Market Roundup
- Philippine Central Bank Governor says we will continue to monitor domestic utility prices and global economic activity
- Philippine Central Bank Governor says October inflation "in line with our view that inflation will be manageable over the policy horizon and slowly rise to within target in 2017-18"
- China Central Bank drains a net 104.1 bln yuan for the week via open market operations, versus a net 595 bln yuan injection last week
- PBOC sets yuan mid-point at 6.7514 / dollar vs last close 6.7625
- RBA: Higher commodity prices mean risks to global inflation more balanced than for some time
- RBA: Near-term risks to china economy have diminished, rising debt a longer term threat
- RBA: revised data suggests non-mining investment has been on upward trend for past few years
- Australia Q3 retail trade decreases to -0.1 % (forecast 0.4 %) vs previous 0.4 %
- Australia Sep retail sales mm* increase to 0.6 % (forecast 0.4 %) vs previous 0.4 %
Economic Data Ahead
- (0445 ET/0845 GMT) Italy Markit/ADACI Services PMI
- (0450 ET/0850 GMT) France Markit Services PMI
- (0450 ET/0850 GMT) France Markit Comp PMI
- (0455 ET/0855 GMT) Germany Markit Services PMI
- (0455 ET/0855 GMT)Germany Markit Comp Final PMI
- (0500 ET/0900 GMT) Eurozone Markit Services Final PMI
- (0500 ET/0900 GMT) Eurozone Markit Comp Final PMI
- (0600 ET/1000 GMT) Eurozone Producer Prices MM
- (0600 ET/1000 GMT) Eurozone Producer Prices YY
- (0800 ET/1200 GMT) Brazil Markit Services PMI
- (0800 ET/1200 GMT) Brazil Markit Composite PMI
Key Events Ahead
- (0845 ET/1245 GMT) Atlanta Fed President Dennis Lockhart speech
- (0900 ET/1300 GMT) Federal Reserve Board Governor Lael Brainard speech
FX Beat
DXY: The dollar steadied against the euro and the yen ahead of the U.S. non-farm payrolls report, but remained defensive to concerns over a tightening U.S. presidential election race. The greenback against a basket of currencies trades 0.15 percent up at 97.29, pulling away from a more than 3-week low of 97.08 hit in the previous session, but was on track to fall about 1.2 percent this week.
EUR/USD: The euro declined, after rising to a more than 3-week high on Thursday, as the dollar recovered some ground against its major peers ahead of the U.S. non-farm payrolls report due later in the day. The markets paid little attention to the Fed's policy decision earlier in the week as focus remained on the Nov. 8 U.S. presidential election. However, today's U.S. non-farm payrolls report could influence expectations of a December Fed rate hike. The European currency trades 0.1 percent lower at 1.1093, having pulled back from a high of 1.1126 touched the previous day, its highest since Oct. 11, but was set for a 1 percent weekly gain. Markets attention will also remain on Eurozone's services PMI report and producer price data ahead of the U.S. employment data. Immediate resistance is located at 1.1130, a break above could take it till 1.1180. On the downside, support is seen at 1.1066 (5-DMA), a break below could drag it near 1.1000.
USD/JPY: The dollar steadied around the 103.00 handle, after slumping to a 1-month low in the previous session on increasing worries over a tightening U.S. presidential election race. The major has fallen 1.6 percent this week after recent polls showed Donald Trump was closing the gap with Hillary Clinton following the re-emergence of a controversy over Clinton's private email server. Investors now have shifted their focus on U.S. non-farm payroll report, which is expected to show that 175,000 jobs were added in October from 156,000 in September. A positive employment report is likely to increase expectations of a December U.S. interest rate hike, which could strengthen the U.S. yields and supports the greenback. The dollar trades 0.1 percent up at 103.05, having recovered from a low of 102.55 struck on Thursday. The major will continue to track board based market sentiment, ahead of series of the U.S. macro - fundamentals. Immediate resistance is located at 103.45, a break above targets 103.95 (20-DMA). On the downside, support is seen at 102.60, a break below could take it near 102.00.
GBP/USD: Sterling edged up, after rising more than 1 percent overnight to a 4-week peak following England's High Court ruling that the government required parliamentary approval to trigger procedures to leave the European Union. Moreover, the Bank of England withdrew plans to cut interest rates on Thursday and raised its growth and inflation forecasts for 2017 sharply due to the fall in the currency since Brexit vote. Sterling trades up at 1.2463, hovering towards a high of 1.2494 hit in the previous session. In absence of macro fundamental drivers from the UK docket, the major will be driven by the overall market, ahead of U.S. economic data releases. Immediate resistance is located at 1.2500, a break above could take it near 1.2600. On the downside, support is seen at 1.2342 (5-DMA), a break below targets 1.2300. Against the euro, the pound trades 0.1 percent up at 89.00 pence, having hit a high of 88.59 pence the day before, its highest since Oct. 7.
