Market Roundup
- USD/JPY +0.8%, EUR/USD -0.05%, GBP/USD -0.12%
- DXY +0.23%, DAX +1.1%, Brent +0.9%, Iron +9.0%
- Nikkei +6.7%, VIX -7.15%, FTSE +1.0%
- U.S 10-yr yield 2.0625% following 1.7160-2.0920 Wed range and 2.0720 close
- UK Oct RICS House Survey +23 vs revised +18 previous, +19 expected
- S&P affirms US AA+/A-1 ratings post-presidential election, outlook stable
- BoJ Oct 31-Nov 1 minutes – Little new, mostly re-hash of previous meet
- Japan ChiefCabSec Suga – Monitoring markets with sense of urgency
- RBNZ cuts OCR 25 bps to 1.75, as eyed, cites uncertainties
- RBNZ Gov Wheeler – Rate cut in light of US election results
- Wheeler risk of s/t- term inflation expectations fall, uncertainty surrounding Brexit
- RBNZ AsstGov McDermott – Plan to keep rates low for very long time
- Trump victory spurs physical gold buying in Europe
Economic Data Ahead
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have dropped by 5,000 to a seasonally adjusted 260,000 for the week ended Nov. 4 while continuing claims for the week ending Oct 28 is expected to rise to 2.030 m from 2.026 m.
- (0830 ET/1330 GMT) The Statistics Canada is likely to report that New Housing Price Index (NHPI) rose 0.2 percent in September after posting a similar gain in August.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 4.
- (1400 ET/1900 GMT) The U.S. government is expected to report a budget deficit of $80 billion for the month of October, as compared with a surplus of $33 billion in September.
- (1645 ET/2145 GMT) New Zealand will release its Business PMI index for the month of October. The index stood at 57.7 in the previous month.
- (1800 ET/2300 GMT) Statistics New Zealand will release food price index for the month of October. The indicator posted a fall of 0.9 percent in the prior month.
- (1830 ET/2330 GMT) The Bank of Japan is expected to report that Domestic Corporate Goods Price Index edged down 0.1 percent in October after remaining unchanged in September.
Key Events Ahead
- (0915 ET/1415 GMT) Federal Reserve Bank of St. Louis President James Bullard will make a presentation on the U.S. economy and monetary policy before an event hosted by Commerce Bank, in St. Louis, Missouri.
- (0945 ET/1445 GMT) FedTrade operation 30-Yr F.Mae/Fr.Mac max $2.250 bln
- (1145 ET/1645 GMT) FedTrade operation 30-Yr Ginnie Mae max $1.275 bln
FX Beat
DXY: The dollar gained versus its major rivals as markets reacted positively to Republican candidate Donald Trump's victory in the presidential election. The greenback against a basket of currencies trades 0.2 percent higher at 98.83, having hit an early high of 98.92, its highest since Oct. 28.
EUR/USD: The euro tumbled below the 1.0900 handle, after rising to an intra-day high of 1.0953, as the greenback boosted across the board on renewed market optimism on an unexpected Donald Trump victory in the U.S. presidential elections. Moreover, the major also came under renewed selling pressure following the release of downbeat industrial data from France and Italy. The European currency trades 0.1 percent lower at 1.0901, having hit a low of 1.0887, its lowest since Oct. 27. Investors now await U.S. weekly jobless claims and FOMC member Bullard’s speech for further cues on the pair. Immediate resistance is located at 1.0977 (20-DMA) a break above could take it over 1.1000. On the downside, support is seen at 1.0874 (Oct. 26 Low), a break below could drag it lower till 1.0850.
USD/JPY: The dollar rose to a 3-1/2 month high, on the back of increasing yields in the U.S. treasuries, while the markets adjusted to a Donald Trump victory. Markets attention now remains on the prospects of the Federal Reserve to hike rates at the December meeting, with the probability of a rate hike going from as low as 30 percent to as high as 80 percent. The major trades 0.8 percent higher at 106.54, having touched a high of 106.91, it’s highest since July 21. Immediate resistance is located at 107.00, a break above targets 107.50. On the downside, support is seen at 105.00 (5-DMA), a break below could take it lower 104.50 (10-DMA).
GBP/USD: Sterling declined below the 1.2400 handle as the dollar rebounded against its major peers as markets sifted through the potential global implications of Donald Trump's unexpected win in the U.S. presidential election. Data released overnight showed Britain's RICS Housing Price Balance rose 23 in October, beating projections of 19 and previous 18, which boosted the bid tone around the major. The major rose to an intra-day high of 1.2455, however, reversed gains as the greenback strengthened across the board. Sterling trades 0.1 percent lower at 1.2390, having hit a low of 1.2377. Immediate resistance is located at 1.2500, a break above could take it near 1.2550. On the downside, support is seen at 1.2351 (10-DMA), a break below targets 1.2300. Against the euro, the pound trades higher at 87.86 pence, after rising as high as 87.27 pence earlier in the day, it’s highest since Oct. 4.
USD/CHF: The Swiss franc slumped, extending losses for the third consecutive session, as the greenback strengthened on the back of higher U.S. yields. The dollar trades 0.4 percent higher at 0.9881, attempting to regain the 0.9900 handle. On Wednesday, the major tumbled to a low of 0.9549, its lowest since Aug. 19 following the results of U.S. presidential elections. Immediate resistance is located at 0.9900, a break above could take it till 0.9950. On the lower side, support stands at 0.9800 and any indicative close below targets 0.9770/0.9735.
