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International financial news

International financial news

[On the eve of the Fed’s entry into the “silent period”, the market believes that the interest rate cut in October will be a foregone conclusion] The Fed is about to enter a two-week silent period. Officials’ speeches have made traders almost convinced that the third-rate cut will be held in October. The Fed will hold a policy meeting from October 29th to 30th. On Friday, Vice President Richard Clarida said that the risk is still "significant" and that the Fed will "take appropriate action" to maintain economic growth, the futures market pricing reflects the 23 basis points of the meeting's interest rate cuts; the market also has December Interest rate cuts are expected, and a total of 34 basis points is expected to be lowered by the end of 2019. This means that if the Fed cuts interest rates by 25 basis points as expected this month, there will be a 36% chance of a downward revision in December; Fed policymakers will remain silent on the eve of the policy meeting. Clarida’s speech was the last official speech before the start of the silent period.

[BNP Paribas: If the Brexit Agreement is not passed, UK domestic stocks may fall by 10%] BNP Paribas said that if the British parliament vetoed Boris Johnson’s Brexit agreement on Saturday, stocks that are sensitive to the UK economy may repel the gains recorded in the past week; the bank predicts that in this case, the pound will be Falling, the FTSE 250 index may fall by 10%, and the FTSE 100 index, which exports more weight, is expected to rise.

[Trump announced that the US Energy Minister will "substitute"] US President Trump announced on social media on the 18th that Energy Minister Rick Perry will leave at the end of this year, by the current Deputy Minister of Energy Dan Brolle Dan Brouillette took over; Perry, 69, has twice run for the US president and has served as the US Secretary of Energy since March 2017. He is one of the longest serving members of the Trump administration.

[The 40th International Monetary and Financial Committee Meeting: The Global Economy Faces Downside Risks] The People's Bank of China reported that the 40th International Monetary and Financial Committee meeting pointed out that global growth has continued to slow since April, and the global economic growth rate is expected to be 3% this year. It is expected that the growth rate will pick up next year, but the outlook is highly uncertain; Against the background of limited space, high debt levels and rising financial fragility, the risks facing the global economy are biased downwards, mainly including trade frictions, policy uncertainties and geopolitical risks.

[EU says it has received a request from the UK to postpone the "Brexit"] European Council President Tusk announced on the evening of the 19th that the EU has received an application letter from the UK to extend the "Brexit" deadline; Tusk issued a message on the social media account: "I just received (Ex-Europe) extension application, It is now going to start discussing with EU leaders how to respond; according to British media reports, British Prime Minister Johnson sent a letter to Tusk, applying to extend the term for “Brexit” to January 31, 2020, but he did not sign this letter. The BBC reported that Johnson will emphasize in a subsequent signature letter that it is a mistake to postpone "Brexit."


GMT(time)

Currency

News and Data

12:30

  CNY

PBoC Interest Rate

16:30

  GBP

GBP/USD Index

16:30

  USD

 Gold Index

16:30

  USD

S&P 500 Index

16:30

  CAD

USD/CAD Index

16:30

  CHF

USD/CHF Index

16:30

  AUD

AUD/USD Index

17:00

  EUR

German PPI (MoM) (Sep)



Summary of investment bank views

Scotiabank: The longest decline in the dollar since January may last longer




Shaun Osborne, the chief currency strategist at Scotiabank, said that due to the possible progress of trade negotiations and Brexit, coupled with the weak domestic economic data, the dollar’s risk aversion has declined. After a sharp decline in the last three weeks, the dollar maybe next year. Further weakened around the beginning of the year. The Bloomberg dollar spot index fell about 2% from the two-year high hit on October 1, and is expected to hit the longest weekly losing streak since January. Friday also hit a low since July.

Osborne said in an interview on Friday that one of the factors that have broadly supported the dollar in the past few months is the uncertainty of Trump's policy, which has allowed investors to pour into assets such as the US dollar denominated US Treasury bonds, which in turn supported the dollar. He also mentioned that the progress of this month's trade negotiations and a series of worse-than-expected US data have weakened the dollar's gains, such as manufacturing and industrial output. In addition, investors' newly established dollar longs or short positions in the euro and pound are facing losses.


Mitsubishi UFJ: Strategically bullish on the euro to 1.1250, but the risk is still on the British Parliament's vote on Saturday




Tokyo Mitsubishi UFJ discussed the outlook for the euro against the dollar, indicating a strategic bullish view, expecting the exchange rate to rise to a higher position in the 1.0950-1.1250 range soon. The bank pointed out that the euro continued to strengthen moderately against the US dollar, rising to the highest level in late August, and further higher after the break of the October 1 low of 1.0879. The current exchange rate is still suppressed by the resistance of the 200-day MA moving average of 1.1212.

The current major macro driver for the euro is the avoidance of non-protocol risks. Finalizing the Brexit agreement at the last minute will ease the downside risks for the Eurozone and the Euro. The current market is closely watching the vote of the British Parliament on Saturday. Without the support of the Northern Ireland Democratic Unity DUP, the final disparity in voting will be very tight. For the euro to rise next week, it will need to meet the vote of the parliament. In addition, the expected price is also likely to be revised back to 1.10. Next week, the European Bank will also hold a meeting, which will be the last meeting before the departure of European Bank President Draghi, but it is unlikely to drive the market trend. Last month, the European Bank has already announced plans for monetary policy.

TD Bank: The eurozone will face many tests next week, and the pound sterling euro will not be able to avoid short-term withdrawal.




Toronto Domingo Bank (TD) wrote on Friday that the eurozone will usher in a series of heavy factors next week, and the pound and the euro will inevitably temporarily retire. Although Brussels has reached a Brexit agreement, it still faces the test of the British Parliament. We expect this agreement to be difficult to pass, so the view that the GBP/USD will build a short-term top at 1.30 will be strengthened and will fall back to around 1.25.

At the same time, the euro will also follow the decline of the pound. In addition to the voting that needs to be paid attention to over the weekend, there will be a series of heavy data and events to be concerned next week, including the ECB policy meeting and Eurozone PMI data. We still doubt whether the global situation can turn, especially as the signs of economic slowdown become more apparent. In addition, we believe that the short-term can invest in the Australian dollar, New Zealand dollar, Swedish krona and Norwegian krone in the G10 currency. The Canadian dollar will need to pay attention to the impact of the election soon.


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