Intraday Market Thoughts

Ebola Fears Flair But They’re Fading

by Adam Button
Oct 24, 2014 3:03

The yen tumbled Thursday as it finally caught up with stocks on a report that the Bank of Japan is losing patience in the fight against deflation. The US and Canadian dollars were the top performers. The Asia-Pacific week ends quietly but UK GDP is a highlight later.

Yen crosses ripped higher with USD/JPY touching as high as 108.35 as stocks continued to recover. We wrote that the dollar was likely to play catch up early in the week and the gains coincided with rising Treasury yields.

The excitement in markets was briefly pared by a report that a New York doctor recently returned from Guinea was rushed to hospital with ebola-like symptoms. The S&P 500 fell 12 points as the story circulated and USD/JPY slipped 30 pips but those declines were later erased.

With flu season coming, reports of ebola-like symptoms will become commonplace in the months ahead but the initial scare is over and unless there are reports of more widespread contagion then the impact of headlines will diminish over time.

Part of the reason the yen was so weak was a report in the WSJ saying the BOJ now sees a larger chance of CPI falling below 1%. That could lead to another round of stimulus and could come as soon as the meeting at the end of the month.

The other story that moved markets was an oil supply cut from Saudi Arabia in September data. Production wasn't lower but officials appear to be stockpiling crude rather than pushing it to market. That sparked a $2 rally in Brent as oil begins to show tentative signs of a bottom.

Asia-Pacific trading is light but one event to watch later will be the results of the first NYC ebola case, which should be released around 0700 GMT. Afterwards, UK GDP will be a major highlight at 0430 GMT. The consensus is for a 0.7% q/q rise.


The latest Premium trades are 2 USDCHF, while both GBPUSD shorts near deeper in the money after the double disappointment from the BoE minutes and UK retail sales. Tomorrow comes UK Q3 GDP.
Act Exp Prev GMT
GDP (Q3) (q/q) [P]
0.7% 0.9% Oct 24 8:30
GDP (Q3) (y/y) [P]
3.0% 3.2% Oct 24 8:30
Core Retail Sales (Sep) (m/m)
-0.3% -0.2% 0.3% Oct 23 8:30
Core Retail Sales (Sep) (y/y)
3.1% 3.4% 4.4% Oct 23 8:30
Retail Sales (Sep) (y/y)
2.7% 2.8% 3.7% Oct 23 8:30

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