Thursday 14.50 BST
What you need to know
- Dollar drifts after Fed minutes sound dovish tone on rate rise outlook
- Attention turns to US inflation data after US banks earning season starts well
- New York indices slip further from records as European stocks struggle
- Sterling stumbles as EU Brexit chief says talks at an ‘impasse’, lifting FTSE 100
- Oil dips ahead of production numbers
Leading quote
“While many Federal Reserve officials expected another rate hike would be appropriate later this year, many also expressed concern that inflation might be more than transitorily low,” says Michael Hanson at TD Securities.
“For the dollar and near-term price action, given the market has largely priced in a December hike, the burden of proof is placed on this Friday’s consumer price index report. This backdrop leaves us comfortable holding long exposure to the euro and the yen.”
Hot topics
Stocks are struggling and the dollar is drifting in cautious trade after dovish minutes from the Federal Reserve’s last monetary policy meeting, while there has been a warm market reception to the start of earnings season for US banks.
Shares in JPMorgan and Citi are higher — by 0.6 per cent and 1.3 per cent respectively — after the two banks became the first to report third-quarter numbers.
Wider US indices are slipping after Wall Street’s recent sustained, record-breaking run loses a little pace. The S&P 500 is down 0.2 per cent.
Wider trade feels cautious as investors continue to absorb minutes from the Fed’s September meeting. Policymakers expressed fears that low inflation was not “transitory”, casting doubt on the pace of rate rises for 2018. It also puts US consumer price inflation data, due out on Friday, at the forefront of the agenda.
The index tracking the world’s reserve currency against six peers is ticking up by 0.1 per cent, finding support after its decline over the past three sessions approached 1 per cent.
The euro is slipping from an 11-session high, trimming its gain fore the week to 1 per cent.
The yen is 0.2 per cent stronger at ¥112.27 per dollar and sterling is also up 0.2 per cent at $1.3244.
The yield on the US 10-year Treasury is down 2 basis points at 2.33 per cent. The 2-year Treasury yield is down is down 1bp at 1.51 per cent.
Equities
European stock are struggling for traction, with the international Euro Stoxx 600 flat, while the Xetra Dax 30 is down 0.1 per cent. London’s FTSE 100 picked up — rising 0.4 per cent overall sending it back to its June highs — after the pound took a hit from remarks on Brexit talks from the EU’s chief negotiator.
European financial stocks are under pressure as investors consider the implications of a gentler pace to US rate rises. The Euro Stoxx banking index is down 0.7 per cent.
Tokyo’s Topix index rose 0.2 per cent, the Kospi index in Seoul gained 0.7 per cent.
Forex
The pressure on sterling comes after Michel Barnier said talks on the terms of Britain’s departure from the EU were at ”deadlock”” Sterling is 0.5 per cent weaker against at £0.9011 per euro, and down 0.5 per cent at $1.3156.
The wider drift for the US dollar is broad. The Australian dollar is up 0.4 per cent at $0.7825 and the New Zealand dollar was up 0.3 per cent. The Korean won and China’s renminbi are both 0.1 per cent stronger.
Commodities
Brent crude is down 1.3 per cent to $56.21 a barrel, coming off the previous session’s gains. The international benchmark has slipped after breaching $59 a barrel — a more than two-year high — on September 25. West Texas Intermediate is down 1.6 per cent at $50.50 a barrel.
Eyes now turn to the US weekly inventory report later in the day.
“With the market looking for a large drawdown in stockpiles, anything weaker than this could see prices come under pressure,” ANZ analysts said in a research note on Thursday.
Gold is up 0.2 per cent at $1,295.21 an ounce.
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