Politics out, data and cen banks in, until November
STOXX 600 +0.3%, 1-mth high
SMI at more than 2-year peak
Energy stocks lead
Wall St futures steady
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POLITICS OUT, DATA AND CENTRAL BANKS IN, UNTIL NOVEMBER
Central banks and economic data were back in the driving seat for markets this week, said analysts at BofA, after letting politics have a go, but that interlude was good practice for of November's U.S. election.
In FX land, the euro EUR=EBS jumped 0.34% against the dollar on Thursday after an unexpected fall in U.S. consumer prices reinforced market bets of a Federal Reserve cut in September and sent the dollar tumbling. The greenback is down again on Friday.
The euro's moves on Monday, after the final round of voting in France's parliamentary elections produced comparative market-friendly gridlock, were more muted.
Similarly, France's 10-year bond yield dropped around 12 bps across Wednesday and Thursday's data-filled days. FR10YT=RR
"Data and (central banks) are back as key drivers after French elections, but a matter of time (until) US elections take over," said FX analysts at BofA in a note that summed up the week's price action.
This week has also saw dramatic strengthening in the yen JPY=EBS after the Bank of Japan likely stepped into markets Thursday, and less dramatic, but still notable, gains in the pound GBP=D3 after hawkish remarks from Bank of England chief economist Huw Pill.
And, BofA say, central banks and data should be the driving force in markets for a little while longer.
"We stick with our bearish USD view for the rest of the year on a weakening US economy and Fed rate cuts," they say.
"The main risk we see is the US elections, but for now, the market is not trading this theme yet"
(Alun John)
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