The Rooster Call: No Surprises in ECB October Policy Announcement

Euro ECB

Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day

No Surprises in ECB October Policy Announcement

Key interest rates were kept unchanged at their September levels leaving the benchmark refi-rate at 0.00 percent and the rates on the deposit and lending facilities at minus 0.40 percent and 0.25 percent respectively (econoday.com).

Count Draghi’s press conference is underway. He said the ECB is not talking about extending QE, which ends in March. Euro shoots higher on that comment, then falls hard on another comment. Volatile. Draghi says “low rates work!” citing rise in inflation.

Employment:

The Philadelphia FED Manufacturing Survey, reported at 9.7 reading was better than consensus expectation. The reading is lower from September reading of 12.8.  As a general rule of thumb, if the Empire State and the Philly FED reports are lower, the market moving ISM Manufacturing report is lower.

Unemployment Claims rose, but in the big picture, not a concern unless rising trend develops.  Still, bonds appreciated the report moving higher.

About 80 percent of the 70 S&P 500 companies that had reported results until Wednesday beat profit estimates. Earnings are now expected to rise 0.5 percent in the third quarter, according to Thomson Reuters I/B/E/S.

Geopolitical:

“I announce my separation from the United States,” Philippines President Rodrigo Duterte said to applause at a meeting in Beijing on Thursday. A day earlier he had said: “I will not go to America any more. We will just be insulted there. So time to say goodbye my friend.”

Economic Events:

  • Jobless Claims – 8:30 AM ET
  • Philadelphia Fed Business Outlook Survey – 8:30 AM ET
  • William Dudley Speaks – 8:30 AM ET
  • William Dudley Speaks – 9:00 AM ET
  • Bloomberg Consumer Comfort Index – 9:45 AM ET
  • Existing Home Sales – 10:00 AM ET
  • Leading Indicators – 10:00 AM ET
  • EIA Natural Gas Report – 10:30 AM ET
  • 3-Month Bill Announcement – 11:00 AM ET
  • 6-Month Bill Announcement – 11:00 AM ET
  • 2-Yr FRN Note Announcement – 11:00 AM ET
  • 2-Yr Note Announcement – 11:00 AM ET
  • 5-Yr Note Announcement – 11:00 AM ET
  • 7-Yr Note Announcement – 11:00 AM ET
  • 30-Yr TIPS Auction – 1:00 PM ET
  • Fed Balance Sheet – 4:30 PM ET
  • Money Supply – 4:30 PM ET
  • William Dudley Speaks – 4:45 PM ET

Markets:

  • Crude is lower…which means ES is lower…which means NQ, TF, and YM are lower. Markets await USA traders to turn equity index futures around. DAX and STOXX 50 lower on crude.  Nikkei 225 higher as Yen falls.
  • Crude great range so far. Remember $50 is line in the sand.
  • VIX futures still asleep…don’t wake the baby. Professionals look for side-way price action with upward bias for S&P 500.
  • Bonds moving higher on Initial Claims report.
  • Gold incrementally higher. Nothing special. It wants to break the negative correlation to US dollar, but old habits are hard to die.
  • Little looks interesting. If you check out the CRB Index you see why physical commodities are not moving.  Cash is King!
  • Sugar teases with potential break of support. Careful here. Longer term momentum still strong. This one is known to dip and pull up without moments notice.
  • Aussie dollar loses it big time. I watched rise in somewhat disbelief. Now the piper has been paid with the huge drop. Really something.
  • Day traders can monitor gold, equity index futures, crude and Euro.

To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.