News & Analysis

Catalonia’s deadline rocked the markets; NZD dive; UK retail sales shock

Oct 20, 2017 | Daily Market Outlook

Key data and releases coming up:

  23:30 AEDT – CAD Canadian CPI, Canadian Core Retail Sales
  10:30 AEDT (SAT) – Fed Chair Yellen Speaks

During yesterday’s LON session, stocks started making strong moves lower. DOW futures were over 100 points lower at one stage and what looked like a possible terrible day on Wall Street did reverse with the DOW eking out a new record finishing at 5.44 points higher at 23163.04. The NASDAQ lost 19.15 to close at 6605.07. The S&P500 0.84 points higher to 2562.10. The USD also had a mixed session with USDCHF and USDJPY traded lower however the USDCAD was 19 pips higher. US stocks meanwhile recovered on earnings hopes and better than expected unemployment claims that came in at 222,000 beating expectations and last reported at 244,000 figure. President Trump concluded the Federal chair interviews with decision possibly being made next week. At this point, Jerome Powell seems to be the favorite.

Europe, like the US, experienced strong falls driven by Catalonia. Wild moves were observed yesterday as Catalonia came back into the radar with the Spanish government threatening to suspend Catalonia’s autonomy. The UK100 finished 19.83 lower and the DAX 52.93 lower. Earnings were also mixed which added to the sessions uncertainty. On top of all this, UK retail sales came in worse than expected at -0.8% below -0.1% the market was looking for. The GBP tanked post release losing 45 pips. With Brexit still in focus data like this is not giving a post-Brexit economy much to cheer about. The EUR however strengthened overnight with strong gains to the USD and NZD.

On the other side of the world, New Zealand, welcomes a new Prime Minister, Jacinda Ardern. The NZD however didn’t welcome the news of the new coalition government suffering its biggest fall this year. The NZDUSD lost 120 pips and posted a session that defied gravity and added 385 pips.

Oil traded lower overnight settling 70 cents lower whilst gold added $8.90.

As for our own ASX200, the index opened weaker this morning. Asian stocks may also have mixed opens this morning due to last night’s volatility.

GER30 – the 1-hour chart shows the volatility Catalonia set off late afternoon yesterday.

EURNZD – showed one of the largest single day rallies seen for a while with 385 pips in a day.

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