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Recent reports from the EU-member states suggest that the single currency is poised for a rally in the following days. France Consumer Confidence results were in line with analysts’ estimates. Figures came in at 104 points for October, which was also the same figure in September. This was the highest business confidence in France since the beginning of the year. Aside from that, Italy’s Producer Price Index (PPI) expanded by 0.1% from that contraction of 0.1% that analysts were expecting. This is the second time that the report came in on a positive note during the year. The strength of the single currency can also be attributed to the phase one trade deal between the United States and China. The month-long trade war between the two (2) largest economies dragged economies, including Canada. Canada was under pressure to cut its benchmark interest following the recent interest rate cut by the Federal Reserve.
A member of the Swiss National Bank (SNB) has made a comment regarding Switzerland’s interest rate. This was amid the race of central banks around the world to reach a negative interest rate. Switzerland was one (1) of the only four (4) countries with a negative interest rate. But Alternate Member of the Governing Board Martin Schegel expressed his willingness for the country’s central bank to further cut its interest rate. The company is currently sitting at negative 0.75%. Among the central banks that are willing to cut its interest rate below zero (0) is the Royal Bank of New Zealand (RBNZ). The RBNZ already cut its benchmark interest rate twice this year. New Zealand’s interest rate is now 1.0% from 1.75% three (3) months earlier. The move by the central bank was in response to the escalating trade war between the United States and China.
Only two (2) days remain before the opening of the 35th ASEAN (Association of Southeast Asian Nation) Summit. Along with the summit was the meeting of the ASEAN Plus Six members regarding the regional trading bloc, the RCEP (Regional Comprehensive Economic Partnership). Once the deal took effect, it will rival North America’s NAFTA (North American Free Trade Agreement) and Europe’s European Union to become the largest trading bloc in the world. The “Plus Six” of the ASEAN were Japan, China, South Korea, Australia, New Zealand, and India. Japan and New Zealand were also members of the pacific rim trade pact, the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership). Japan had also ratified the EU-Japan Free Trade Agreement which became the largest trading zone in the world. Recently, Japan was also able to strike a bilateral trade agreement with the United States.
The U.S.-China trade war will trigger the creation of a new economic pact. On October 31, members of the ASEAN Plus Six will meet in Bangkok Thailand to advance talks on their partnership. The ten (10) ASEAN members, together with the six (6) members of the ASEAN enlargement will form the RCEP (Regional Comprehensive Economic Partnership). This trading pact is expected to dethrone the European Union as the largest trading pact in the world. The RCEP potentially includes 45% of the global population, and a combined GDP of about $21.3 trillion, accounting for 40% of the global trade. Aside from this, the pacific rim trade pact, the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) is also on the rise. Both of these trading pacts include Singapore as a member. However, concerns are mounting as the U.S. is losing its influence in Southeast Asia.
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