NY Open: Halloween dishing up equity market treats

It’s Halloween, and Wall Street traders are trick-or-treating dressed as bulls. Facebook’s (FB: Nasdaq) jump in earnings per share and better margin forecasts for 2019 helped improve sentiment for Amazon (AMZN: Nasdaq) and Alphabet (GOOGL: Nasdaq), and put global indices in a happy mood. Wall Street opened with a bang, powered by a 1.6% surge in the Nasdaq. 

Unfortunately, this morning’s rally still leaves the major indices awash in losses for the month.

USD dollar bulls are smiling. It has been a good month. The greenback posted gains against all the G-10 major currencies except the Japanese yen, which squeaked out a tiny increase. The dollar added to its overnight rally in New York trading. Prices were supported by the better than expected ADP employment data (227,000 versus a forecasted 189,000) which bolsters hopes for a big gain in nonfarm employment which is released on Friday.

A large part of the US dollar strength today can be attributed to month-end portfolio rebalancing demand. The steep plunge in US equity indices in October suggests good-sized US dollar buying for the 16:00 GMT fix. The evidence of those flows can be seen in EURUSD which hasn’t received any support from the higher than expected Core CPI data or the weaker than forecast Chicago PMI result (58.4 versus a forecasted 60.5)

The month-end portfolio demand overshadowed the Canada August GDP data which rose 0.1%.  The better-than-expected result, which was the seventh consecutive increase, led to a brief drop in USDCAD. The GDP result increases the odds that the Bank of Canada raises interest rates again in December. Prices dropped to 1.3109, a minor intraday support line then quickly rebounded to session highs of 1.3137.