German confidence data. In other markets, Gold and Crude oil are trading mildly softer in tight range.
German Ifo business climate rose to 109.5 in September, above expectation of 106.3. Current assessment gauge rose to 114.7 versus expectation of 112.9. Expectations gauge rose to 104.5 versus expectation of 100.0. Ifo president Clemens Fuest said that "the German economy is expecting a golden autumn." Also, "companies are clearly more optimistic about the months ahead" and "They are also more satisfied with their current business situation." Also released today, UK BBA mortgage approvals dropped slightly to 37k in August. New Zealand trade deficit widened sharply to NZD -1265m in August.
BoJ governor Haruhiko Kuroda said today that "there is no limit to monetary policy." And, "in designing monetary policy, the BOJ will relentlessly pursue innovation and never hesitate to challenge." BoJ revamped the monetary policy framework to 'QQE with Yield Curve Control' last week. Kuroda said today that the pace of bond purchase could change depending on how much is needed to achieve the yield curve control. Or, BoJ could top up the size of the purchase.
Looking ahead, a number of economic data will be released this week. But the main focuses would likely be on speeches from central bankers. Here are a summary of the scheduled speeches:
- Monday: BOJ Kuroda; SNB Jordan; ECB Draghi; Fed Tarullo; BoC Poloz
- Tuesday: Fed Fischer
- Wednesday: RBA Edey; BoE Shafik; Fed chair Yellen, Fed Bullard, George; ECB Draghi
- Thursday: BoJ Kuroda; BoE Forbes; Fed Powell, Yellen
Meanwhile, here are some highlights on economic data:
- Tuesday: BoJ minutes, SPPI; Eurozone M3; UK CBI reported sales; US S&P Case shiller house price, consumer confidence
- Wednesday: Swiss UBS consumption indicator, KoF leading indicator; German consumer climate; US durable goods orders
- Thursday: Japan retail sales; German CPI, unemployment; UK M4, mortgage approvals; US GDP final, jobless claims, trade balance
- Friday: New Zealand building permits; Japan CPI, unemployment rate, household spending, industrial production, housing starts; China Caixin PMI manufacturing; German retail sales; UK GDP final; Eurozone CPI, unemployment rate; Canada GDP, IPPI and RMPI; US personal income and spending