Daily FX Update, 15 October 2015

OVERNIGHT MARKET UPDATE:

·         US – Retail sales increase by 0.1% m/m in September, while market had expected sales to rise by 0.2% m/m. The slight increase in retail sales in September was largely due to the jump in sales by motor vehicle and parts dealers. Meanwhile, retail sales in August were also downwardly revised to remain unchanged.

·         UK – Unemployment rate decreased to its lowest since 2008 pushing the employment rate to a record high. The ILO jobless rate fell to 5.4% in the three months to August, the lowest since June 2008.

·         Euro area – German government downgraded its growth outlook citing slowdown in China and other emerging economies. In the Autumn forecast, the economy ministry said real gross domestic product is set to grow 1.7% instead of prior forecast of 1.8%.

·         Currency – US dollar weakened after signs of a China slowdown weighed on Federal Reserve interest rate bets. The fear of a Chinese economic slowdown caused the US Dollar to decline versus its major peers.

·         Equity – U.S. stocks closed lower as investors digested earnings reports and weighed weaker-than-expected data.

·         Rate – 10-year U.S. government bond fell below the 2% and settled at a five-month low on Wednesday due to fresh signs of tepid consumer spending and low inflation which in return boosted demand for haven assets.

·         Energy – Oil prices eased Wednesday amid concerns about the global oversupply of crude. Market expected weekly inventory data due Thursday to show that U.S. inventories of crude oil rose by 2.6 million barrels last week

Precious Metal – The gold price surged to a three-month high in Asia overnight as expectations of when the US would raise interest rates continued to drift.