ALPHA Market Update 05 October 2018


Market Update




  • The European Court of Auditors’ annual report revealed the EU’s pension liabilities skyrocketed by more than £12billion in a single year. The findings showed that the bloc’s spending promises reached a record €267billion (£236billion) in 2017, almost twice the size of the EU’s annual budget, which marked a significant increase from €239bilion (£211billion) in 2016. The EU’s pension liabilities also hit €73billion (£64billion) in 2017 up from €67billion (£59billion) in 2016, and the bloc’s budget guarantees, including loans to EU member states for economic development, rose to €123billion (£109billion) from €115billion (£102billion). The drastic increases in EU liabilities could hypothetically leave the UK with a bill of up to €30billion (£26billion) for its share of the obligations.

United Kingdom

  • GBP/USD is trading little changed on the upside at around 1.3020 after briefly touching 1.3060 earlier on Friday on Brexit rumors of negotiators saying the deal is “very close”. The currency pair gradually receded from daily highs thereafter with 1.3000 being a major psychological support line. The US September labor market report due later on Friday could be a major game changer for Sterling as Brexit negotiations heat up for the weekend round before the Brexit Secretary Dominic Raab heads for Brussels next Monday.


  • Oil prices rose on Friday as traders anticipated a tighter market due to U.S. sanctions against Iran’s crude exports, which are set to start next month. International benchmark Brent crude oil futures were at $84.98 per barrel at 0504 GMT, up 40 cents, or 0.5 percent from their last close. U.S. West Texas Intermediate (WTI) crude futures were up 47 cents, or 0.6 percent, at $74.80 a barrel. The gains helped claw back some of the losses from the previous session due to rising U.S. inventories and after Saudi Arabia and Russia said they would raise output to at least partly make up for expected disruptions from Iran.


  • AUD dropped to a two-year low this morning despite a stronger-than-expected set of retail sales numbers for August, although analysts at Westpac are saying the worst is now over the currency. In the current market, which has seen AUD increasingly driven by global factors rather than domestic data, August’s retail number had to be a show-stopper if it was to provide anything more than fleeting support to AUD. And although the number beat economist forecasts, it was not enough to prop up the currency.
  • Retail sales rose by 0.3% during August, a definitive improvement on the 0% change seen back in July, when markets had looked for sales growth of just 0.2%. This drove the annual pace of retail sales growth up to 3.4%, from 3.2% previously. Growth was strongest in the states of Tasmania, New South Wales and Victoria. Western Australia and the Northern Territory both saw retail sales contract by -0.1% and -0.5% respectively, according to the Australian Bureau of Statistics.

New Zealand

  • No News


  • Federal Reserve Chairman Jerome Powell said in a speech in Boston on Wednesday that the economic outlook was “remarkably positive” and that rates might rise above “neutral”, currently anywhere from 2.5 to 3%.
  • Elsewhere, the USD/JPY pair was down 0.12% at 114.41, while the Aussie dollar and the Kiwi both slid 0.3% against the dollar.
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