Market Roundup
- Australia Oct new vehicle sales -3.6% m/m, +4.2% y/y.
- NZ Q3 retail sales +1.6% q/q, +5.7% y/y, +1.25% and +5.6% eyed.
- NZ Oct PSI 56.2, Sept 55.0, sector still in expansion.
- Fonterra Q1 FY'16 NZ milk collection -4%, Australia +1%, farmgate NZ$4.60.
- Japan EconMin Amari - Economy recovering moderately despite some weakness, private consumption and CAPEX to rise, eyes growth in Q4, unions should seek 3% wage hike to beat deflation - Reuters, MNI.
- Japan Q3 GDP -0.2% q/q, -0.8% AR, -0.1% and -0.2% eyed, very weak, CAPEX -1.3% q/q, -0.4% eyed, domestic demand contribution to GDP -0.3%, external demand +0.1%, priv consumption +0.5%, housing +1.9%, GDP deflator +2.0% y/y, Q2 GDP revised -0.7% q/q, Japan in recession.
- Wary of capital outflows, Japan urges China to go slow on CNY reforms - RTRS.
- G20 leaders pledge robust fight against patchy economy, reaffirm previous commitments on exchange rates, will resist protectionism - draft communiqué.
- Boston Fed Rosengren - Flags lending risks, pace of growth could become argument for quicker pace of interest rate increases - Financial Times.
- Canada FinMin Morneau - Weak CAD offers opportunities for exporters -Reuters.
- ECB Mersch - Stimulus decision depends on long-term trends - Les Echos.
- SNB Maechler - Swiss better off with negative interest rates - NZZ.
- China buys net CNY12.9 bln in FX in October, reverses 3-mos of heavy sales.
- Bond defaults signal moment of truth for China ratings agencies - Reuters.
Economic Data Ahead
- (0500 ET/ 1000 GMT) EZ Oct inflation - final, +0.1% m/m, unch y/y eyed; flash +0.2%, unch.
- (0500 ET/ 1000 GMT) EZ Oct - ex-food/energy, +0.4% m/m, +1.0% y/y eyed; flash +0.4%, +0.8%.
- (0830 ET/ 1330 GMT) US Nov NY Fed Empire State manufacturing index, -6.0 eyed; last -11.36.
Key Events Ahead
- N/A ECB VP Constancio, Buba Buch, et al at Frankfurt Euro Finance conference.
- N/A France E3.4-3.8/1.1-1.5/1.4-1.8 bln 3/6/12-month BTF note auctions.
- N/A Netherlands E1-2 bln 3 and 6-month DTC auctions.
- N/A Slovakia 1.5% and 3.625% 2018 and 2019 government bond auctions.
- (0515 ET/ 1015 GMT) ECB Pres Draghi speech at Madrid industry roundtable conference.
- (0830 ET/ 1330 GMT) Canada September securities flow data.
- (1000 ET/ 1500 GMT) ECB/Austria CB Nowotny speech in Vienna/17:15 to speak again in Vienna.
- (1100 ET/ 1600 GMT) ECB Coeure speech in Paris (tentative).
- (1630 ET/ 2130 GMT)RBA AsstGov Kent speech at Sydney conference.
FX Beat
AUD/USD: The antipodeans had a subdued tone on Monday as investors showed caution following the Paris terror-strike which triggered risk-off sentiment. AUD/USD opened Monday's trade at 0.7118, down from a peak of 0.7160 on Friday, briefly below 0.7100 on broad US Dollar strength. AUD has been resilient in face of crumbling commodities/'risk-off', underpinning the Aussie was also the speculation that RBA would hold rates for the next couple of months at least. The pair is currently holding above the 0.71 barrier, strong support is located at 0.7090 (5 DMA, Channel top), breaks below could take the pair to next support (Double bottom) at 0.7067. Daily price action has dipped below the cloud, hourly Tenkan at 0.7115 capping upside in the pair, next resistance is seen at 0.7120 (Daily Tenkan)
USD/JPY: The fear and uncertainty following Paris terror strike shortly after US markets closed on Friday saw buyers shying away from risky assets and seeking safe havens. USD/JPY fell to session lows at 122.22, but bounced back from early lows and is currently trading at 122.44. The economic impact of the attack is minimal and the knee-jerk price action usually reverses in short order. Large USD660 mln 122.50 option expiries exert magnetism. key support comes in at 117.86 and the 2012-2015 uptrend and 123.11 comes as first resistance ahead of 123.41 and then 123.72.
EUR/JPY: The euro hit a 6 1/2-month low against the yen after the deadly attacks in Paris added to caution on the common currency. Even before the attacks, the euro had been under pressure from expectations the ECB will step up monetary easing next month. EUR/JPY fell to as low as 130.645 yen, its lowest since late April. It last stood at 131.38 yen, down 0.5 percent from late New York levels last week.
GBP/USD: Cable has lost some ground to dollar to trade around 1.5187 levels after slipping from 1.5263 levels. The pair is currently trading in oversold condition and a rebound towards higher levels can be expected sooner or later. Raising trend line in 4 hours chart is strong support and the pair is trading above daily pivot point located at 1.5180,which indicates further upside. Strong resistance can be seen at 1.5263, a break above this level would expose the cable to next resistance level at 1.5300. To the downside immediate support can be seen at 1.5190, a break below at this level will open the door towards next level at 1.5132.
Equities Recap
Asian stocks fell to six-week lows on Monday and emerging market currencies wilted as investors sought the safety of the greenback in the wake of Friday's deadly attacks in Paris and downbeat economic data.
MSCI's broadest index of Asia-Pacific shares outside Japan fell more than 1 percent in early trade after a 3 percent loss last week.
Leading the losers were the Nikkei stock index which unofficially closed down 1.04 pct at 19,393.69, nearly wiping out last week's 1.7 percent gain as latest economic data undershot expectations.
Australia's S&P/ASX 200 index unofficially closed down 0.75 pct at 5,013.50 points, Taiwan stocks down 0.4 pct at 8,295.40 points and Seoul shares down 1.51 pct.
Commodities Recap
Crude oil futures rose on Monday as France launched large-scale air strikes against Islamic State in Syria.
Front-month U.S. crude futures broke back above $41 a barrel, trading at $41.08 a barrel at 0425 GMT, up 34 cents from their last close.
Internationally traded Brent was at $44.98 a barrel, up over a percentage point and half a dollar, testing resistance at $45 per barrel.
Gold jumped 1 percent on Monday as investors sought safety in the metal following Friday's deadly attacks in Paris and as equities fell.
Spot gold rose 0.8 percent to $1,092.10 an ounce by 0242 GMT. U.S. gold futures rose more than 1 percent to a session high of $1,093.
Treasuries Recap
Australian government bond futures pulled further away from recent lows, with the three-year bond contract up 6 ticks at 97.910. The 10-year contract jumped 7 ticks at 97.0800, while the 20-year contract powered up 6 ticks to 96.5400.
New Zealand government bonds gained, sending yields around 5 basis points lower.
JGB prices opened slightly higher, with the 5s/20s curve flattening modestly by 1.5bp from last Friday. As of this writing, yields on the current 5-yr JGBs are unchanged from last Friday's final close at 0.035%, while the 10s are down 0.5bp at 0.295%. In the super-long zone, the 20s are down 1.5bp at 1.06%, while the 30s are also down 1.5bp at 1.375%.
