Market Roundup
- BoJ Gov Kuroda – Risks to economic outlook skewed to downside, ready to take additional measures if needed, JGB liquidity still ample – Reuters.
- Japan Oct monetary base at fresh record high, Y417.63 trln, +21.3% y/y.
- US Valeant in talks to sell unit to Japan Takeda for @$10 bln – Nikkei.
- South Korea Hanwha Chemical launches Y20 bln 3-yr samurai via MUFJ, Nomura – IFR.
- China starts credit default swap trading to lessen bond risks – Xinhua.
- US Oct auto sales 18.29 mln AR, -6% m/m despite discounts, GM -1.7%.
- NIESR - Political attacks on BoE threaten its independence – Reuters.
- Australia Sept bldg approvals -8.7% m/m, -3% forecast, -6.4% y/y, priv-sector houses +2.3%.
- RBNZ survey - Q4 1-year inflation expectations 1.29%, 2-year 1.68%.
- NZ Q3 unemployment 4.9%, 8-year low, employment +1.4%, participation 70.1%, highest in 25-years, LCI private-sector wages +0.4% q/q, +1.6% y/y, +0.5/+1.8% forecast, Q2 jobless 5.0%, employment +2.4%, participation 69.7%, LCI +0.4/+1.6%.
- New Zealand Fonterra GDT price index +11.4%, volumes off though, supply tighten.
Economic Data Ahead
- (0300 ET/0700 GMT) Great Britain Oct Nationwide house prices, +0.2% m/m forecast; last +0.3%.
- (0415 ET/0815 GMT) Spain Oct PMI mfg, 52.6 forecast; last 52.3.
- (0445 ET/0845 GMT) Italy Oct PMI mfg, 51.4 forecast; last 51.0.
- (0450 ET/0850 GMT) France Oct PMI mfg, 51.3 forecast; flash 51.3.
- (0455 ET/0855 GMT) Germany Oct PMI mfg, 55.1 forecast; flash 55.1.
- (0455 ET/0855 GMT) Germany Oct unemployment, 2.56 mln nsa forecast; last 2.61 mln nsa, 2.68 mln sa.
- (0455 ET/0855 GMT) Germany Oct unemployment, 6.1%, -1k forecast; last 6.1%, +1k.
- (0500 ET/0900 GMT) Eurozone Oct PMI mfg, 53.3 forecast; flash 53.3.
- (0530 ET/0930 GMT) Great Britain Oct PMI construction, 51.8 forecast; last 52.3.
- (0815 ET/1215 GMT) United States Oct ADP national employment, 165k forecast; last 154k.
- (0945 ET/1345 GMT) United States Oct ISM New York index; last 719.7, biz conditions 49.6.
Key Events Ahead
- N/A ECB Governing Council meeting.
- N/A Norway NOK3 bln 1.5% 2026 NST478, Sweden government bond auctions.
- (0400 ET/0800 GMT) Norges Bank financial stability report.
- (0600 ET/1000 GMT) Greece E875 mln 26-week treasury bill auction.
- (0630 ET/1030 GMT) Germany E3 bln zero% 2026 Bund, Belgium E1-1.4 bln 3/6-mo TC auctions.
- (0930 ET/1330 GMT) Riksbank Gov Ingves speaks at Helsinki university seminar.
- (1200 ET/1600 GMT) Canada FinMin Morneau parliamentary testimony.
- (1315 ET/1715 GMT) BoC DepGov Wilkins speaks at Toronto securities event.
- (1400 ET/1800 GMT) FOMC policy announcement, no changes forecast.
FX Beat
DXY: The dollar declined to a 3-week low against the euro and a 12-day low versus the yen, as some polls showed Republican Donald Trump had a lead against Democrat Hillary Clinton in the upcoming U.S. presidential elections. The greenback against a basket of currencies trades 0.1 percent down at 97.65, having hit a near 3-weerk low of 97.60 earlier in the session.
EUR/USD: The euro rose to a 3-week high as growing concerns over the U.S. presidential election on Nov. 8 weighed down the greenback, triggering risk-off market sentiment. The dollar came under renewed selling pressure after some polls showed Republican Donald Trump inching ahead following the FBI investigation over Clinton’s email. The greenback failed to benefit from higher-than-expected ISM manufacturing data as political uncertainty continued to overshadow fundamentals. The European currency trades 0.1 percent up at 1.1066, having touched an early high of 1.1069, its highest since Oct. 11. Focus now shifts towards Eurozone's Manufacturing PMI, ahead of Fed’s policy decision due later in the day, where it is anticipated to keep interest rates unchanged but set the stage for a hike in December. Immediate resistance is located at 1.1100, a break above could take it till 1.1140. On the downside, support is seen at 1.1030, a break below could drag it near 1.1000.
USD/JPY: The dollar slumped below the 104.00 handle, extending previous session losses, as recent polls indicated a potential Trump presidential election win, fuelling demand for perceived safe-haven Japanese yen. According to a Reuters/Ipsos opinion poll released on Monday, Clinton held a 5 percentage-point lead, marginally changed since the FBI announcement, however, another poll by the Los Angeles Times showed Trump leading by 2 points. The major was also undermined by increased cautiousness as markets headed into the FOMC statement due later in the day. The pair trades 0.4 percent lower at 103.68, hovering towards a low of 103.63 hit earlier in the session, it’s lowest since Oct. 21. On the data front, investors eye the U.S. private sector employment report, followed by the FOMC decision, while news related to the U.S. elections will be also closely watched for further clues on the major. Immediate resistance is located at 104.52 (5-DMA), a break above targets 105.00. On the downside, support is seen at 103.30, a break below could take it near 103.00.
