Market Roundup
- BoJ likely to cut FY’17/18 CPI forecast in next qtrly report to 1% zone from 1.7% in last, to push back on timing of achieving 2% target – Sankei.
- Japan Sept outstanding bank loans +2.2% y/y, steady rise continuing, total Y502.017 trln, Aug +2.0%, July +2.1%.
- China Sept trade surplus $41.99 bln, $53 bln forecast, exports -10% y/y, imports -1.9%, +3% and +1% forecast, big miss and EM risk-off.
- China Sept trade surplus CNY278.35 bln, exports -5.6% y/y, imports +2.2%, GAC sees trade facing difficulties but pressure on exports to ease in Q4.
- China Sept, Jan-Sept commodities imports see hefty gains y/y.
- China NRDC approves 23 fixed-asset investment projects in Sept, CNY319.7 bln.
- UK Sept RICS house price balance up to +17, +14 forecast, Aug +13, new home buyer enquiries up for first time since Feb, expectations strongest since March.
- ECB Mersch – Raising inflation target now could damage ECB credibility.
- Fitch – Housing slump tops China as Australia’s number 1 credit risk.
- Suddenly coal prices are booming. Will the entire country be next? – The Age.
- New Zealand Oct ANZ/RM consumer confidence 122.9, Sept 121.0, highest since mid ’15.
- New Zealand Sept PMI +2.5 points to 57.7, the highest level since January.
- New Zealand govt end-June net debt 24.6% of GDP, 24.9% forecast, net operating surplus
- New Zealand $1.83 bln or 0.7% of GDP, next economic-fiscal update December 8.
- New Zealand Sept REINZ median house prices +3% m/m, +7% y/y.
- New Zealand Sept food price index -0.9% m/m, +0.1% y/y; job adverts +0.3%, +13.5%.
Economic Data Ahead
- (0830 ET/1230 GMT) United States Sep import/export prices, +0.2%, unch m/m forecast; last -0.2%, -0.8%.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 254k forecast; last 249k.
- (1400 ET/1800 GMT) United States Sep Treasury budget, $25.0 bln surplus forecast; last $90.9 bln surplus.
Key Events Ahead
- N/A Brussels banking union conference, various speakers.
- N/A Sweden SEK500 mln each 0.125/1.0% 2019/25 inflation-linked bond auctions.
- (0400 ET/0800 GMT) Riksbank Gov Ingves speaks at Karlstad University.
- (0500 ET/0900 GMT) Italy E3.5-4/2-2.5/1.5-2 bln 0.05/0.65/1.65% 2019/23/32 BTP auctions.
- (0500 ET/0900 GMT) Ireland E1 bln 1.0% 2026 IGB auction.
- (0600 ET/1000 GMT) ECB/Slovenia CB Jazbec speaks at Ljubljana ceremony.
- (0600 ET/1000 GMT) NZ Treasury FY’15-16 financial statement.
- (1215 ET/1615 GMT) Philly Fed Harker (’17 voter, hawk) speaks in Philadelphia.
- (2000 ET/0000 GMT) Minny Fed Kashkari (’17 voter, dove) speaks at Missoula, MT town hall.
FX Beat
DXY: The dollar edged down versus the euro and the yen as weak Chinese trade data set off a fresh bout of risk aversion. The greenback against a basket of currencies traded flat at 97.97, having touched a fresh 7-month high of 98.12 earlier in the session.
EUR/USD: The euro retreated from a near 2-1/2-month low on the back of the FOMC minutes that were overall balanced on a divided Fed on when to hike interest rates. The major initially hit a low of 1.1001 as markets see a high probability of Federal Reserve raising rates in December. The European currency trades 0.1 percent up at 1.1017, attempting to sustain gains above the 1.1000 handle. Markets now await German final CPI reading, U.S. initial jobless claims and Fed speeches for further cues on the major. Immediate resistance is located at 1.1050, break above could take it till 1.1080 /1.1100. On the downside, support is seen at 1.1000, a break below could drag it till 1.1080.
USD/JPY: The dollar eased, pulling away from an 11-week high hit earlier in the session, as a sharp decline in Chinese trade data triggered a fresh bout of risk aversion. The Japanese yen recovered most of the lost ground from U.S. interest rate hike expectation led- slump, as investors rushed towards safe-haven assets amid risk-off market sentiment. The major trades 0.4 percent lower at 103.78, retreating from a high of 104.63, it’s strongest since July 29. Investor’s attention now remains on U.S. unemployment claim, import/export price index figures and Fed official speech for further insights on the U.S. monetary policy outlook. Immediate resistance is located at 104.90, a break above targets 105.50. On the downside, support is seen at 103.20, a break below could take it near 102.70.
