parmveer.sunnar's picture

Trending Economic: Morning Brief (30 October 2015)

Being that today is month end and the fact that we also have relatively busy economic calendar, volatility is expected to be high especially going into U.S trading hours. However overnight the main focus was on Japan whereby we saw the release of the Monetary Policy statement, BoJ Outlook report and the BoJ press Conference. It has also been announced by the Nikkei newspaper that the Japanese government is contemplating compiling a 3 trillion yen extra budget in order to prepare for the trans-pacific trade pact; this has caused Japanese stocks to catch a slight bid. Coming back to the BoJ they chose to keep monetary policy unchanged specifically the asset purchase programme will remain in place at 80 trillion yen annually. Inflation expectations have also been lowered to 1.4% down from 1.9%. In terms of USDJPY the reaction was relatively muted, however the divergence of monetary policy between the US and the BoJ continues to weigh heavily on the currency pair.

In terms of Europe we have already seen the release of German Retail Sales m/m which fell short of expectations, coming in at 0.0% vs. 0.4% exp and -0.4% prev. Importantly later on in the European session we will see the release of composite CPI Flash Estimate y/y with expectations of a slightly better read that previously at 0.9%. Core CPI Flash Estimate y/y however is expected to stay much the same at 0.9%, both inflation statistics will be released at 1230GMT. The European unemployment rate will also be released at the same time however no change from previously is expected at 11.0%.

There are also a number of key releases due out today from both the U.S and Canada. In terms of Canada the main data point today will be GDP m/m (1230GMT) and market expectations are of a drop to 0.1% from 0.3% previously. With regards to the U.S the main release to watch out for will be Core PCE Price Index m/m (1230GMT) and we expect to see a slightly better release at 0.2% vs. 0.1% previously. Chicago PMI will also be released at 1345GMT and we expect to see a slight improvement at 49 vs. 48.7 previously.

In the Energy Sector, crude continues to trade within the range mentioned yesterday and support now exists at around $45.27.