2013-10-30

Markets were in an upbeat mode in yesterday's trading session despite mixed figures from the US - Consumer Confidence fell below expectations while core PPI and Retail Sales surprised to the upside. Global equity markets rallied and the USD gained some lost ground on back of higher short term Bill rates, indicating that US risk premia in the short term are picking up. From Europe, Spanish Retail Sales came out better than expected, which boosted equities, but was not enough to trigger additional longs in the EUR. EUR/USD sold off for the second day in a row - key resistance at 1.3820, Cable lost for the third day in a row with key resistance at 1.6260 and USD/JPY reaped the benefits of a stronger US Dollar along with a weaker JPY on risk appetite, putting distance to the 200-day SMA at 97.67.

From Asia, the Japanese yearly Industrial Production came out at 5.4% vs. 5.5% expected, but this was not enough to keep stocks from the bid in anticipation of continued monetary backing from the US. Nikkei is up 1.23%, Hang Seng up 1% and the ASX200 in Australia up 0.3%.

Today, we have a lot of interesting items on the calendar from both Europe and the US. The German Unemployment Rate for October is expected to be unchanged at 6.9%, while Euro zone sentiment indicators are expected to show signs of optimism despite still being in negative overall. From the US, the ADP report (exp at 150K) will be interesting as it is a proxy for the NFP figure and the CPI for September will also be very interesting. However, all these figures will be overshadowed by the Fed meeting this evening, where the interest rates and monetary stimuli are expected to be kept unchanged. In light of the recent government shutdown and decision not to taper, it could be assumed that the Fed will do what they can to support the economy. Hence, we could see additional gains in stocks should this be the case.