GBP/USD: Sterling eased after rising by as much as 1.5 percent in the previous session on news that PM Theresa May would allow lawmakers some scrutiny of the Brexit process. On Wednesday, the major rose above the 1.2300 handle from a low of 1.2104, however, it trimmed gains to close out at 1.2201. Sterling trades 0.1 percent down at 1.2186, as investors seem to have digested May’s acceptance of a parliamentary vote on Brexit negotiations. Markets will continue to track sentiments surrounding Brexit developments, ahead of BoE Governor Carney's speech. Immediate resistance is located at 1.2259 (5-DMA), a break above could take it near 1.2300. On the downside, support is seen at 1.2100, break below targets 1.1900. Against the euro, the pound trades 0.3 percent lower at 90.37 pence, pulling away from a high of 89.67 pence hit in the prior session.
AUD/USD: The Australian dollar slumped to a 3-1/2 week low as data showing a sharp decline in Chinese exports triggered a broader risk-off sentiment. However, it trimmed losses as Australia's consumer inflation expectations in October which rose to 3.7 percent from 3.3 percent, provided some support to the major. The recovery seems to be fragile as downbeat China data-led risk-aversion combined with lower oil prices continued to weaken the bid tone around the Aussie. The pair trades 0.3 percent lower to 0.7539, having touched an early low of 0.7518, its lowest since Sept 19. Markets will continue track overall market sentiment, ahead of U.S. economic data and FOMC member Hacker's speech. Immediate support is seen at 0.7500, a break below could drag it till 0.7480. On the upside, resistance is located at 0.7580, a break above targets 0.7600.
NZD/USD: The New Zealand dollar tumbled to fresh 2-1/2 month lows, as a contraction in China’s trade raised concerns about the health of world's second largest economy. Moreover, the divergent monetary policy outlooks between the Fed and RBNZ and ongoing weakness in oil prices, continue to put downward pressure on the major. The Kiwi trades 0.1 percent lower at 0.7052, having touched an early low of 0.7036, its weakest since July 27. Investors will continue to digest downbeat Chinese trade data, ahead of U.S. unemployment claims and EIA oil inventory report for further momentum in the pair. Immediate resistance is located at 0.7093 (5-DMA), break above targets 0.7120/ 0.7150. On the downside, support is seen at 0.7010, a break below could drag it lower 0.7000.
Equities Recap
Asian shared tumbled to 3-week lows after the sharper-than-expected decline in China's September trade data, raised doubts about the health of the world's second largest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, its lowest since Sept. 19.
Tokyo's Nikkei slumped 0.39 percent at 16,774.24 points, Australia's S&P/ASX 200 index lost 0.68 percent at 5,437.30 points and South Korea's KOSPI tumbled 0.6 percent at 2,020.85 points.
Shanghai composite index edged up 0.07 percent at 3,060.59 points, while CSI300 index traded 0.06 percent up at 3,302.30 points.
Hong Kong’s Hang Seng was trading 1.29 percent down at 23,104.00 points. Taiwan shares declined 0.4 percent to 9,219.17 points.
Commodities Recap
Crude oil prices declined, extending losses for the third consecutive session after OPEC stated that its production had increased to the highest level in last eight years and following reports that showed a rise in U.S. crude stockpiles. International benchmark Brent crude was trading 0.5 percent down at $51.40 per barrel at 0408 GMT, hovering towards a low of $51.28 hit earlier in the week. U.S. West Texas Intermediate crude declined 0.45 percent at $49.76 a barrel, pulling further away from a 4-month high of 51.57 hit on Monday.
Gold prices edged up, as the greenback eased after rising to a near 7-month high on expectations that the U.S. Federal Reserve might raise interest rates in December. Spot gold rose 0.45 percent to $1,260.45 an ounce by 0413 GMT, extending recovery from a 4-month low of 1,241.27 hit on Friday. U.S. gold futures were up 0.1 percent at $1,255 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7446 percent lower by 0.033 bps, while 5-year was 0.034 bps down at 1.2700 percent.
Australian government bond futures were higher, with the 3-year bond contract up 5 ticks at 98.34, while the 10-year contract rose 6.5 ticks to 97.785.
New Zealand government bonds rose, sending yields down about 5 ticks at the long-end of the curve.
Canadian government bond prices were little changed across the yield curve. The 2-year was half a cent higher on the day to yield 0.601 percent and the benchmark 10-year added 4 Canadian cents to yield 1.194 percent, after earlier hitting its highest in four weeks at 1.267 percent.
