Market Roundup
- EUR/USD -0.11%, USD/JPY 0.05%, GBP/USD -0.15%, EUR/GBP 0.01%
- DXY 0.17%, DAX 0.37%, FTSE 0.56%, Brent -0.55%, Gold -0.36%
- State election losses further dent Merkel's authority
- Merkel will not seek re-election as CDU party chair – source
- Britain's Hammond to turn up heat on Brexit rebels in budget speech
- UK lending growth hits three-year low after car sales fall – BoE
- Sterling stuck near two-month lows before UK budget speech
- BOJ eyes tweaks to bond-buying programme, but won't rush changes-sources
- Key gauge of markets' euro zone inflation expectations falls to one-year low
- S&P ratings relief lifts Italy's bond market
- Mexico peso weakens further to down 1 pct against dollar after vote to ditch airport
- Many U.S. firms in China eyeing relocation as trade war bites-survey
- Australian PM's approval ratings slump as minority government looms
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for September, which is expected to rise 0.3 percent, after posting similar gains in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal consumption expenditures (PCE) price index for the month of September. The index stood at 0.1 percent in August while core PCE is likely to have increased 0.1 percent after staying unchanged in the previous month.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.4 percent in the month of September, after surging 0.3 percent in August.
- (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of October. The index posted a rise of 28.8 percent in the previous month.
- N/A The Federal Reserve releases its Loan Officer Survey.
Key Events Ahead
- (0900 ET/1300 GMT) Fed New York Senior Vice President Ray Testa speaks at LBMA/LPPM Precious Metals Conference in Boston
- (0945 ET/1345 GMT) Federal Reserve Bank of Chicago President Charles Evans makes opening remarks at the Sixth Annual Summit on Regional Competitiveness, in Chicago.
FX Beat
DXY: The dollar index gained as the yield on the benchmark 10-year Treasuries rose 1-1/2 basis points. The greenback against a basket of currencies trades 0.1 percent up at 96.39, having touched a high of 96.86 on Friday, its highest since August 15. FxWirePro's Hourly Dollar Strength Index stood at 35.44 (Neutral) by 1100 GMT.
EUR/USD: The euro rebounded from a 2-1/2 month low as investors saw some relief after German Chancellor Angela Merkel's junior coalition allies gave her conservatives until next year to deliver more policy results. The European currency traded flat at 1.1407, having touched a low of 1.1335 on Friday, its lowest since August 1.6 FxWirePro's Hourly Euro Strength Index stood at 7.15 (Neutral) by 1100 GMT. Immediate resistance is located at 1.1432 (October 25 High), a break above targets 1.1493 (October 23 High). On the downside, support is seen at 1.1335 (October 26 Low), a break below could drag it till 1.1301 (August 15 Low).
USD/JPY: The dollar surged after data released on Friday showed the U.S. economy slowed less than expected in the third quarter, as the strongest consumer spending in nearly four years and a surge in inventory investment offset a tariff-related drop in soybean exports. The major was trading 0.3 percent up at 112.23, having hit a low of 111.37 on Friday, its lowest since September 13. FxWirePro's Hourly Yen Strength Index stood at -11.46 (Neutral) by 1100 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. personal consumption expenditure, and Fed Evans speech. Immediate resistance is located at 112.58 (September 20 High), a break above targets 112.98 (September 25 High). On the downside, support is seen at 111.62 (September 15 Low), a break below could take it lower 111.35 (September 5 Low).
GBP/USD: Sterling rallied as investors awaited the British finance minister's annual budget speech later in the day. The major traded 0.2 percent up at 1.2847, having hit a low of 1.2777 on Friday; it’s lowest since August 20. FxWirePro's Hourly Sterling Strength Index stood at -50.31 (Bearish) 1100 GMT. Immediate resistance is located at 1.2876 (September 4 High), a break above could take it near 1.2933 (September 3 High). On the downside, support is seen at 1.2777 (October 6 Low), a break below targets 1.2729 (August 20 Low). Against the euro, the pound was trading 0.1 percent up at 88.78 pence, having hit a low of 88.61 on Friday, it’s lowest since October 2.
USD/CHF: The Swiss franc declined as the greenback surged following a rise in the U.S. Treasury yields. The major trades 0.2 percent up at 0.9988, having touched a high of 1.0026 on Friday, it’s highest since July 19. FxWirePro's Hourly Swiss Franc Strength Index stood at -78.80 (Slightly Bearish) by 1100 GMT. On the higher side, near-term resistance is around 1.0018 (October 25 High) and any break above will take the pair to next level till 1.0034 (July 18 High). The near-term support is around 0.9954 (September 25 Low) and any close below that level will drag it till 0.9937 (September 23 Low).
Equities Recap
European shares rebounded from last week’s sell-off, while the greenback surged as the U.S. Treasury yields resumed rise.
The pan-European STOXX 600 index gained 1.2 percent at 356.68 points, while the FTSEurofirst 300 index rallied 1.2 percent to 1,403.62 points.
Britain's FTSE 100 trades 1.5 percent up at 7,045.98 points, while mid-cap FTSE 250 surged 1.8 percent to 18,670.99 points.
Germany's DAX rose 1.9 percent at 11,410.19 points; France's CAC 40 trades 0.3 percent higher at 4,980.45 points.
Commodities Recap
Crude oil prices declined, as concern over the global economy put crude on track for its biggest monthly fall since mid-2016. International benchmark Brent crude was trading 0.6 percent down at $77.29 per barrel by 1057 GMT, having hit a low of $75.09 on Wednesday, its lowest since August 24. U.S. West Texas Intermediate was trading 0.6 percent down at $67.28 a barrel, after rising as high as $67.92 earlier, its highest since October 23.
Gold prices dropped as the dollar firmed and global stocks edged up from last week's setbacks Spot gold was down 0.4 percent $1,229.38 an ounce at 1059 GMT, having touched its highest since July 17 at $1,243.32 on Friday. U.S. gold futures were down 0.3 percent at $1,232.70 an ounce.
Treasuries Recap
The U.S. Treasuries suffered during late afternoon session ahead of today’s personal income and spending report for September that will confirm the monthly profile for consumer spending (which rose a robust 4.0 percent in Q3). The yield on the benchmark 10-year Treasuries rose 1-1/2 basis points to 3.093 percent, the super-long 30-year bond yields gained nearly 1 basis point to 3.323 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 2.822 percent.
The German bunds slumped during European session as investors wait to watch the country’s unemployment change data for the month of October, scheduled to be released on October 30 by 08:55GMT and eurozone’s consumer price inflation (CPI) data for the similar period, due for release on October 31 by 10:00GMT, will add further direction in the debt market. The German 10-year bond yields, which move inversely to its price, jumped 3-1/2 basis points to 0.384 percent, the yield on 30-year note also climbed nearly 3-1/2 basis points to 1.023 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at -0.644 percent.
The Japanese government 10-year bond yield plunged on the first trading day of the week following slower rate of growth in the country’s retail sales for the month of September, albeit meeting market expectations. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped nearly 6 basis points to 0.111 percent, the yield on the long-term 30-year note plunged 12 basis points to 0.864 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.119 percent
The Australian government bonds jumped across the curve during Asian session amid a silent trading session that witnessed data of little economic significance ahead of the country’s consumer price inflation (CPI) data for the third quarter of this year, scheduled to be released on October 31 by 00:30GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 4 basis points to 2.572 percent, the yield on the long-term 30-year bond slumped 3 basis points to 3.079 percent and the yield on short-term 2-year traded nearly 2 basis points lower at 1.982 percent.
