Central banks step in
Today's news headlines:
‘BOE “cliff edge” poses fresh challenge for ravaged gilt market’. UK bond markets remain tentative as we approach the 14th of October when the Bank of England support is set to be withdrawn. Of the £100 billion made available to calm markets, only a small percentage has been deployed, around £3.7bn so far, which appears to have done enough to stop yields spiralling. With quantitative tightening set to begin at the end of this month, many expect these plans to be pushed back again to prevent further angst in the UK pensions market. (Bloomberg)
‘World currency reserves shrink by $1 trillion in record drawdown’. As Dollar dominance continues in markets, central banks across the world look to shore up their currency. Intervention has helped push global reserves lower by 7.8% this year, the largest fall for nearly 20 years. In India, currency reserves have been used to moderate asset price volatility and help to prop up the Rupee, which is down over 9% against the US Dollar this year. A stronger Dollar keeps import costs high, and while reserves are healthy for some, countries such as Pakistan forecast they can support import costs for just another three months with reserves almost depleted. (Bloomberg)
European stocks are higher this morning following a mixed showing in Asia overnight. WTI is trading close to $88 per barrel following the OPEC+ decision to cut production by 2 million barrels per day, prompting Goldman Sachs to increase its Q4 forecast to $110 per barrel. Sovereign bond yields are higher across the curve this morning while the Dollar index is down 20 basis points.
German Factory Orders MoM (Aug): -2.4% (est. -0.7%)
Eurozone Retail Sales MoM (Aug): 10:00AM
European Central Bank Monetary Policy Meeting Accounts: 12:30PM
US Unemployment Claims (Oct. 1st): 1:30PM
Canada Ivey PMI (Sep): 3:00PM
Bank of Canada Governor Tiff Macklem speaks: 4:35PM
UK Monetary Policy Committee Member Jonathan Haskel speaks: 6:00PM
US Federal Open Market Committee Member Lisa Cook speaks: 6:00PM
US Federal Open Market Committee Member Christopher Waller speaks: 10:00PM
US Federal Open Market Committee Member Loretta Mester speaks: 11:30PM
GBP/USD – 1.1361
GBP/EUR – 1.1457
EUR/USD – 0.9916
USD/CAD – 1.3597
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.