Market Roundup
- CFTC IMM CTA data – Spec USD net longs at 9 ½-month high, JPY net longs down to 31.9k, lowest since early June, EUR net shorts 129.3k, GBP 89.8k.
- MSCI announces latest changes to US, China, emerging market indices, 55 added, 34 deleted from all-world index.
- SF Fed Williams – US economy driven primarily domestically, China not bid driver of business investment, open and free trade best – Reuters.
- Richmond Fed Lacker – Fiscal stimulus boosts case for US rate hikes
- China PBOC to continue with net FX sales in October – Xinhua.
- PBOC fixes CNY at 6.8495 vs USD, spot CNY (CNH=D3) 6.8698, 8-year CNY low.
- China FinMinistry – France to encourage Panda bonds – Reuters.
- RBA November meeting minutes – Risks broadly balanced, inflation returning to “normal”, growth nearing potential, rising AUD could complicate transition, steady policy appropriate, steadier China reduced downside risks – Reuters.
- IMF – Australia economy resilient, more government spending needed.
- Statistics NZ halts economic data releases after the quake.
- New Zealand Oct PSI +2.1 points to 56.3, strong tourism, local spending drivers.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Q3 GDP – flash, +0.3% q/q, +1.8% y/y forecast; last +0.4%, +3.1%.
- (0200 ET/0700 GMT) Norway Q3 GDP – all/mainland, unch and +0.3% q/q forecast; last unch, +0.4%.
- (0245 ET/0745 GMT) France Oct HICP – final, +0.1% m/m, +0.5% y/y forecast; flash -0.2%, +0.5%.
- (0300 ET/0800 GMT) Spain Oct CPI; last unch m/m, +0.2% y/y.
- (0300 ET/0800 GMT) Spain Oct HICP; last +0.8% m/m, +0.5% y/y.
- (0330 ET/0830 GMT) Sweden Oct CPI, +0.3% m/m, +1.2% y/y forecast; last +0.2%, +0.9%.
- (0330 ET/0830 GMT) Sweden Oct CPIF, +0.4% m/m, +1.4% y/y forecast; last +0.2%, +1.2%.
- (0330 ET/0830 GMT) Sweden Q3 capacity utilization; last -0.2% q/q.
- (0400 ET/0900 GMT) Italy Q3 GDP – prelim, +0.2% q/q, +0.8% y/y forecast; last unch, +0.8%.
- (0430 ET/0930 GMT) Great Britain Oct CPI, +0.3% m/m, +1.1% y/y forecast; last +0.2%, +1.0%.
- (0430 ET/0930 GMT) Great Britain Oct – core, +0.2% m/m, +1.4% y/y forecast; last +0.2%, +1.5%.
- (0430 ET/0930 GMT) Great Britain Oct RPI, +0.1% m/m, +2.2% y/y forecast; last +0.2%, +2.0%, index 264.9.
- (0430 ET/0930 GMT) Great Britain Oct RPIX; last +0.2% m/m, +2.2% y/y.
- (0500 ET/1000 GMT) Eurozone Q3 GDP – flash, +0.3% q/q, +1.6% y/y forecast; last +0.3%, +1.6%.
- (0500 ET/1000 GMT) Eurozone Sep trade balance, E22.5 bln surplus forecast; last E18.4 bln surplus.
- (0500 ET/1000 GMT) Germany Nov ZEW economic sentiment index, 8.1 forecast; last 6.2.
- (0500 ET/1000 GMT) Germany Nov ZEW current conditions index, 61.5 forecast; last 59.5.
- (0730 ET/1330 GMT) United States Oct retail sales/ex-autos, +0.6%, +0.5% m/m forecast; last +0.6%, +0.5%.
- (0730 ET/1330 GMT) United States Nov NY Fed Empire State manufacturing index, -2.5 forecast; last -6.8.
- (0730 ET/1330 GMT) United States Oct import/export prices, +0.4%, +0.2% m/m forecast; last +0.1%, +0.3%.
- (1000 ET/1500 GMT) United States Sep business inventories, +0.2% m/m forecast; last +0.2%.
Key Events Ahead
- (0315 ET/0815 GMT) RBA Gov Lowe speaks at Melbourne CEDA annual dinner.
- N/A EuroFinance Week in Frankfurt, ECB Lautenschlaeger to speak today.
