Market Roundup
- EUR/USD 0.18%, USD/JPY 0.07%, GBP/USD 0.14%, EUR/GBP 0.02%
- DXY -0.17%, DAX 0.53%, FTSE -0.05%, Brent 0.43%, Gold -0.16%
- ECB to stick to exit plans despite darker outlook
- DE Oct IFO Business Climate New, 102.8, 103.0 f'cast, 103.7 prev
- DE Oct IFO Current Conditions New, 105.9, 106.0 f'cast, 106.4 prev, 106.6 r'vsd
- DE Oct IFO Expectations New, 99.8, 100.3 f'cast, 101.0 prev, 100.9 r'vsd
- Italy's Salvini says spread would inevitably fall if it follows the real economy
- UK says EU pragmatism could alleviate Brexit border blockages
- UK and EU close to agreeing Brexit deal, UK's Raab
- Italy's Di Maio reiterates support for euro, says won't change deficit goal
- China, Japan seek warmer ties against backdrop of U.S. trade friction
- BOJ deputy gov warns against pricking bubbles with monetary tightening
- China fx regulator: will continue crackdown on fx market irregularities including illegal online fx trading
- Norges bank leaves key policy rate unchanged at 0.75%
Economic Data Ahead
- (0830 ET/1230 GMT) US Sep Durable Goods, -1.0% f'cast, 4.4% prev
- (0830 ET/1230 GMT) US 20 Oct w/e Initial Jobless Claims, 214k f'cast, 210k prev
- (0830 ET/1230 GMT) US 13 Oct w/e Continued Jobless Claims, 1.653 mln, 1.640 mln prev
Key Events Ahead
- (0700 ET/1100 GMT) CBRT expected to leave Turkey's interest rate at 24%
- (0745 ET/1145 GMT) ECB Governing Council meeting, followed by interest rate announcement in Frankfurt
- (0830 ET/1230 GMT) ECB President Mario Draghi holds a press conference, after the interest rate meeting in Frankfurt
- (1215 ET/1615 GMT) Fed Vice Chairman Richard Clarida speaks in Washington
- (1900 ET/2300 GMT) Cleveland Fed's President Loretta Mester speaks in New York
FX Beat
DXY: The dollar index loses momentum area ahead of the NA open. DXY trades slightly lower on the day at 96.35, down 0.02% on the day. Break above 97 handle will see continuation of upside.
EUR/USD: The single currency was largely muted ahead of ECB policy rate meeting. The central bank is expected to stay pat. Focus shall be on Draghi's wording for further direction in EUR/USD. Technical indicators support weakness. Price action is below major moving averages which are biased lower. We see scope for test of 1.1345 (Aug 15 low) on bearish statements from ECB President Mario Draghi at the presser. 5-DMA is immediate resistance at 1.1449, bearish invalidation only on breakout at 110-EMA.
USD/JPY: USD/JPY trades in the red for the 3rd consecutive session. S&P 500 futures have dropped well below the key support of the 50-week EMA, emboldening the bears. The pair has retraced dip below 112 handle and is currently trading at 112.30 after hitting session lows at 111.82. Price has broken below 23.6% Fib. We see scope for test of 50-DMA at 111.53 ahead of daily cloud. Violation at daily cloud will see further bearishness. On the upside, 20-DMA is major resistance. We see bearish invalidation on break above. Focus now on the forthcoming Bank of Japan (BoJ) policy meeting scheduled for October 31.
GBP/USD: Cable pauses downside, trades slightly higher on the day at 1.29 at the time of writing. Major trend in the pair remains bearish. Technical indicators support weakness. We see scope for decline till 1.28900/1.2850/1.2780. The minor jump can be seen only above 1.3050 and any break above targets 1.3070 (55-day EMA)/1.3125.
USD/CHF: USD/CHF is extending gains, trades 0.19% higher at 0.9995 at the time of writing. The pair is on track to close in the green for the 5th consecutive week. The pair has broken above minor resistance at 0.9980. Break above 1.00 targets 1.00680 high made on Jul 13th 2018. Any break above 1.00680 confirms further bullishness. On the lower side, near term low made yesterday 0.99378 will be acting as major support and any break below targets 0.9889/0.9865.
NZD/USD: NZD/USD has pared losses and edged higher from session lows at 0.6502, but poor showing in equities likely to keep upside capped. New Zealand unadjusted monthly trade deficit widened $90m in September to $1,560m, hits new record. The pair's bearish bias remians intact as long as 5-DMA resistance holds. Break above 5-DMA could see test of channel top at 0.66. Bearish invalidation only on channel breakout. On the flipside, next major support lies at 0.6425 (lower BB) ahead of 0.6424 (Oct 8 low).
Equities Recap
European markets attempt minor rebound on Thursday. The pan-European STOXX 600 index was up 0.32 percent at 354.40 points, while the FTSEurofirst 300 index was up 0.24 percent at 1,393.62 points.
Britain's FTSE 100 was largely unchanged at 6,963.58 points, while mid-cap FTSE 250 was up 0.28 percent at 18,457.39 points.
Germany's DAX was up 0.54 percent at 11,251.69 points; France's CAC 40 was up 1.37 percent at 5,020.83 points.
Commodities Recap
Gold resumes upside, holds near 3-month peak on equity rout. Spot gold was up 0.2 percent at $1,235.41 an ounce as of 0659 GMT. U.S. gold futures were up 0.6 percent at $1,238.0 an ounce.
Among other precious metals, palladium was down 0.3 percent at $1,121.30 an ounce, silver rose 0.7 percent to $14.73 per ounce, while platinum was up 0.4 percent at $830.90 per ounce.
Oil extends consolidation for 2nd consecutive day. Brent crude oil fell 82 cents, or 1.1 percent, to a low of $75.35 before recovering to trade around $76.32, up 15 cents, by 0910 GMT. U.S. light crude was unchanged at $66.82 after touching an intraday low of $65.99, down 83 cents.
Treasuries Recap
U.S.: The U.S. Treasuries remained flat Thursday ahead of the country’s initial jobless claims and the 7-year auction, both scheduled for today at 12:30GMT and 17:00GMT respectively. Also, FOMC members Clarida and Mester are scheduled to deliver their speeches today by 16:15GMT and 21:30GMT and respectively. The yield on the benchmark 10-year Treasuries remained tad higher at 3.128 percent, the super-long 30-year bond yields hovered around 3.349 percent and the yield on the short-term 2-year too nearly flat at 2.851 percent.
EUR: The German bunds remained tad lower during European session Thursday after investors have shrugged-off the lower-than-expected Ifo business climate index for the month of October. Investors will now eye the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled today by 17:15GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, rose 1 basis point to 0.399 percent, the yield on 30-year note climbed nearly 1-1/2 basis points to 1.034 percent and the yield on short-term 3-year surged 2 basis points to -0.650 percent.
AUD: Australian government bonds gained across the curve during Asian session on Thursday as investors’ moved into safe-haven buying as stocks prices tumbled globally amid Italy worries. That pushed the Aussie 10-year bond yield to a 6-week low of 2.586 percent. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 5-1/2 basis points to 2.626 percent, the yield on the long-term 30-year bond dipped 2-1/2 basis points to 3.126 percent and the yield on short-term 2-year plunged 2 basis points to 2.002 percent.
