Market Roundup
- Oil falls on weak Chinese industrial data
- EU likely to agree Brexit delay as PM Johnson seeks an election
- Gold eyes further gains as rock-bottom rates tempt investors: Reuters poll
- Russia: OPEC+ will factor in weak U.S. output at December meeting – TASS
Economic Data Ahead
- (0830 ET/1230 GMT) U.S. Goods Trade Balance (Sept) (Prior -$73.06 Bln)
- (1030 ET/1430 GMT) U.S. Dallas Fed Manufacturing Business Index (Oct) (Consensus 1.4, Prior 1.5)
Key Events Ahead
- (1100 ET/1500 GMT) ECB President Draghi's Speech
FX Beat
DXY: The dollar index slightly weaker as market await U.S. interest rate decision. DXY capped below 98 mark. Trades 0.08% lower at 97.74 at 11:30 GMT. Technical studies support further gains. 200-DMA is major support at 97.41, weakness only on break below.
EUR/USD: Euro attempts mild recovery at the beginning of the week's trade. Brexit negotiation will remain the main driver in the near term. EUR/USD was trading at 1.1097 at 11:45 GMT, up 0.17% at the time of writing. Strong support seen at 1.1066 (nearly converged 55 and 21 EMAs). Major trend is bearish. Breakout above 200-DMA (1.1200) will see bearish invalidation. Focus on ECB Draghi's speech later today for impetus.
USD/CHF: USD/CHF extends bull run, trades higher for the 6th straight session. The major was trading at 0.9951 at 12:00 GMT, up 0.10% at the time of writing. Price action is testing 200-DMA resistance at 0.9955. Technical bias is bullish. Breakout at 200-DMA to see bullish continuation. Next major resistance lies at 1.0015 (Upper Bollinger band) ahead of 1.0027 (Oct 2nd, 3rd high).
GBP/USD: British Pound found support on renewed Brexit optimism after the UK and EU agreed a Brexit deal. GBP/USD shorts slashed, the major edges higher on the day to trade at 1.2831 at 11:50 GMT, up 0.08% at the time of writing. That said, growing risk of a snap UK election keep upside limited. Major trend has shifted to bullish. However, near-term technical bias is bearish. 200-DMA is major support at 1.2711. Break below could see major downside.
USD/JPY: USD/JPY extends sideways grind, focus on Fed and BoJ policy meetings for further impetus. Price action will likely be impacted by Brexit and optimism over a U.S.-China trade deal. Technical studies support further gains. Major resistance is seen at 200-DMA at 109.05. Decisive break above will see major gains. On the flipside, major support is seen at 108. break below negates near-term bullish bias.
Equities Recap
European Stocks Mixed after Brexit Extension Announcement
At 11:30 GMT, the UK’s FTSE 100 Index was trading 7315.04, down 9.43 points or -0.13 percent.
Germany’s DAX was trading at 12952.70, up 58.19 points or +0.45 percent and France’s CAC 5726.61 is trading 5726.61, up 4.46 points or +0.08 percent.
Commodities Recap
Gold prices steady near two-week highs as markets eye US interest rate decision. Spot gold was trading at $1505.38 at 11:20 GMT, up 0.07%.
Silver holds marginal gains around $18.065, while, Palladium outperformed once again within the precious metals complex after making record highs this month.
Oil prices pause bull run, consolidate gains after significant rise last week. WTI crude was trading at $56.29 per brl at 11:20 GMT, down 0.60% at the time of writing. While Brent crude oil was trading at $61.65, down 0.50%.
Treasuries Recap
U.S.: The U.S. Treasuries plunged during Monday’s afternoon session as investors await the conclusion of the latest FOMC meeting on Wednesday, where the central bank is highly expected to adopt a 25bp interest rate cut, market pricing having risen to 90 percent for the same. Also, a host of 3-tier economic data throughout this week, shall keep on adding insight to the bond market. The yield on the benchmark 10-year Treasury yield jumped 3-1/2 basis points to 1.837 percent, the super-long 30-year bond yield also surged 3-1/2 basis points to 2.327 percent and the yield on the short-term 2-year traded 2-1/2 basis points up at 1.652 percent.
UK: The United Kingdom’s gilts remained narrowly mixed during European trading hours Monday after the European Union extended the Brexit deadline until January 31, 2020, with possibilities of an earlier exit if the UK Parliament succeeds in passing a withdrawal deal. The yield on the benchmark 10-year gilts, hovered around 0.677 percent, the 30-year yield remained flat at 1.168 percent and the yield on the short-term 2-year traded tad lower at 0.510 percent.
EUR: The German bunds slumped during European session Monday ahead of the European Central Bank (ECB) President Mario Draghi’s speech, scheduled to be delivered today by 15:00GMT and the country’s labour market report for the month of October, due for release on October 30 by 08:55GMT, for added information in the debt market. The German 10-year bond yield, which moves inversely to its price, jumped 2-1/2 basis points to -0.351 percent, the yield on 30-year note surged 4 basis points to 0.163 percent while the yield on short-term 2-year remained flat at -0.655 percent.
AUS: The Australian government bonds remained tad higher during Asian session of the first trading day of the week Monday ahead of the Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech, scheduled to be delivered on October 29 by 06:45GMT. Also, the country’s consumer price inflation (CPI) for the third quarter of this year, due for release on the following day by 00:30GMT shall impart additional direction to the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 1.102 percent, the yield on the long-term 30-year bond fell 1 basis point to 1.681 percent while the yield on short-term 2-year traded flat at 0.784 percent.