GBP/USD: Sterling consolidated within a narrow range as investors remained cautious ahead of FOMC policy outcome amid persisting risk-off markets sentiment. On Tuesday, the major rose to near 2-week high on news that the Bank of England Governor Mark Carney would be serving until 2019, however, it trimmed gains following worse-than-expected UK's Markit manufacturing PMI data. Sterling trades flat at 1.2243, after rising to a high of 1.2280 in the previous session, it’s highest since Oct. 20. Markets will closely watch the UK construction PMI and U.S.ADP employment report, ahead of Federal Reserve policy meeting outcome for further momentum. Immediate resistance is located at 1.2300, a break above could take it near 1.2340. On the downside, support is seen at 1.2100, break below targets 1.1900. Against the euro, the pound trades lower at 90.43 pence, having hit more than a 3-week low of 90.48 earlier in the session.
AUD/USD: The Australian dollar declined, as political uncertainty in the U.S. triggered risk-off market sentiment. On Tuesday, the major rallied to a high of 0.7688 after the Reserve Bank of Australia kept interest rates unchanged at 1.50 percent and refrained from providing any explicit easing bias in its statement. Moreover, data released earlier showed the economy's building permits slumped 8.7 percent in September, against estimates of 3.0 percent fall, which further weakened the bid tone around the pair. The Aussie trades 0.2 percent lower at 0.7632, having touched an intra-day low of 0.7612. Investors will continue to track developments surrounding the U.S. elections ahead of the U.S. jobs report, EIA crude inventory data and FOMC statement due later in the day. Immediate support is seen at 0.7600, a break below could drag it near 0.7560. On the upside, resistance is located at 0.7660, a break above targets 0.7770.
NZD/USD: The New Zealand dollar hit a near 2-week high above the 0.7200 handle after the economy's unemployment rate declined to near 8-year lows last quarter, further easing RBNZ Nov rate cut expectations. Data released on Wednesday showed unemployment rate edged down 4.9 percent, versus previous 5.0 percent, while the participation rate hit a peak of 70.1 percent, a level not seen in at least 25 years. Moreover, the major was also aided by a rebound in the price of milk, as the Global Dairy Price index advanced 11.4 percent at the latest auction against the previous result of 1.4 percent. The Kiwi trades 0.6 percent higher at 0.7227, having hit an early high of 0.7231, its highest level since Oct.20. The pair had declined 1.8 percent in October but was still up 5.5 percent so far this year. Markets will continue to digest NZ's unemployment data, ahead of New Zealand's inflation expectations report and FOMC statement for further cues. Immediate resistance is located at 0.7250, a break above targets 0.7270. On the downside, support is seen at 0.7165 (10-DMA), a break below could drag it near 0.7130/ 0.7100.
Equities Recap
Asian shares slumped to 7-week lows, while the dollar eased as investors turned cautious ahead of the FOMC statements, with just days away from the U.S. presidential election.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.2 percent to 7-week lows.
Tokyo's Nikkei slumped 1.76 percent at 17,134.68 points, Australia's S&P/ASX 200 index fell 1.20 percent to 5,227.00 points and South Korea's KOSPI was trading 1.44 percent lower at 1,978.39 points.
Shanghai composite index declined 0.43 percent at 3,109.04 points, while CSI300 index was trading 0.55 percent lower at 3,340.15 points.
Hong Kong’s Hang Seng was trading 1.37 percent down at 22,833.23 points. Taiwan shares shed 1.4 percent at 9,139.04 points.
Commodities Recap
Crude oil prices declined, extending losses for a fourth straight day after a less comprehensive industry report showed a surprise increase of 9.3 million barrels in stockpiles for the week ended Oct. 28. International benchmark Brent crude was trading 0.25 percent lower at $47.76 per barrel at 0404 GMT, hovering towards a 1-month low of $47.70 hit in the previous session. U.S. West Texas Intermediate crude declined 0.22 percent at $46.22 a barrel, having hit a low of $46.17 on Tuesday, its lowest since Sept 28.
Gold held gains after rising to a near 1-month high in the previous session, as investors await the Federal Reserve meeting outcome for clues on the timing of a possible U.S. interest rate hike. Spot gold rose 0.24 percent at $1,291.00 an ounce at 0411 GMT, having touched its highest since Oct. 4 at $1291.73 per ounce on Tuesday. U.S. gold futures were up 0.1 percent at $1,289.30 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.8114 percent lower by 0.009 bps, while 5-year was 0.004 bps down at 1.2824 percent.
The Australian government bonds rebounded as growing uncertainties over the U.S. presidential election sparked demand for safe-haven buying. The yield on the benchmark 10-year Treasury note fell 4-1/2 basis points to 2.349 percent, the yield on 15-year note dipped 4 basis points to 2.717 percent and the yield on short-term 2-year slid 4-1/2 basis points to 1.642 percent.
The New Zealand 10-year bond yields hit highest in six months on after recent data showed that the country’s unemployment rate fell to lowest in nearly eight years. The yield on the benchmark 10-year bond, which moves inversely to its price, rose 6 basis points to 2.780 percent.
Canadian government bond prices were mixed across the yield curve, with the 2-year price flat to yield 0.553 percent and the benchmark 10-year falling 11 Canadian cents to yield 1.208 percent.
