Market Roundup
- USD/JPY +0.2%, EUR/USD +0.15%, GBP/USD +0.10%
- DXY -0.21%, DAX +0.25%, Brent +0.04%, Iron +1.50%
- Switzerland Sept Retail Sales -2.3% y/y vs revised -2.8% previous
- Switzerland Oct Mfg PMI 54.7 vs 53.2 previous, 53.8 expected
- UK Oct Mfg PMI 54.3 vs revised 55.5 previous, 54.5 expected
- Swedish Oct Mfg PMI jumps to 58.4 vs 54.8 Reuters Poll forecast
- Sentix-Italy overtakes Greece as most likely to leave EZ
- BoJ leaves policy unchanged as eyed, short-rate target -0.1%
- Japan FinMin Aso – Not considering third extra budget this FY
- Japan Oct manufacturing PMI – final 51.4, still best in 9-mos, flash 51.7, Sept 50.4
- China Oct Caixin manufacturing PMI 51.2, highest since July ’14, 50.2 eyed, Sept 50
- China Oct official services PMI 54.0, Sept 53.7
- RBA leaves OCR as is as eyed, global economy still soggy
- Australia Oct AIG PMI +1.1 point to 50.9, new orders-exports up
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada is expected to report that economic growth slowed to 0.2 percent in August, after rising 0.5 percent in the previous month.
- (0930 ET/1330 GMT) The RBC will release Canada's Manufacturing PMI for the Month of October. The indicator stood at 50.3 in the prior month.
- (1000 ET/1400 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of November. The indicator rose to 51.3 in October.
- (0945 ET/1345 GMT) The Markit Economics releases its final U.S. Manufacturing Purchasing Managers Index (PMI) for the month of October. The index came in at 53.2 in September.
- (1000 ET/1400 GMT) The Institute for Supply Management is likely to report that U.S. manufacturing PMI rose to 51.7 in October from a reading of 51.5 the month before.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending in September increased 0.5 percent after slipping by 0.7 percent in the previous month.
- (1330 ET/1730 GMT) Autodata Corp releases U.S. auto sales figures for October, which are likely to have risen to 17.50 million units, compared to an increase from September's 17.76 million units.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1845 ET/2245 GMT) The Statistics New Zealand reports its unemployment rate for the third quarter. The indicator stood at 5.1 percent in the second quarter.
Key Events Ahead
- (0745 ET/1145 GMT) FedTrade operation 30-Yr Fannie Mae/Freddie Mac max $2.250 bln
- (0900 ET/1300 GMT) The Federal Open Market Committee commences its two-day interest-rate setting meeting.
- (1030 ET/1430 GMT) FedTrade operation 15-Yr Fannie Mae/Freddie Mac max $725 mln
- (1145 ET/1545 GMT) Bank of Canada Governor Stephen Poloz will give a speech in Vancouver.
FX Beat
DXY: The dollar eased on growing concerns over the U.S. presidential election on Nov. 8, which could pose some near-term risk to the currency. The greenback against a basket of currencies trades 0.2 percent down at 98.13, having hit fresh 8-day low of 98.12 earlier in the session.
EUR/USD: The euro advanced above the 1.1000 handle, boosted by board-based dollar weakness and cross-driven strength. The major rose to a near 2-week high as it found support from both the EUR/JPY and EUR/GBP cross trade. Moreover, investors’ cautious stance ahead of U.S. presidential election strengthened the bid tone around the pair. The European currency trades 0.3 percent up at 1.1009, having hit a high of 1.1010, its highest since Oct. 20. The short term trend is slightly bullish as long as support 1.0930 (5- day MA) holds. Any break above 1.1022 (21- day MA) will take the pair to next level till 1.10650 (daily Kijun-Sen)/1.11000/1.1140 (100- day MA). The short term trend reversal can happen only if it closes above 1.11730 (200- day MA). On the lower side, any violation below 5- day MA will drag the pair down till 1.0850/1.0820.
USD/JPY: The dollar rose above 105.00 after Bank of Japan held off on expanding stimulus and pushing back the timing for hitting its inflation target. In the press conference, BoJ Gov Kuroda stated that the central bank would deploy all available measures to achieve its inflation target. The major trades 0.1 percent up at 104.94, having hit an intra-day high of 105.11. Markets now await U.S. manufacturing PMI tracked by Markit and ISM Manufacturing, ahead of Fed’s interest rates decision due tomorrow. The major resistance is around 105.50 and break above targets 105.80/106.30. On the lower side, major support is around 104.34 (daily Tenken- Sen) and any break below targets 103.80 (21- day MA) /102.89.
GBP/USD: Sterling rose to near 2-week high on news that the Bank of England Governor Mark Carney would be serving until 2019. However, the major trimmed gains after UK's Markit manufacturing PMI for the month October decreased to 54.3 against estimates of 54.5 and previous reading of 55.5. Sterling trades 0.1 percent down at 1.2230, having touched a high of 1.2280, its highest since Oct. 20. Against the euro, the pound trades 0.2 percent lower at 89.85 pence. The short-term trend is bearish as long as resistance 1.2330 holds. Any violation above 1.2332 will take the pair to next level till 1.2400. The immediate support stands at 1.2200 and any indicative break below targets 1.2150/1.20880 (Oct 11 Low). The short term trend reversal is only above 1.3325 level.
USD/CHF: The Swiss franc gained, rising to an almost two-week high as the greenback weakened across the board. The dollar declined 0.4 percent to 0.9851, having hit a low of 0.9849, its lowest since Oct. 20. The short term trend is weak as long as temporary top 1.000 holds and any violation above confirms further bullishness, a jump till 1.0040/1.0090 is possible. The minor resistance is around 0.9915 (10- day MA)/0.9960. On the lower side, support stands at 0.9860 and any indicative close below targets 0.9780 (200- day MA)/0.9715 (61.8% retracement of 0.9537 and 0.9998).
