2013-10-31

Good morning,

Central Bank activity was high yesterday, but the focus was on the news from the US. Markets have been on the bid in the past weeks in anticipation of continued support from the Federal Reserve to the US, and it seems it was a "buy the rumour, sell the fact"-strategy, as the Fed kept the pace of the monetary stimuli unchanged and kept the interest rate unchanged. All was basically as expected. The key message was that the Fed could alter the pace of the purchases in the upcoming meetings, but general market consensus is, that the Fed won't start tapering before March 2014 at the earliest in light of the recent government shutdown and continued problems with the US debt ceiling. EUR/USD has been retracing from the highs overnight back below prior break-out level at 1.3710. Support at 1.37 before 1.3660.

In Asia, the BoJ and RBNZ also kept rates unchanged as expected. From Japan, the main message was an uprevision of the 2015 GDP growth to 1.5% despite an unchanged inflation at 1.9%. The news were taken as negative by the markets, sending the Nikkei down more than 1% and the JPY up more or less across the board. USD/JPY lost some ground overnight after a strong session post FOMC, but the pair is still struggling to break through the Ichimoku-cloud base as well as the 50- and 100-day SMAs.

In New Zealand, The Kiwi did not react much to the neutral statement from the RBNZ, where the cash rate was left unchanged at 2.5% as expected. NZD/USD has been in a down-trend since late October, but currently found support at the 50-day SMA at 0.8236, before the 200-day SMA at 0.8177.

For today, the markets will be digesting the monetary announcements, while absorbing a new round of macro figures. Euro zone Unemployment and preliminary Inflation will be interesting and from the UK, the GfK Consumer Confidence will be interesting for the GBP. Key figure from the US will be the Chicago PMI for October, expected at 55.0 vs. 55.7 prior.