Market Review – Fundamental Perspective 25 October 2017

US equity markets finished the day in the green yesterday and the Dow Jones made new all-time highs after earning beats by a number of industrials.
USD strength versus EM currencies was the dominant theme in FX markets with Latin American currencies in particular coming under pressure as US bond yields moved higher.
US rates and USD continue to be driven by the question of who should replace Yellen as Fed Chair and according to reports, the relatively hawkish John Taylor came out on top after President Trump asked Senate Republicans for their opinion on the matter.
Trump has indicated that he will make a decision before his next foreign trip on 3rd Nov.
GBP traded with an offered tone throughout yesterday’s session versus both USD and EUR on no particular news but it is not unlikely that some will have been disappointed by PM May’s failure to deliver any further updates on Brexit negotiations.
Focus today will be on Q3 GDP released this morning and Barclays Research expects “…UK GDP to have expanded 1.4% y/y, though the deterioration in net trade and slowing momentum in the service sector imply downside risks…”.
The BoC is widely expected to leave rates unchanged today as communication since the surprise September hike and softer data has pared down market expectations for a sustained hiking cycle.
The National Treasury of South Africa will present its Medium Term Budget Policy Statement to Parliament today. This will be Finance Minister Gigaba’s maiden budgetary presentation and markets will be looking for evidence of adeptness in the way he confronts the country’s fiscal challenges, especially with regards to prioritization of the numerous competing demands.

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