The US stock market is neutral after pending home sales rose 1.5 % in September and consumer confidence declined. We expect treasury yields to decline slightly ahead of the FOMC meeting.
Oil prices returned to decline on Monday, retreating from local highs after a moderate upward rally last week. Investors are optimistic about progress in US-Chinese trade negotiations, but negative macroeconomic statistics and disappointing forecasts of energy demand have a restraining effect. Some support for oil quotes is provided by OPEC+ actions. The organization intends to expand the current agreement on limiting oil production, but the next meeting of the cartel is planned only for December. Today, investors are focused on the American Petroleum Institute Weekly Crude Oil Stock report as of October 25.
EUR showed moderate growth against USD on Monday, correcting from local lows updated last Friday. In addition to very strong technical factors, the euro was supported by uncertain macroeconomic statistics from the USA. Dallas Fed Manufacturing Business Index in October fell from 1.5 to –5.1 points, which turned out to be significantly worse than market expectations of 1.4 points. Chicago Fed National Activity in September fell from 0.15 to –0.45 points with a forecast of –0.37 points. Today, the euro is trading in both directions again, waiting for the appearance of new drivers at the market. Investors are focused on the data from the US on Redbook Retail Price Index, Pending Home Sales and CB Consumer Confidence.
GBP rose against USD, having received support from the development of correctional sentiment in the US currency across the entire market. The pound also reacted positively to the formal approval of the Brexit deadline extension until January 31, 2020. Thus, the UK will be able to leave the EU before the end of January next year, as soon as it ratifies the final version of the agreement in parliament. Boris Johnson has not been able to secure the support of the majority yet, so he insists on holding early parliamentary elections in early December. Today, British investors expect publication of data on Consumer Credit for September, Nationwide Housing Price Index, and Mortgage Approvals for September in the UK.
AUD rose against USD on Monday also maintaining upward momentum during today’s Asian session. Moderate support for the instrument is provided by increased prospects for concluding a preliminary trade agreement between the US and China by the end of this year. Participants of the ongoing negotiation process respond very positively to the progress made. The final version of the agreement can be signed at the APEC summit, which will be held on November 16-17 in Chile.
USD showed growth against JPY on Monday, updating local highs of August 1. An increase in the instrument at the market was promoted by an increase in investor interest in risk amid a decrease in concerns about Brexit. In addition, traders respond positively to preliminary results of the negotiation process between the United States and China and hope that a trade agreement that will avoid escalating the tariff war can be signed in November. Today, the pair is trading in both directions. Investors take a lead from Japanese statistics on Tokyo consumer inflation. October Consumer Price Index remained at the previous level of 0.4% YoY, while forecasts assumed its growth to 0.5% YoY. CPI Tokyo Ex Food and Energy rose from 0.6% YoY to 0.7% YoY, which turned out to be better than the forecast of 0.5% YoY.