This week, market players focused mainly on data from Canada, where the central bank was anticipated to lower interest rates, along with the retail sales report. However, there were other significant news items worth noting, which we will explore below.
On Wednesday, the Bank of Canada unexpectedly reduced its interest rate by 0.50%, bringing it down from 4.25% to 3.75%. This move drew the attention of analysts and investors, who are now looking for further shifts in the country’s economic policy.
In the United States, the existing home sales report for September indicated that 3.84 million homes were sold, falling short of the forecast of 3.88 million. However, August's data was revised upward from 3.86 million to 3.88 million.
Additionally, the EIA reported that US oil inventories rose by 5.474 million barrels for the week ending October 18, which was well above the expected increase of 1.8 million barrels. In contrast, inventories had dropped by 2.191 million barrels in the previous week.
On Thursday, Germany's purchasing managers’ index (PMI) showed positive trends. The Manufacturing PMI increased from 40.6 to 42.6, surpassing expectations, while the services sector also saw improvement, rising from 50.6 to 51.4.
Eurozone data similarly reflected progress, with the Manufacturing PMI rising from 45.0 to 45.9, although the Services PMI dipped slightly from 51.4 to 51.2. The Composite PMI edged up to 49.7, just under the expected 49.8.
In the United Kingdom, the purchasing managers’ index indicated a slowdown. The services PMI declined from 52.4 to 51.8, while the manufacturing PMI dropped from 51.5 to 50.3. The composite PMI decreased from 52.6 to 51.7, falling short of expectations.
In the United States, jinitial obless claims totaled 227,000, lower than the forecast of 243,000. The previous week's figure was revised upward to 242,000. The U.S. PMIs showed improvement in both manufacturing and services, with the Manufacturing PMI increasing to 47.8 from 47.3, and the Services PMI rising slightly to 55.3 from 55.2.
The September new home sales report was also positive, with sales reaching 738,000, surpassing the forecast of 719,000. However, the prior-year figure was revised down to 709,000 from 716,000.
On Friday, Tokyo core inflation for October dropped below the Bank of Japan’s 2% target for the first time in five months, registering at 1.8% year-over-year. This development complicates the central bank’s decision-making process regarding potential interest rate hikes.
Germany's IFO Current Economic Score index increased to 85.7 in October, while the IFO Business Climate index rose to 86.5, surpassing the forecast of 85.6. The IFO Expectations index also saw improvement, reaching 87.3, up from 86.4 in September.
Canada's August retail sales report is set to be released at 12:30 GMT on Friday. Core retail sales are projected to grow by 0.3% month-over-month, a slight decline from the previous 0.4% increase. Retail sales volume is anticipated to rise by 0.5%, compared to the previous gain of 0.9%.
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