Bernanke’s Farewell Tour: Morning Market Update Oct 28

October 28th, 2013 by

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Precious metals overnight remained near the five-week highs hit Friday, with Platinum seeing a sharp little rally in midday European trading. They’re seeing a little pressure this morning on options expiry and a dollar attempting to pull up from nine-month lows. The euro and yen are slightly weaker today, giving the dollar some support. The euro recently hit a 23-month high against the dollar, which sparked concerns the ECB would start making noises to moderate its strength. Traders decided to get ahead of the central bank and ease off this morning by themselves. Crude oil is still near two-month lows on growing U.S. stockpiles.

U.S. industrial output for September was up 0.6%, but this was mostly on electricity use during a hotter than usual September. Factory output barely grew, rising only 0.1%. The numbers were good enough to give the dollar a mini rally (or an excuse to cover shorts.)

Tomorrow starts the next-to-last Federal Reserve Open Market Committee meeting with Ben Bernanke as Fed chairman. While markets take the reports of a lost $25 billion in economic activity seriously, traders are still a little wary of what may happen this week. The “No Taper” September meeting caught a lot of people flat-footed. The consensus is that tapering will not occur until the second quarter of 2014.

More central bank-induced anxiety is on tap next month, as the European Central Bank begins “stress testing” bank in EU member nations ahead of a planned closer integration of the economic zone’s banking system. Traders are starting to cringe, thinking of what audits are going to find on the books of banks in Greece, Italy, Spain, and other distressed nations.  Despite that, euro stocks were up on earnings reports and the expectations that the Fed isn’t turning off the liquidity firehose in the U.S. any time soon.

In Asia, the Nikkei was up after heavy losses on Friday, while the Hang Seng recovered off of seven-week lows.  Wall St. has opened negative in choppy trading.

by David Peterson