World markets have been mixed again overnight as traders keep trying to figure out if we are nearing the end of the current monetary stimulus cycle and prepare for big announcements still to come this week.
AUD has rallied overnight after the RBA maintained its cash rate and neutral tone. The central bank indicated that business conditions have improved, although it paid the usual lip service to being ready to stimulate more if needed (which was ignored). Most importantly, it didn’t panic in response to recent rate increases at Australian banks, indicating that it still sees the current rate environment as accommodative.
Capital has been moving out of continental European currencies today between key central bank speeches. Earlier today, Sweden Riksbank Deputy Governor Floden indicated the bank could still ease further if needed, but this is not a huge surprise and not a change in direction. It can be seen as a warmup for two key speeches later today.
ECB President Draghi is speaking today with traders looking for signs of confirmation that he is still looking to increase stimulus at the next ECB meeting a month from now after conflicting comments from other ECB members. Prior to him, Swiss National Bank’s Jordan is also scheduled to speak with traders looking for hints of what the SNB may do if the ECB brings in more QE. Recall that the SNB sent shockwaves through forex markets back in January removing its peg just before the ECB launched the current QE program.
Central bank speeches continue tomorrow with the FOMC’s big three Yellen, Fischer and Dudley all speaking. USD has been moving up on anticipation that they will confirm the Fed is seriously considering interest rate liftoff at its December meeting.
Stock markets have been mixed overnight. Asia Pacific indices
staged a catchup rally but this momentum hasn’t carried through to Europe or North America so far. Video game companies may attract attention from traders after Activision Blizzard announced strong earnings and a big acquisition of King Digital. These developments could spark speculation on whether anyone else could become a takeover target.
Activision Blizzard $0.21 vs street $0.15, agrees to acquire King Digital, maker of Candy Crush, for $18.00 per share, or $5.9B in an all cash friendly deal.
Archer Daniels $0.60 vs street $0.70
Mosaic $0.62 vs street $0.53
WestJet $0.82 vs street $0.75
TransCanada $0.62 vs street $0.60
Sears Canada positive same store sales in Q3 in its core store network
Significant announcements released overnight include:
Australia RBA interest rate 2.00% no change expected
NZ QV house prices 14.0% vs previous 12.6%
NZ ANZ commodity prices 6.9% vs previous 5.5%
Singapore PMI 48.9 as expected
Singapore electronics sector 48.6 vs street 49.0
Spain unemployment change 82K vs street 71K
UK construction PMI 58.8 as expected
Upcoming significant announcements include:
10:00 am EST US factory orders street (0.9%)
10:00 am EST US factory orders ex transport previous (0.8%)
12:00 pm EST SNB Jordan speaking
1:00 pm EST ECB Draghi speaking
After 4:00 pm EDT Tesla Motors earnings