AUD/USD: The Australian dollar rallied to near 1-week high after the Reserve Bank of Australia held its cash rate at a record low of 1.5 percent and refrained from explicit easing bias. The major also found support from better-than-expected Chinese PMI report, which showed manufacturing activity hit a two-year high in October. The Aussie trades 0.8 percent higher at 0.7672, having hit a high of 0.7676, its biggest rise since Oct 26. On the higher side, major resistance is around 0.7680 and any break above will take the pair till 0.7730/0.7760/0.7800. The major support is around 0.7614 (21- day MA) and a break below will drag it till 0.7590/0.7530.
NZD/USD: The New Zealand dollar rose, but traded within a narrow range as markets cautiously awaited New Zealand's third-quarter figures on employment and wages. The Reserve Bank of New Zealand is expected to cut interest rates at its policy meeting next week, however, strong jobs data would further diminish the risk of easing beyond that. The Kiwi trades 0.3 percent up at 0.7173, hovering towards a high of 0.7181, its loftiest since Oct. 26.Immediate resistance is located at 0.7200, a break above targets 0.7260. On the downside, support is seen at 0.7120, a break below could drag it lower 0.7100.
Equities Recap
European shares edged down and were set to slump for a seventh straight session, while the dollar eased with investors reluctant to take positions as the U.S. presidential campaign entered its final week.
The pan-European STOXX 600 index decreased 0.08 percent at 338.70 points, while the FTSEurofirst 300 index shed 0.03 percent at 1,338.08 points.
Britain's FTSE 100 trades 0.25 percent higher at 6,972.71 points, while mid-cap FTSE 250 climbed 0.18 percent to 17,575.45 points.
Germany's DAX tumbled 0.05 percent at 10,660.01 points; France's CAC 40 trades 0.22 percent lower at 4,499.29 points.
Tokyo's Nikkei rose 0.10 percent at 17,442.40 points, Australia's S&P/ASX 200 index fell 0.6 percent to 5,286.00 points and South Korea's KOSPI shed 0.04 percent at 2,007.39 points.
Shanghai composite index rose 0.7 percent to 3,122.44 points, while CSI300 index also gained 0.7 percent at 3,359.05 points. Hong Kong’s Hang Seng added 0.9 percent to 23,147.07 points.
Commodities Recap
Crude oil prices steadied around 1-month lows, after posting its biggest 1-day slide in more than five weeks as traders stated that the likelihood of a more substantial price recovery was limited. Global benchmark Brent crude was trading 0.3 percent higher at $48.68 per barrel at 0951 GMT, having touched a low of $48.43 on Monday, its lowest since Sept 29. U.S. West Texas Intermediate crude edged down 0.1 percent at $46.68 a barrel, after falling to a 1-month low of $46.61 in the prior session.
Gold prices rose to a 1-month high as the dollar eased across the board, while investors await Federal Reserve monetary policy meeting decision for clues on the timing of a possible interest rate hike. Spot gold was up 0.7 percent at $1,286.68 per ounce by 1149 GMT, having hit an early high of $1287.35, its highest since October 4. U.S. gold futures for December delivery rose 0.52 percent to $1,279.70.
Treasuries Recap
The U.S. Treasuries slumped ahead of the Federal Reserve interest rate decision, which is scheduled to be released on Wednesday, where it is widely expected to leave the Fed fund rate unchanged. The yield on the benchmark 10-year Treasury note rose nearly 2 basis points to 1.85 percent, the yield on long-term 30-year Treasury climbed 1-1/2 basis points to 2.606 percent and the yield on the short-term 2-year note bounced nearly 1 basis point to 0.857 percent.
The UK gilts plunged after recent data showed that the world’s second-largest economy’s manufacturing activity expanded at a faster pace in October. Also, markets largely shrugged off a fall in UK’s October manufacturing PMI. The yield on the benchmark 10-year gilts rose 3 basis points to 1.273 percent, the super-long 40-year bond yield climbed 2 basis points to 1.74 percent and the yield on short-term 2-year bounced 1 basis point to 0.267 percent.
The German bunds traded plunged as investors moved away from safe-haven buying amid gains in crude oil prices and the recovery in the equities market. Also, the yields on 10-year bonds hit highest since May. The yield on the benchmark 10-year bond rose 3-1/2 basis point to 0.205 percent, the yield on long-term 30-year note also jumped 3-1/2 basis points to 0.826 percent and the yield on short-term 2-year bond bounced 1/2 basis point to -0.613 percent.
The Japanese government bonds traded nearly flat after the Bank of Japan kept its interest rate unchanged at -0.10 percent, as widely expected, while maintaining 10-year JGB yield target near zero percent. Also, the central bank aimed to increase annual JGB holdings by 80 trillion yen. The benchmark 10-year bond yield hovered around -0.04 percent mark, the yield on long-term 30-year Treasury remained steady at 0.51 percent and the yield on short-term 2-year note stood flat at -0.23 percent.
The New Zealand government bonds closed modestly higher as investors await GlobalDairyTrade (GDT) dairy auction and RBNZ’s inflation expectations data. The yield on the benchmark 10-year bond fell 1/2 basis point to 2.730 percent, the yield on 5-year note ended 1 basis point lower at 2.203 percent and the yield on short-term 2-year note closed steady at 2.020 percent.
The Australian government bond plunged after the Reserve Bank of Australia kept its official cash rate unchanged at a record low of 1.50 percent, citing recovery in consumer inflation and stronger economic growth. The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.395 percent (highest since May), the yield on 15-year note jumped 3 basis points to 2.754 percent and the yield on short-term 2-year also climbed 3 basis points to 1.686 percent.
