Investors couldn’t complain about the volatility on the market today. Especially on the US stock market, because major indices started session with significant gains and tend to end below yesterday’s closing. S&P 500 is clearly below 1900 points, which additionally spreads negative sentiment among market bulls. Furthermore, Dow Jones Industrial Average slides below 16000 points.
Initially, stocks were gaining along with commodity market. Oil gains awaiting the publication of API report showing crude stock changes ahead of government report tomorrow. Market consensus for DOE publication indicates further stock contraction of about 2 million barrels, what is caused by falling oil production and decreasing imports.
The British pound was the biggest disappointment on the FX market today, even though we had decent readings today. EURUSD dropped to 1.12 after Germany CPI readings, but recovered at the end of US session. Markets might react as if the data could push ECB to “do more”. Preliminary September readings undershoot expectations, trailing weak Spanish readings. The support area was strong enough to stop the plunge. Since the ECB started its 1.1 trillion-euro ($1.2 trillion) bond-buying program in March, inflation in the currency bloc has slowed significantly. It looks especially bad in comparison with the ECB’s goal of just below 2%.
The most important piece of data is already known and surprised to the upside, but still it’s a minor reading and EURUSD strongly gains after first plunge.
Polish zloty remained very weak, and the losing streak is almost a week long now. Finance Minister, Szczurek said that “the public finance sector deficit in 2016 (counted according to EU methodology) will measure 2.8% of GDP [similar level as in this year]”. The 2016 budget was approved by the cabinet with the headline central budget deficit cap at 54.6bn PLN and according to PAP, an 18.5% increase on the 2015 projected gap.
Besides API report we are ahead of important data concerning housing market in New Zealand today. During the Asian session, we will have plenty releases from New Zealand, Australia and Japan.