Daily Market Report 21/10/2013

The US dollar slid to the weakest level since February as investor appetite for riskier assets rose on bets the Federal Reserve will delay tapering stimulus into 2014. The U.S. dollar index, which monitors the greenback against 10 other major currencies, fell by 1% last week.

Further fuelling global risk appetite was the positive news from the Chinese economy. It grew by 7.8% in the third quarter of 2013, accelerating from the 7.5% in the second quarter. This was driven by stronger domestic and overseas demand for Chinese goods and services. Positive news from the from China leads to a sell-off in USD as investors see the US as a “safe haven”.

This was all reflected in stock markets across the globe as many indices reached highs not seen since the credit crunch. The MSCI All-Country World Index advanced 0.3% to 394.55, the highest since May 2008. 

We could be in for a choppy week as it is a busy one for economic data, with a first glimpse of GDP growth in the third quarter topping the list in the UK on Friday. In Germany, we get the IFO business survey on Friday and euro zone PMIs on manufacturing and services activity across the region are out on Thursday.

In the United States, after the shutdown held back some key data from government departments, there is a flood coming this week, top of the bill non-farm payrolls tomorrow. Also due out in the US are existing home sales today, import and export price figures on Wednesday, October jobless claims and PMI Manufacturing on Thursday and durable goods orders on Friday.

Key Announcements: 

15.00pm – USD – Existing Home Sales (Sep): Expected to fall to 5,370,000.