- (0430 ET/0930 GMT) ECB zero% 7-day refi, E30 bln allotment forecast, E31.45 bln maturing.
- (0440 ET/0940 GMT) Spain E4-5 bln 6 and 12-month treasury bill auctions.
- (0500 ET/1000 GMT) BoE Gov Carney, Shafik, Saunders Treasury Committee testimony.
- (0600 ET/1100 GMT) NZ Fonterra dairy auction, GDT price index.
- (0730 ET/1230 GMT) Boston Fed Rosengrean speaks in Portland, Maine.
- (0905 ET/1405 GMT) Fed Gov Tarullo speaks in Washington, DC.
- (1330 ET/1830 GMT) FOMC ViceChair Fischer speaks at Washington, DC Brookings Institute.
- (1330 ET/1830 GMT) Dallas Fed Kaplan speaks in Dallas.
FX Beat
DXY: The dollar eased versus its major peers, but traded within the range of multi-month highs. The greenback against a basket of currencies trades 0.1 percent down at 99.88, having touched a high of 100.22 in the previous session, its highest since Dec. 3.
EUR/USD: The euro edged up, after declining to an 11-month low on Monday, as the dollar eased on moderate retreat in the Treasury yields. The 10-year U.S. bond yield has advanced about 0.40 percentage point to 10-month highs, since Donald Trump's victory at the U.S. presidential elections last week, as his policies of major fiscal spending and trade protectionism are seen likely to boost inflation. The European currency trades 0.1 percent up at 1.0751, pulling away from a low of 1.0709 hit in the previous session, its lowest level since December. Against other European currencies, the euro weakened on the back of growing concerns that Italian Prime Minister Matteo Renzi may not hold office if he loses a referendum on constitutional reform on Dec. 4. Markets now await German GDP, Eurozone GDP, and U.S. Retail Sales figures. FxWirePro's Hourly Euro Strength Index stood Neutral at -52.35 by 0400 GMT (lower than the benchmark of -75 for bearish trend). Immediate resistance is located at 1.0828 (5-DMA) a break above could take it near 1.0900. On the downside, support is seen at 1.0709 (Previous Session Low), a break below could drag it lower 1.0700.
USD/JPY: The dollar nudged down but was within the range of a 5-month high struck on Monday, following a retreat in the Treasury yields. The major hit an intra-day low of 107.79, however, attempted a minor recovery to trade above the 108.00 handle. The major trades 0.2 percent down at 108.19, having hit a peak of 108.54 in the previous session, its strongest level since Jun. 3 and was still up 6.7 percent from a low of 101.19 touched last Wednesday. The pair is likely to run into a fresh bout of profit-taking, as markets shift their focus on U.S. macro fundamentals, including retail sales data, import/export price index and speeches from Federal Reserve officials'. FxWirePro's Hourly Yen Strength Index remained Neutral at -28.44 by 0400 GMT. Immediate resistance is located at 108.60, a break above targets 109.00. On the downside, support is seen at 107.13 (5-DMA, a break below could take it lower 107.00.
GBP/USD: Sterling steadied after declining below the 1.2500 handle in the previous session on a stronger dollar boosted by higher U.S. bond yields. On Monday, the major tumbled more than 1 percent to a low of 1.2444, but still around 2.5 percent up from two weeks ago. Markets will closely watch the UK's consumer price index (CPI), which is expected to edged up 1.1 percent y/y in October from the previous month’s print of 1.0 percent, while core figure is seen slowing to 1.4 percent from 1.5 percent. Sterling trades flat at 1.2485, having hit an intra-day high of 1.2528. FxWirePro's Hourly Sterling Strength Index stood at 83.32 (Bias Slightly Bullish) by 0500 GMT. Immediate resistance is located at 1.2600, a break above could take it near 1.2700. On the downside, support is seen at 1.2400, a break below targets 1.2342 (20-DMA). Against the euro, the pound trades 0.2 percent lower at 86.09 pence, having hit a high of 85.66 pence on Friday, its highest since Sept. 23.