AUD/USD: The Australian dollar retreated after rising to a 9-day high on slightly upbeat Australia's retail sales, which rose 0.6 percent in September from 0.4 percent in August. The weakness came in after Reserve Bank of Australia's quarterly monetary policy statement warned over rising housing market risks and its negative economic consequences. The central bank kept its forecasts for both growth and inflation unchanged from its August outlook but saw the economy expanding by 2.5-3.5 percent in 2017, while core inflation is expected to remain steady at 1.5 percent, before rising to 2 percent by end-2018. The Aussie trades flat at 0.7680, having touched a high of 0.7697, it’s highest since Oct. 26 and was set to gain more than 1 percent so far this week, its best weekly performance since Sept.23. Investors will continue to digest headlines from the RBA Monetary Policy Statement, ahead of U.S. economic data due later in the day. Immediate support is seen at 0.7656 (5-DMA), a break below could drag it near 0.7625 (20-DMA). On the upside, resistance is located at 0.7700, a break above targets 0.7730.
NZD/USD: The New Zealand dollar eased, pulling away from a 6-week high hit in the previous session, as ongoing U.S. presidential election worries triggered a renewed bout of risk aversion across the markets. However, the major remained above the 0.7300 handle and was up 2 percent this week, recording its best weekly performance in more than 3-months. The pair has largely gained on the back of U.S. dollar weakness and strong domestic economic data in this week. Moreover, the RBNZ is expected to ease at next week's policy meeting as it looks to balance a rising currency and stoke inflationary pressures. The Kiwi trades 0.4 percent lower at 0.7309, after rising to a high of 0.7340 on Thursday, its strongest since Sept. 22. Investors will continue to track overall markets sentiment, ahead of series of U.S. economic data. Immediate resistance is located at 0.7350, a break above targets 0.7400. On the downside, support is seen at 0.7254 (5-DMA), a break below could drag it near 0.7200.
Equities Recap
Asian shares tumbled and the dollar nursed losses as investors awaited U.S. nonfarm payroll data due later, amid growing uncertainty about the outcome of the U.S. presidential election.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4 percent and was set for a loss of 1.6 percent for the week.
Tokyo's Nikkei slumped 1.76 percent at 17,134.68 points, Australia's S&P/ASX 200 index fell 0.90 percent to 5,178.60 points and South Korea's KOSPI was trading 0.08 percent lower at 1,980.60 points.
Shanghai composite index declined 0.1 percent at 3,125.86 points, while CSI300 index was trading 0.3 percent lower at 3,354.60 points.
Hong Kong’s Hang Seng was trading 0.06 percent down at 22,670.92 points. Taiwan shares ended flat at 9,068.15 points.
Commodities Recap
Crude oil prices edged up, after five consecutive days of decline triggered by worries over the ability of producers to coordinate output cuts and a rise in U.S. crude inventories. International benchmark Brent crude was trading 0.4 percent higher at $46.46 per barrel by 0355 GMT, having hit more than 1-month low of $46.02 in the previous session. U.S. West Texas Intermediate crude gained 0.3 percent at $44.76 a barrel, pulling away from a low of $44.40 touched on Thursday, its lowest since Sept 28.
Gold prices declined below $1,300 an ounce mark, as the dollar steadied ahead of the U.S. wage growth numbers and non-farm payrolls report due later in the day. Spot gold fell 0.3 percent to $1,298.32 an ounce at 0404 GMT, pulling away from a high of $1,307.89 hit on Wednesday, it’s highest since Oct 4. U.S. gold futures were up about 0.1 percent at $1,304.30 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.8046 percent lower by 0.007 bps, while 5-year was 0.003 bps down at 1.2597 percent.
The Australian government bonds slumped as the Reserve Bank of Australia kept its economic growth and inflation forecasts virtually unchanged in its November Monetary Policy Statement (SoMP), signalling no near-term rate cut. The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.346 percent, the yield on 15-year note also climbed 4 basis points to 2.717 percent and the yield on short-term 2-year bounced 2 basis points to 1.656 percent.
The New Zealand government bonds closed mixed ahead of the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, which is scheduled to be held on Wednesday. The yield on the benchmark 10-year bond fell 1 basis point to 2.785 percent, the yield on 5-year note ended nearly 5 basis points higher at 2.323 percent and the yield on short-term 2-year note climbed 3 basis points to 2.105 percent.
Canadian government bond prices were lower across the yield curve, with the 2-year price down 0.5 of a Canadian cent to yield 0.548 percent and the benchmark 10-year falling 12 Canadian cents to yield 1.198 percent. The curve steepened as the spread between the 2-year and 10-year yields widened by 1 basis point to 65 basis points, indicating underperformance for longer-dated bonds. The spread touched its widest in 4-months at 66 basis points.
