Market Roundup
- BOJ Kuroda: Large long-term debt purchases could cause problems with liquidity, but have not seen this problem so far
- BOJ Kuroda: Too early to talk about how BOJ will manage its balance sheet when it exits from QE
- Fitch - China's near-term growth prospects are further supported by continued resilience of fixed-asset investment, retail sales, and labor market
- Fitch - Continues to see tangible evidence of China's ongoing structural rebalancing
- Fitch on China - macroeconomic performance remains a rating strength despite gradual slowdown in growth
- Norway's quarterly consumer confidence at 0.3 points in Q4 vs revised -5.5 in Q3 –FNO
- Saudi Arabia Oct CPI YY decrease to 2.6 % vs previous 3.0 %
- Saudi Arabia Oct CPI MM decrease to -0.1 % vs previous 0.0 %
- Turkey Oct central government debt stock increase to 725.4 bln try vs previous 712.9 bln try
Economic Data Ahead
- (0200 ET/0700 GMT) Switzerland Trade
- (0430 ET/0930 GMT) Great Britain PSNB
- (0500 ET/1000 GMT) South Africa Unemployment
- (0600 ET/1100 GMT) Great Britain CBI Trends- Orders
- (0730 ET/1230 GMT) Brazil Current Account
- (0730 ET/1230 GMT) Brazil Foreign Direct Investment
Key Events Ahead
- (0245 ET/0745 GMT) Reserve Bank of Australia assistant governor Christopher Kent speech
FX Beat
DXY: The dollar eased across the board, as investors consolidated the gains built on expectations of increased fiscal stimulus, which could boost the U.S. economy and accelerate the pace of monetary tightening. The greenback against a basket of currencies trades lower at 100.84, pulling away from a 13-1/2 -year high of 101.48 hit on Friday. FxWirePro's Hourly Dollar Strength Index stood at 27.47 (Bias Neutral) by 0500 GMT.
EUR/USD: The euro edged up, extending previous session gains, as investors consolidated the gains built on prospects of increased fiscal stimulus and higher inflation under a Trump administration. On Monday, the major snapped a 10-day losing streak, pulling away from an 11-month low of 1.0569, as the Trump-led rally paused. The European currency traded flat at 1.0628, having touched a high of 1.0649 earlier in the session. FxWirePro's Hourly Euro Strength Index stood at -17.29 (Bias Neutral) by 0400 GMT. Markets attention now remains on U.S. existing home sales data and Eurozone's preliminary consumer confidence figures for further momentum on the pair. Immediate resistance is located at 1.0680 (7-EMA), a break above could take it over 1.0700. On the downside, support is seen at 1.0578 (Previous Session Low), a break below could drag it lower 1.0550.
USD/JPY: The dollar eased, after an earthquake with a preliminary magnitude of 7.3 and the subsequent tsunami warning in northern Japan triggered a fresh bout of risk aversion, which boosted the safe-haven yen. However, the major attempted a quick recovery to turn positive from an intra-day low of 110.26. The pair trades higher at 110.81, having hit a high of 111.36 in the previous session, it’s strongest since May 30. FxWirePro's Hourly Yen Strength Index stood at -37.26 (Bias Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the U.S. existing home sales and regional manufacturing data for further moves. Immediate resistance is located at 111.44, a break above targets 112.00. On the downside, support is seen at 110.00, a break below could take it near 109.19 (9-EMA).
GBP/USD: Sterling edged up, extending gains from the previous session as the market scrutinized Prime Minister Theresa May's latest clues on the possible outcome of Britain's exit from the European Union. On Monday, the major rose above the 1.2500 handle from a low of 1.2312 after PM indicated at Brexit transition deal. Sterling trades up at 1.2491, hovering towards a 1-week high of 1.2512 hit earlier in the session. FxWirePro's Hourly Sterling Strength Index stood at 50.80 (Bias Bullish) by 0400 GMT. Markets will closely watch UK public sector net borrowing due later in the day, ahead of British government's autumn budget statement on Wednesday. Immediate resistance is located at 1.2557, a break above could take it near 1.24600. On the downside, support is seen at 1.2435 (5-DMA), a break below targets 1.2400. Against the euro, the pound trades 0.15 percent down at 85.09 pence, after hit a high of 84.89 pence in the prior session, its highest since Sept. 16.
