EUR/USD slightly stronger, thanks to lower Spanish bond yields as rumors circle that Spain is going request aid imminently. In addition, higher than expected Euro PPI suggest that there is ongoing inflationary pressure in the European system, which limits the ECB’s ability to cut interest rates. Today Spain released disappointing labor stats, with unemployment rising by 80k in September. The most important upcoming events for EUR traders are: Thursday’s ECB meeting and Friday’s NFP.
Markets are adding risk to portfolios putting some upward pressures on equities and commodities and downward pressure on the USD. News flow has been quiet, with most of the headlines focused on the RBA decision to cut interest rates by 25bpts. Yesterday’s stronger than expected US ISM is encouraging; however for markets the key inputs will come from tomorrow’s US election debate.
Yesterday’s speech by Chair Bernanke contained no market relevant new information and instead defended QE and suggested that the Fed was in no way monetizing debt.
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