AUD/USD: The Australian dollar retreated from a 1-month low, following the release of Reserve Bank of Australia's latest policy meeting minutes, which gave an upbeat assessment of the economy. The RBA minutes showed that risks around inflation forecast were largely balanced and the economy continued to grow at a moderate pace. Moreover, rising commodity prices also kept the bid tone around the major intact. The Aussie trades 0.1 percent up at 0.7563, having hit an early high of 0.7581. It hit a low of 0.7523 on Monday, the lowest since Oct. 13 and has fallen 2.5 percent since Trump won the election last week. FxWirePro's Hourly Aussie Strength Index stood Neutral at - 21.66 by 0500 GMT (lower than the benchmark of -75 for bearish trend). Investors focus now remains on RBA Governor Philip Lowe's speech in Melbourne, ahead of U.S. retail sales data due later in the day. Immediate support is seen at 0.7523 (Previous Session Low), a break below could drag it below 0.7500. On the upside, resistance is located at 0.7600, a break above targets 0.7634 (20-DMA).
NZD/USD: The New Zealand dollar slumped, extending losses for the fifth consecutive session, as it failed to sustain its recovery mode despite a revival in risk sentiment. On Monday, the major tumbled to a 1-month low of 0.7070, as investors sent the greenback and bond yields soaring, however, it closed above the 0.7100 handle as oil prices staged a solid rebound. Moreover, the impact of several earthquakes also weakened the bid tone around the pair. The Kiwi trades 0.1 percent down at 0.7110, having hit an early high of 0.7144. FxWirePro's Hourly Kiwi Strength Index was Highly Bullish at -100.13 by 0500 GMT. Markets now eye U.S. retail sales, Fed’s Rosengren speech and Global Dairy Trade price index data for fresh impetus on the pair. Immediate resistance is located at 0.7166 (5-DMA), a break above targets 0.7200. On the downside, support is seen at 0.7070 (Previous Session Low), a break below could drag it near 0.7000.
Equities Recap
Asian shares declined, as expectations of fiscally expansionary policies under Donald Trump's presidency sent Treasury yields higher.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat in early trade, after having declined nearly 5 percent since Donald Trump's victory at the U.S. presidential elections last week.
Tokyo's Nikkei was 0.06 percent flat at 17,662.89 points, Australia's S&P/ASX 200 index declined 0.33 percent to 5,328.10 points and South Korea's KOSPI was trading 0.12 percent lower at 1,972.08 points.
Shanghai composite index declined 0.27 percent to 3,201.82 points, while CSI300 index was trading 0.20 percent lower at 3,423.34 points.
Hong Kong’s Hang Seng was trading 0.39 percent up at 22,310.81 points. Taiwan shares shed 0.1 percent at 8,931.43 points.
Commodities Recap
Crude oil prices rose, moving further away from multi-week lows hit on Monday, boosted by renewed prospects that OPEC will deliver production cuts and on expectations of declining U.S. shale output. International benchmark Brent crude was trading 0.9 percent higher at $45.15 per barrel by 0359 GMT, putting further distance between a 3-month low of $43.55 hit on Monday. U.S. West Texas Intermediate crude rose 1.05 percent at $44.14 a barrel, having hit a low of $42.18 in the previous session, its lowest since Aug. 11.
Gold prices steadied, after hitting its lowest in 5-1/2 months the session before, as the U.S. dollar eased across the board on profit taking. Spot gold was up 0.4 percent at $1,225.65 an ounce at 0405 GMT, having reached its weakest since June 3 at $1,211.41 an ounce in the previous session. U.S. gold futures rose 0.44 percent to $1,227.10 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.2136 percent lower by 0.008 bps, while 5-year yield was 0.002 bps up at 1.6488 percent.
The Australian government bonds traded a tad lower after the Reserve Bank of Australia in its November meeting minutes signaled no further rate cut in the coming months. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.671 percent, the yield on 15-year note jumped 3 basis points to 3.128 percent and the yield on short-term 2-year climbed 2 basis points to 1.823 percent.
The New Zealand government bonds closed marginally higher as the economy is still reeling from the impact of powerful earthquakes. The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1/2 basis point to 3.105 percent, the yield on 7-year note ended 2 basis points lower at 2.763 percent and the yield on short-term 5-year note slid 1/2 basis point to 2.488 percent.
Canadian government bond prices were lower across a steeper yield curve, with the 2-year down 8 Canadian cents to yield 0.67 percent and the benchmark 10-year falling 105 Canadian cents to yield 1.551 percent. The 2-year yield fell 5.9 basis points further below its U.S. equivalent to a spread of -33.8 basis points, its largest gap since March, as U.S. Treasuries underperformed.
