Overnight, Japanese inflation came in at 07%, unchanged since September. Low inflation has dogged the Japanese economy, and now that Shinzo Abe has been re-elected, it will be one of his top priorities to nudge it higher.
US stocks finished on a high note as solid earnings from Twitter (NYSE:TWTR) and Ford (NYSE:F) helped the bullish sentiment. Tech giants Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) reported figures after the closing bell in New York. All the companies posted earnings that were ahead of analysts’ expectations, and the stocks all jumped in post-market trading.
Mario Draghi, the President of the European Central Bank (ECB) got his way yesterday by restructuring the bond buying scheme and managing to send the euro lower. The ECB chief has a history of talking the single currency down, and yesterday he did precisely that. The ECB will continue to purchase €60 billion worth of bonds per month until the end of the year.
From January, the ECB will buy €30 billion worth of bonds until the end of September. The inflation rate is the eurozone is 1.5%, so it is well away from the ECB’s 2% target. Mr Darghi also left the door open to further stimulus if required, and that put major pressure and the single currency. Conversely, the weak euro and the hint of possibly another extension to the easing scheme triggered a wave of buying of equities in Europe.
Catalonia will remain in focus today as the Spanish Sentate are likely to vote to impose direct on the region. Carles Puigdemont, the President of Catalonia, yesterday ruled out the option of having a snap election in the region. Seeing as Mr Puigdemont didn’t unilaterally declare independence either, so it appears the ball is in Madrid’s court.
The US advance GDP reading at 1.30pm (UK time) will be in focus. The consensus is for a reading of 2.5%, and that compares with the previous report of 2.6%. Yesterday, the US had an unimpressive day in terms of economic data, as September’s pending homes figures were flat on the month, and the jobless claims figure ticked up.
EUR/USD – had dipped below the 100-day moving average at 1.1675, and if it holds below that level it could send the market to the 1.1613. The 50-day moving average at 1.1840 could act as resistance to rallies.
GBP/USD – is still in its upward trend and the bulls might be eyeing the 1.3335 mark. Beyond that, it may run into resistance at 1.3452. The 100-day moving average at 1.3061 may provide support.
EUR/GBP – is firmly below the 100-day moving at 0.8941, and if it remains below that metric it could target the 200-day moving average at 0.8750. The 50-day moving average at 0.8982 might act as a hurdle to a positive move.
USD/JPY – has been pushing higher since early September, and the July high of 114.49 could be the next level to watch. A break above 114.49, might see the market target 115.62 and support may come into play at 113.00. The next support level below that could be the 200-day moving average at 111.74.
FTSE 100 is expected to open 5 points higher at 7491.
DAX is expected to open 72 points higher at 13205.
CAC 40 is expected to open 25 points higher at 5480.
IBEX 35 is expected to open 37 points higher at 10384.
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