Debate reaction and ECB meeting share the spotlight
19:00, 19 October 2016
· By CMC Markets
Stock markets are mixed in the wake of yesterday's debate and ahead of today's ECB meeting. US index futures plus the Dax are up 0.2% while the FTSE is flat. WTI crude oil is down 0.9% in what looks like a normal correction following a big rally Wednesday.
Currency trading has been mixed, gold is holding on to most of Wednesday's gains while EURUSD remains stuck just under $1.1000. USD is up slightly against many other currencies.
CAD is under the most pressure among majors with traders still speculating on a possible Canadian rate cut after the Bank of Canada cut its GDP forecasts pushed out the return to full speed out to mid 2018 and made dovish comments at the press conference. An actual rate cut could be counterproductive to the government's efforts to rein in house prices, but the threat of a cut enables a lower loonie to continue to do the bank's heavy lifting on stimulus.
Like many people, I stayed up to watch the big debate last night plus media comments afterwards and again this morning. The main focus has been on whether Donald Trump would accept the results of the vote or not with the Democrats in full freak out mode.
This should send a warning to traders about the results. Currently markets are pricing in a decisive Clinton win and in fact the Mexican Peso rallied following the debate indicating traders thought Clinton won. The way Democrats have been hitting the panic button over Trump's move to keep people guessing indicates that it's a much closer race than the polls are suggesting. After all, if it's a blowout, what would there be to contest?
Also interesting was that a CNN poll showed 52% of respondents thought Hillary Clinton won the debate, but this was down from 57% who thought she won the second debate and 62% who thought she won the first debate. One doesn't have to be a technical analyst to spot this trend.
What this all means is that the election may be a lot closer than many people think, and that a Brexit style surprise is still possible so traders should have a plan and not be complacent.
This morning, focus turns to the ECB meeting and Draghi press conference. No changes happened in the decision as expected so focus now turns to what Draghi has to say. Traders are expecting the central bank to crush talk of tapering QE purchases. Traders also will be watching for signs of whether QE could be extended past March. EUR has been in retreat lately suggesting traders are expecting a neutral to dovish day; any hawkishness would come as a surprise.
Citrix Systems $1.32 vs street $1.19, raises 2016 guidance to $5.18-$5.20 from $5.00-$5.10
eBay $0.45 vs street $0.44
Mattel $0.70 vs street $0.71
Tesla Motors preparing to add cameras and sensors for autonomous driving to all its cars, plans a driverless trip from LA to NY by end of 2017
ECB decision no changes to interest rate or QE as expected
UK retail sales 4.1% vs street 4.7% vs previous 6.2%
UK retail ex auto 4.0% vs street 4.4% vs previous 5.9%
Australia employment change (10K) vs street 15K vs previous (4K)
Australia full-time jobs (53K) vs previous 11K
Australia part-time jobs 42K vs previous (15K)
Australia unemployment rate 5.6% vs street 5.7%
Germany producer prices (1.4%) vs street (1.2%)
Sweden unemployment rate 6.1% vs street 6.3%
Upcoming significant economic announcements include:
1:30 pm BST ECB Draghi press conference
8:30 am EDT
8:30 am EDT US jobless claims street 250K
8:30 am EDT US Philadelphia Fed street 5.0 vs previous 12.8
10:00 am EDT US existing home sales street 5.35M
10:00 am EDT US leading index street 0.2%
10:30 am EDT US natural gas street 73 BCF