AUD/USD: The Australian dollar extended its recovery momentum and attempts to regain the 0.7400 handle, as the U.S dollar eased across the board. However, the major is still down four cents in the two weeks since Republican Donald Trump victory at the U.S. Presidency triggered a rise in inflation bets and Treasury yields. Moreover, gains in copper, coal and iron ore prices kept the bid tone around the pair intact. The Aussie trades 0.4 percent higher at 0.7396, pulling further away from a 5-month trough of 0.7311 touched on Monday. FxWirePro's Hourly Aussie Strength Index stood at - 16.40 (Bias Neutral) by 0500 GMT. Investors focus remains on Reserve Bank of Australia assistant governor Christopher Kent speech, ahead of the U.S. economic data due to be reported later in the day. Immediate support is seen at 0.7311 (Previous Session Low), a break below could drag it lower 0.7300. On the upside, resistance is located at 0.7436 (7-EMA), a break above targets 0.7500.
NZD/USD: The New Zealand dollar edged higher as its U.S. counterpart consolidated amid slightly improved risk-on markets sentiment. The major rapidly recovered from the New Zealand earthquake-led dip, as higher commodities prices boosted the bid tone around the Kiwi. Moreover, extension of the retreat in the U.S. dollar across the board from multi-year high also helped the ongoing recovery in the pair. The Kiwi trades 0.1 percent up at 0.7074, drifting further away from a low of 0.6985 hit in the previous session, its lowest since Jul. 26. FxWirePro's Hourly Kiwi Strength Index was at 49.01 (Bias Neutral) by 0500 GMT. Investors’ attention now shifts on Reserve Bank of New Zealand Deputy Governor Geoff Bascand speech, ahead of U.S. macro fundamental drivers. Immediate resistance is located at 0.7106 (10-DMA), a break above targets 0.7150. On the downside, support is seen at 0.7035, a break below could drag it near 0.7000.
Equities Recap
Asian shares touched 1-week highs, after Wall Street closed at a record peak, with markets undeterred by a powerful earthquake in Japan and New Zealand.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.2 percent.
Tokyo's Nikkei rose 0.38 percent at 18,174.51 points, Australia's S&P/ASX 200 index advanced 1.33 percent to 5,422.40 points and South Korea's KOSPI was trading 0.9 percent higher at 1,984.47 points.
Shanghai composite index rose 0.78 percent to 3,243.33 points, while CSI300 index was trading 0.66 percent higher at 3,463.54 points.
Hong Kong’s Hang Seng was trading 1.38 percent up at 22,668.23 points. Taiwan shares added 1.0 percent at 9,133.39 points.
Commodities Recap
Crude oil prices advanced, hitting their highest level since October as the market expect a potential output cut led by OPEC, however, a failure to agree a cut could further deteriorate the already oversupplied market by early 2017. International benchmark Brent crude was trading 0.73 percent higher at $49.36 per barrel by 0359 GMT, having touched an early high of $49.42, its highest since Oct. 31. U.S. West Texas Intermediate crude rose 0.8 percent at $48.70 a barrel, hitting a 3-week high of $48.78 earlier in the session.
Gold prices edged higher, extending previous session gains, as the U.S. dollar eased after rising to a 13 1/2-year high. Spot gold was up 0.3 percent at $1,217.39 an ounce by 0404 GMT, having gains 0.4 percent in the previous session, after three sessions of losses. U.S. gold futures rose about 0.7 percent at $1,217.80 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3191 percent down by 0.018 bps, while 5-year yield was 0.01 bps down at 1.7863 percent.
The Australian government bonds strengthened following a recovery in the United States Treasury prices. The yield on the benchmark 10-year Treasury note fell more than 3 basis points to 2.67 percent, the yield on 15-year note dipped 4-1/2 basis points to 3.06 percent and the yield on short-term 2-year slid 1-1/2 basis points to 1.80 percent.
The New Zealand government bonds closed higher as investors' risk appetite faded after reports of a 6.3 magnitude earthquake off the North Island. The yield on the benchmark 10-year bond fell 2 basis points to 3 percent, the yield on 7-year note also ended 2 basis points lower to 2.73 percent and the yield on short-term 2-year note slid 2 basis points to 2.09 percent.
Canadian government bond prices were mixed across the yield curve, with the 2-year up 0.5 Canadian cent to yield 0.674 percent and the benchmark 10-year rising 8 Canadian cents to yield 1.570 percent. The 10-year yield touched an 11-month high at 1.602 percent, on Wednesday.
