It has been a quiet end to October trading, with only modest market movements.
The USD is a smidgeon stronger, recovering a little of Friday’s losses, but changes have not been great, ranging from a 0.3% gain for GBP to a 0.2% loss for JPY.
The most significant market move has come from a 3% fall in oil prices, as weekend talks amongst OPEC members saw no step forward towards agreeing to production cuts. An increasing number of countries are now seeking exemptions from planned supply cuts and investors are losing faith that a deal will be struck at the end of November.
The energy sector is the worst performing in European and US equity markets. US equities are still managing to eke out a gain for the session, as M&A activity continues to dominate, with reports that October has been the busiest month for deals in 12 years.
There’s been little wash-up of weaker oil prices on the commodity currencies, with CAD and AUD fairly flat and the latter hovering around the 0.76 mark. The NZD is down a touch to 0.7150 and has traded in a tight 25pip range since the end of last week. Tonight sees the next GDT dairy auction, which is expected to show improved pricing. NZX dairy futures for whole milk powder have risen by over 6% over the past fortnight, supported by the outlook for lower NZ dairy production.
GBP is up slightly to 1.2230. It fell at the start of the NZ trading session as the Daily Mail reported that BoE Governor Carney was about to step down, due to political pressures. The FT then contradicted this report, saying that insiders believed he would take up the option to extend his term. Overnight, PM May publicly backed Carney as governor, rejecting calls from Brexiter critics campaigning for him to resign ahead of time. As the send button was about to be pressed a headline has just crossed the screen that Carney will stay at the BoE until June 2019.
JPY is the weakest of the majors and USD/JPY is back up around 105. Yesterday’s data releases on industrial production and retail sales showed an anaemic economy and this followed Friday’s soft CPI figures. The BoJ is expected to offer nothing at its policy meeting today, begging the question of what is going to drive better activity and inflation outcomes.
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