Market Roundup
- China Oct trade surplus bln, $61.64 bln, $64.75 bln eyed, exports -3.6% y/y, imports -16% CNY basis, USD-basis -6.9%, -18.8%, -3%, -16% eyed.
- China end-Oct FX reserves $3.5255 trln, 1st gain in 6-mos, Sept $3.514 trln.
- Japan Sept total cash earnings +0.6% y/y, real wages +0.5%, overtime pay +1.4%, '15 summer bonues -2.8%, biggest decline since '09.
- Japan end-Oct FX reserves $1.244 trln, end-Sept, $1.248 trln.
- Australia Oct overall job ads +0.4% m/m, newspapers +3%, internet +0.3%.
- Dutch Sept manuf output +0.4 pct m/m after -1.6 pct in Aug CBS
- Malaysia's September factory output up 5.1 pct from yr ago vs Reuters poll 2.9 pct
- Specs boost USD bets latest week, highest since mid-Aug, EUR net shorts jump, JPY too, GBP longs cut, CHF net buys to net sales -CFTC
- Big funds cautiously raise allocations to cheap emerging stocks - Reuters.
- Deutsche Bank marketing 3/5-yr samurais via DB, Daiwa.
- SIC Sheng - China CPI likely to rise 1.4% next year - Shanghai Sec News.
- SF Fed Williams - Makes sense to gradually hike interest rates, would send positive signal, confident inflation to rise to 2%, GDP +2% H2 '15, in '16.
- Fed Gov Brainard - Caution warranted on global risks - Reuters.
- Ex-Fed Bernanke - Warns of outside threats in interest rate decision -GLOBML.
- US Sept consumer credit record $28.92 bln, $17.5bln eyed, Aug rev $16.04 bln.
- Bank of England may not raise interest rates till '17 - Economist.
- UK CBI cuts '15 and '16 growth forecasts to 2.4%, 2.6% (-0.2% each) -Reuters.
- ECB/BdF Villeroy - Risks of too-low inflation, weaker growth, still some room for maneuver monetary policy-wise - Handelsblatt.
- ECB/Buba Weidmann - Won't tighten policy for foreseeable future, Germany balanced budget not at risk due to refugees - Reuters.
- Senior Chinese official: 6.5 pct annual economic growth rate for 2016 to 2020 is a bottom line not target
- Senior Chinese official: Fiscal reform plans will be adjusted according to conditions
- (0200 ET/ 0700 GMT) Germany Sep trade balance, E20.0 bln surplus eyed; last E19.6 bln surplus.
- (0430 ET/ 0930 GMT) EZ Nov Sentix index, 13.2 eyed; last 11.7.
- (1000 ET/ 1500 GMT) US Nov employment trends index; last 128.8.
- N/A EuroGroup meeting in Brussels, latest OECD economic outlook.
- N/A Paris OECD New World Forum, various speakers (till Nov 10).
- N/A Germany E2 bln 6-month Bubill auction.
- N/A France E3.4-3.8/1.3-1.7/1.4-1.8 bln 3/6/12-month BTF auctions.
- (1230 ET/1730 GMT) Boston Fed Rosengren speech in Portsmouth.
USD/JPY: Strong US NFP readings strongly anchored December rate hike bets, boosting USD across the board. The dollar index soared to nearly seven-month highs after the robust U.S. employment data. Against its Japanese counterpart the dollar added 0.1 percent to 123.25, after rising as high as 123.35 earlier in the Asian session, its highest since late August. From a technical perspective, on the daily charts the pair has broken above the channel top, which had been capping gains since Sept month. USD/JPY is trading above 123.00 handle, bullish moves to continue. The pair is currently at 123.37 and is on track to test 123.50 - August 21 high. Buy-dip strategies are recommended. Initial technical resistance is seen at 123.50 Aug 21 high and 123.14 retracement low post-US payrolls report would be support on the downside.
AUD/USD: The Australian and New Zealand dollars fell to one-month lows on Monday. The Aussie dollar shed 1.3 percent last week. Disappointing Chinese trade figures released over the weekend also weighed on the Aussie today. AUD/USD opened Monday at 0.7040 and fell as far as 0.7021 at one point, has recovered slightly and is currently at 0.7059. Key support is seen at $0.7008 (76.4 percent Fibo of the $0.6892-$0.7382 climb). Any extension of this decline is expected to reduce the chance of another Reserve Bank of Australia interest rate cut.
