Stocks mixed after bright start; NOK and GBP move higher

Summary:

• Early gains for stocks fade a little as the day wears on

• Norway’s inflation print sends NOK higher

• Pound gains on Brexit comments; GBPNZD hits 2-year high

• More declines in crypto space

• Thursday the key day this week for economic releases

Stocks are still a little higher on the day in general, but some of the early gains have been pared by the European cash close. Indices on the continent are mainly in the green while the US is little changed at the time of writing. The US100 could be interesting to watch going forward with a large bearish engulfing candle seen on W1 last time out. Furthermore a bear-market risk indicator used by Goldman Sachs has reached its highest level in almost half a century.

The Norwegian central bank has been offered a final confirmation to pull the trigger next month after price growth accelerated more than forecast in August. Note that the last month’s reading came well above the Norges Bank’s estimate suggesting the monetary authority would have to need the quicker pace of rate increases going forward. Consumer price growth increased 3.4% in August in annual terms while the core inflation gauge jumped to 1.9% - both figures easily beat market expectations set at 3.2% and 1.7% respectively.

The pound is enjoying a good day of gains with dual developments on the Brexit front seeing a flurry of buying in sterling.The largest gains can be seen against the Swiss Franc and the Japanese Yen with an appreciation on the day of 1.1% and 0.9% respectively while the pound is higher against all of its peers. The pound was already trading slightly higher on the day after the latest UK GDP figures beat forecasts but the real reason for the appreciation seems to be the latest Brexit news. Reports that the EU’s top Brexit negotiator, Michel Barnier, said it would be “realistic” for a deal to be forged by early November saw a flurry of buying in the pound with the GBPUSD surging by more than 100 pips in a short space of time.

4 of the 5 cryptocurrency markets are in the red on the day with Dash the sole bright spot and higher by around 2.5%. Ripple is the worst hit, lower by almost 3% and trading down at 0.26 once more.  On the fundamental front the government of the New South Wales (one of the Australian states) announced that it will conduct a pilot program for digital driver licences in November. The trial of driver licence digitization will cover 140,000 holders. Holders of this digital document will be allowed to show it using a mobile phone to prove age and identity once stopped by the police roadside check.

In terms of the economic calendar this week Thursday sees 3 central bank decisions in quick succession with the BoE, CBRT and ECB all due to announce their latest policy. Both the BoE and ECB are seen as almost certainly keeping their current policy in tact with the accompanying statements and Draghi conference likely seen as the source of any market moves should they occur. The CBRT announcement could well be the most market-moving with a hike of more than 300 basis points expected. This sets a fairly high bar as far as expectations are concerned and with the CBRT having decided to stand pat before despite overwhelming reasons for a hike it could well provide a good trading opportunity whatever is announced.