AUD/USD: The Australian dollar rallied above the 0.7700 handle, recouping most of its previous session losses on the back of improved risk-on market sentiment. The major was also strengthened by upbeat consumer inflation expectations report, which grew 3.2 percent in November, from 3.7 percent the month before. The economy's consumer price index rose 0.7 percent in the third quarter, while on yearly basis it rose 1.3 percent, both slightly ahead of expectations and above the second quarter’s readings. The Aussie trades 1.33 percent higher at 0.7731, hovering towards a high of 0.7780 hit on Tuesday, it’s highest since April 21. Immediate support is seen at 0.7689, a break below could drag it near 0.7640. On the upside, resistance is located at 0.7760, a break above targets 0.7780.
NZD/USD: The New Zealand dollar fell, extending losses from the previous session after the Reserve Bank of New Zealand cut interest rates to a record-low 1.75 percent, as widely expected and left doors open for more easing in the future. The major slumped to a low of 0.7236, its lowest since Nov. 2, following comments from RBNZ Governor Wheeler on likely intervention, however, it trimmed losses as persistent risk-on sentiment provided some relief. The Kiwi trades 0.4 percent lower at 0.7250, having hit an intra-day high of 0.7307. Immediate resistance is located at 0.7316 (5-DMA), a break above targets 0.7350. On the downside, support is seen at 0.7214 (20-DMA), a break below could drag it lower 0.7200.
Equities Recap
European shares advanced, extending gains for a fourth straight session to hit a 2-week high, strengthened by miners and banks stocks, while markets absorbed the unexpected win of Donald Trump in the U.S. presidential election.
The pan-European STOXX 600 index increased 0.81 percent at 342.56 points, while the FTSEurofirst 300 index added 0.6 percent at 1,352.28 points.
Britain's FTSE 100 trades 0.6 percent up at 6,957.61 points, while mid-cap FTSE 250 trades rallied 1.51 percent at 17,855.16 points.
Germany's DAX advanced 0.83 percent at 10,735.05 points; France's CAC 40 trades 0.89 percent higher at 4,583.25 points.
Tokyo's Nikkei rose 6.72 percent at 17,344.42 points, Australia's S&P/ASX 200 index gained 3.08 percent to 5,315.20 points and South Korea's KOSPI soared 2.26 percent at 2,002.60 points.
Shanghai composite index jumped 1.4 percent to 3,171.28 points, while CSI300 index advanced 1.1 percent at 3,390.61 points. Hong Kong’s Hang Seng added 1.9 percent at 22,839.11 points.
Commodities Recap
Crude oil prices edged down, after industry showed an unexpected rise in the U.S. crude inventories last week, while investors recovered from their initial shock at U.S. President-elect Donald Trump's surprise victory. Global benchmark Brent crude was trading 0.2 percent lower at $46.43 per barrel by 0928 GMT, after falling to a low of $44.38 on Wednesday, its lowest since Aug. 11. U.S. West Texas Intermediate crude declined 0.4 percent at $45.12 a barrel, having hit a 3-month low of $43.06 in the previous session.
Gold prices rose as global markets took a breather from a massive sell-off in risky assets and digested Republican Donald Trump's shocking U.S. presidential win, however, firmer global equities capped gains. Spot gold gained 0.6 percent at $1,285.37 an ounce at 0934 GMT, after rising to an intra-day high of $1.292.03. U.S. gold futures climbed 1.1 percent to $1,287.50 per ounce.
Treasuries Recap
The U.S. 10-year Treasury yields broke 2 percent mark for the first time since January over hopes that the Donald Trump government would spend more on developing the US economy, which could boost growth and inflation. The yield on the benchmark 10-year Treasury note rose 6 basis points to 2.071 percent, the yield on 5-year bond jumped 5 basis points to 1.509 percent and the yield on short-term 2-year note bounced 2-1/2 basis points to 0.919 percent.
The UK 10-year gilt yields rose to the highest level since Brexit vote on June 23 as investors moved away from safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year gilts rose 6 basis points to 1.320 percent, the super-long 30-year bond yield jumped 7 basis points to 2.004 percent and the yield on short-term 2-year bounced 2 basis points to 0.235 percent.
The German 10-year bund yields hit highest since May as investors moved away from the safe-haven assets on hopes that Donald Trump's economic policies could boost inflation, granting more space to the Federal Reserve for hiking interest rate in the near future. The yield on the benchmark 10-year bond rose 5 basis points to 0.228 percent, the yield on long-term 30-year note jumped 6 basis points to 0.853 percent and the yield on short-term 2-year bond climbed 1 basis point to -0.644 percent.
The Japanese government bonds plunged following the weakness in the U.S. Treasuries. The implied probability of the Federal Reserve December rate hike jumped to 82 percent despite market speculation that the move is less likely after Donald Trump’s victory. The benchmark 10-year bond yield rose 4 basis points to -0.037 percent, the yield on long-term 30-year note climbed 4-1/2 basis points to 0.521 percent and the yield on short-term 2-year note jumped nearly 2 basis points to -0.257 percent.
The New Zealand government bonds closed higher as the Reserve Bank of New Zealand (RBNZ) lowered its official cash rate by 25 basis points to a new record low of 1.75 percent from previous 2.00 percent. The yield on the benchmark 10-year bond fell 2 basis points to 2.955 percent, the yield on 7-year note also ended 2 basis points lower at 2.640 percent and the yield on short-term 2-year note slid 2 basis points to 2.085 percent.
The Australian government bonds slumped as investors’ risk sentiments revived after the implied probability of the United States Federal Reserve December interest rate hike jumped to 80 percent. The yield on the benchmark 10-year Treasury note rose nearly 9 basis points to 2.505 percent (intraday), the yield on 15-year note jumped 10 basis points to 2.917 percent and the yield on short-term 2-year climbed 8 basis points to 1.679 percent.