NZD/USD: The New Zealand dollar was also down against the Greenback at $0.6520, having briefly dipped to a five-week trough below 65 cents after the U.S. labour report. It has lost four cents since mid-October, in part due to falling prices of dairy products, the nation's largest export earner. The pair is currently trading at 0.6558, with immediate resistance at 0.6566 (session high Nov 11) and support on the downside at 0.6499 (Nov 6 lows).
AUD/NZD: The Aussie held at NZ$1.0770, having bounced three cents from a low touched last week. Earlier in the session, Australian job ads posted their third month of growth in October, an encouraging sign that demand for labour is holding up. Technicals on daily charts point lower. Pair has broken below 200 DMA at 1.0763 and is currently trading at 1.0759. Converging 10&20 DMAs at 1.0690 levels are strong support on the downside. 1.0796 (Nov 3rd high) is initial resistance on the upside ahead of 1.0849 (Nov 6th high).
GBP/USD: Cable has declined till 1.5027 after release of better than expected US Non Farm payroll. It is currently trading around 1.50655. The pair has taken support near trend line support around 1.5016 (trend line joining 1.5160 and 1.5105) and slightly recovered from that level. On the downside any break below 1.5016 will drag the pair down till 1.5000/1.4950 in short term. The pair's minor resistance is around 1.5090 and break above targets 1.5140/1.5180. Bias still down on continuing USD strength into December FOMC. EUR/GBP modestly bid in Asia, 0.7126 to 0.7146.
Equities Recap
Asian stocks were mixed, with Japanese and Chinese shares up, while S.Korean stocks down.
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.8 percent, while Australian shares lost 1.5 percent on lower commodity prices. South Korea's Kospi dropped 0.3 percent and Hong Kong's Hang Seng fell 0.2 percent. Australia's S&P/ASX 200 index unofficially closed down 1.65 pct at 5,129.10 points.
The gainers included Tokyo's Nikkei which rose 1.9 percent after the yen weakened significantly against the dollar.
Shanghai shares rose 1.8 percent after securities regulators said it would allow initial public offerings to resume after a July halt.
Commodities Recap
Brent crude futures edged up on Monday, recovering from a three-day decline, but a firm dollar after robust U.S. employment data fuelled bets for an interest rate hike before the year is over kept a lid on prices.
Brent crude for December delivery was up 40 cents at $47.82 a barrel by 0407 GMT, after falling more than 1 percent on Friday.
December U.S. crude gained 37 cents to $44.66 a barrel after touching a 1-1/2-week low of $43.83.
Gold ticked up after an eight-day losing streak on Monday, but languished near its lowest in three months as surging U.S. nonfarm payrolls boosted expectations of a December rate hike in the United States. Spot gold rose 0.5 percent to $1,093.20 an ounce by 0331 GMT on short covering.
Among other precious metals, platinum fell to a one-month low of $930.50 an ounce. Palladium slid nearly 1 percent, and was trading near a six-week low.
Treasuries Recap
Australian government bond futures were down sharply near three-month lows, with the three-year bond contract off 10 ticks at 97.950. The 10-year contract skidded 10.5 ticks to 97.0750, while the 20-year contract slipped 8.5 ticks to 96.5450.
The yield on the Australian two-year bond climbed to 1.93 percent, an attractive rate compared with the near zero rates of Japan and negative yields of Germany and France.
New Zealand government bonds fell, sending yields as much as 6 basis points higher at the long end of the curve.
JGB prices ended the morning session lower, sending yields up by 1bp to 2bp from last Friday in the 5-yr and longer zone. JGB opened weaker on a sharp rise in US TSY yields last Friday after stronger-than-expected US jobs data
At midday, yields on the current 5-yr JGBs are up 1bp from last Friday at 0.05%, while the 10s are up 2bp at 0.335%, vs 0.34% earlier. In the super-long zone, the 20s are up 1.5bp at 1.095%, vs 1.10% earlier, while the 30s are up 2bp at 1.39%, vs 1.395% earlier, ahead of Thursday's monthly JPY800bn 30-yr JGB auction to re-open the current issue.
