By Michael Brown, Senior Research Strategist at Pepperstone
DIGEST – Trading conditions weren’t exactly exhilarating yesterday, with little for participants to chew over. Today’s docket also seems uninspiring, with next week’s FOMC decision the next key event for participants to navigate.
WHERE WE STAND – Anything much happen yesterday?
In short, no, not really, which was just as well given that I spent the majority of the day off desk, enjoying a ‘proper’ lunch. Hence, for your benefit & mine, I will hence keep today’s note short.
Actually, it was a relief that nothing much happened through yesterday’s session, as it makes things so much easier to catch up on after a day off the desk. The buck was a touch softer, stocks trod water, and Treasuries softened across the curve. The most notably mover was the JPY, which has continued to firm amid a round of hawkish BoJ sources stories, which continue to roll the pitch for a 25bp hike to be delivered in a couple of weeks’ time.
If anyone’s hoping I’ll pin a narrative on those other price moves on a Friday morning, then they’ll be sorely disappointed. Frankly, what we saw yesterday was much more representative of noise, than it was of signal, with little value to be extracted from the price action on display. On the whole, it was a day of consolidation for most markets, as opposed to one where anything fresh took place.
In fact, even fundamental developments gave little for participants to chew over, besides the weekly US jobless claims report showing initial claims having fallen to their lowest level since 2022, at 191k. This shouldn’t deter the FOMC from delivering a 25bp cut next week, but might at least dispel some of the ‘doom and gloom’ that’s been surrounding the US labour market of late, which remains in ‘no hire, no fire’ mode, making further ‘risk management’ cuts appropriate.
Anyway, with pretty much everything trading flat in the day, I see little, to no, reason to shift from my long-standing bullish equity & bullish gold views, with my bullish USD standpoint on the sidelines for the time being.
Perhaps next week will bring more excitement, yet given the number of participants who’ve told me that they’ve already closed their books for the year, I’d argue we shouldn’t hold out too much hope on that front.
LOOK AHEAD – There’s a few bits & bobs on the docket today, though it’s a struggle to see any of them moving the needle too much.
This morning brings our final read on Q3 eurozone GDP, which should remain unrevised at 0.2% QoQ, though growth is likely to pick-up into 2026, as fiscal tailwinds increasingly emerge. Across the pond, last month’s Canadian jobs report is due, though shouldn’t see the BoC budge from its ‘on hold’ stance, while September’s US PCE figures are far too stale to matter.
Besides that, all that’s left to do is provide my usual warning as to potential gapping risk on Monday’s open in the event of unexpected news flow, before everyone’s minds turn towards making beverage choices to see in the weekend.