- GBP/USD swings higher again to 1.5366 vs 1.5245 Tuesday's low.
- NZD/USD reverses Tuesday losses, bull trend resumes to 0.6749 Levels.
- UK August ILO Jobless rate 5.4% vs 5.5% previous, 5.5% expected.
- UK August Average earnings 3month 3.0% vs 2.9% previous, 3.0% expected.
- UK August Average earnings-ex bonus 3mth 2.8% vs 2.9% previous, 3.0% expected.
- Switzerland October ZEW 18.3 vs 9.7 previous.
- Euro zone August Industrial Production +0.9% y/y vs 1.7% revised, previous, 1.8% expected.
- PBOC to extend trading hourss in domestic FX market to 1530GMT.
- Odds narrow on Australia rate cut after Westpac up mortgage rates.
- Australia October Westpac/MI consumer confidence index +4.2% to 97.8.
- RBNZ Gov Wheeler - Further OCR cuts likely, China growth greatest concern.
- (0800 ET/1200 GMT) Brazil Retail Sales.
- (0830 ET/1230 GMT) US September PPI, -0.2% m/m, -0.7% y/y eyed; last unchanged, -0.8%.
- (0830 ET/1230 GMT) US September retail sales, +0.2% m/m eyed; last +0.2%.
- (0830 ET/1230 GMT) US September ex-autos, -0.1% m/m eyed; last +0.1%.
- (1000 ET/1400 GMT) US August business inventories, +0.1% m/m eyed; last +0.1%.
- (1130 ET/1530 GMT) Brazil's Central Bank is scheduled to announce weekly capital flows and foreign reserves data.
- (1400 ET/1800 GMT) US Federal Budget for September is likely to be at $95 bln vs previous $-64.4 bln.
Key Events Ahead
- (1300 ET/1700 GMT) BoE Chief Econ Haldane lecture in Guildford, England.
- (1400 ET/1800 GMT) Fed Beige Book release.
FX Recap
USD: The dollar was trading near a 3 1/2-week low against a basket of currencies on Wednesday as China bolsters expectations that Fed is likely to wait longer before hiking rates. The dollar index slid 0.25 percent to 94.523, its lowest since Sept 18. Against the yen, the dollar dropped 0.1 percent on Wednesday to 119.60 yen, near Tuesday's low of 119.55; its lowest since Oct. 2.
EUR/USD: Industrial output in the euro area failed to repeat the solid performance from the previous month. The output produced by manufacturers, mines and utilities in the common currency area decreased 0.5% on a seasonally adjusted basis in August, compared to the last month's 0.6% increase. US Retail Sales are due later, with prior surveys seeing a 0.2% monthly advance in September. It made intraday high at 1.1427 and low at 1.1377 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1320-25 (316M), 1.1400 (236M).
USD/JPY: The US dollar was dropping on Wednesday, although losses were not so dramatic and the pair was seen trading around ¥119.50 during the London session. The broader market sentiment continues to worsen for the second straight session, with the underlying reason being the same - poor economic news from China. The Japanese yen continues to garner support on global risk-off approach. Pair made intraday high at 119.80 and low at 119.41 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 119.70 (1.4BLN), 119.80 (360M), 119.95-120.00 (1.5BLN).
GBP/USD: Sterling fell to $1.5288 after UK wages lag forecasts from $1.5205 before data, later it reversed losses and climbed to $1.5314, up 0.5 pct on day. It hit a day's low of 74.77 pence per euro, having traded at 74.49 pence beforehand. Wages in the three months to August rose 2.8%, a little less than the 2.9% recorded in the previous period. The latest ILO unemployment rate for August declined to 5.4% from 5.5%, hitting the lowest level since mid 2008. Pair made intraday high at 1.5370 and low at 1.5246 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels. Option expiries are at 1.5100 (235M), 1.5200 (571M).
NZD/USD: The kiwi dollar bounced back from its three-day low on Wednesday, reversing its course after comments from Reserve Bank of New Zealand Governor Graeme Wheeler had sent the currency lower. Wheeler spoke extensively about the limits of what monetary policy can achieve. Wheeler said it is "important also to consider whether borrowing costs are constraining investment" and spoke of the need to "save ammunition". This suggests that the RBNZ will take a cautious approach to further rate cuts. The rebound came after S&P ratings agency upwardly revised New Zealand's dairy giant Fonterra's outlook to 'stable' from credit watch 'negative'. Pair made intraday high at 0.6748 and low at 0.6618 levels. Initial support is seen at 0.6235 and resistance at 0.6721 levels. Option expiries are at 0.6485 (405M), 0.6600 (213M).
AUD/USD: The Australian dollar shifted down a gear on Wednesday after Westpac Bank hiked mortgage rates in an effort to meet new regulatory capital requirements, prompting fresh calls for the RBA to lower rates in November. A 0.20% hike across all Westpac mortgage rates on Wednesday immediately raised suspicion that the Reserve Bank of Australia (RBA) would need to counter Westpac's effective tightening by loosening monetary policy, possibly as soon as next month. The AUD/USD pair was down 0.43% at $0.7198 on Wednesday morning in Sydney from $0.7246 where the pair closed in New York on Tuesday just hours earlier. Pair made intraday high at 0.7276 levels and low around 0.7198 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7200 (434M), 0.7350 (329M).
Equities Recap
World shares slipped for a second day running and the dollar dropped to its lowest in almost a month on Wednesday following new signs of a slowdown in China's economy.
The pan European FTSEurofirst 300 opened roughly 1 pct in the red, UK's FTSE slumped 0.6 pct, France's CAC fell 0.8 pct and Germany's DAX dropped 0.8 pct in early trades.
Japan's Nikkei stock index dropped 1.9 pct, while MSCI's broadest index of Asia-Pacific shares outside Japan closed down 0.6 pct. MSCI's 45-country All World Stock Index dropped 0.4 pct at 400.24 points. China's CSI300 index was down 0.9 pct and the Shanghai Composite Index lost 0.8 pct, the Hang Seng fell 0.7 percent, to 22,439.91.
Commodities Recap
Oil eased further below $50 a barrel on Wednesday, falling for a third day, on concern a supply glut will persist and demand slow down as economic growth moderates in No. 2 consumer China. Brent crude fell 5 cents at $49.19 a barrel, U.S. crude rose 1 cent at $46.67.
Gold hit 3-month highs on Wednesday, extending profits for a fourth session, as concerns over deflationary pressures in China fuelled expectations of a longer delay in U.S. rate hikes. Spot gold climbed 0.5 pct at $1,173.66 an ounce by noon, while U.S. gold futures for December delivery were up $8.30 an ounce at $1,173.70.
Treasuries Recap
The yield on benchmark US 10-year Treasuries slipped to 2.042 percent in early European trading while Wall Street futures were pointing to a steady restart.
JGB prices closed the day narrowly mixed, with the 5-yr to 10-yr zone outperforming the rest of the curve. The benchmark 10-yr and 20-yr JGB yields broke below the recent low of 0.31% (Oct 5) and 1.07% (Oct 5 & Oct 13) before ending at 0.305% and 1.065%, respectively, their lowest level since Apr 28 (0.295% & 1.065%).
German 10-year yields were down 3 bps at 0.57 percent, as the country geared up to sell 3 billion euros of debt maturing in 2020. Portuguese 10-year yields rose 3 basis point to 2.45 percent , while other euro zone equivalents fell 2-3 bps after weak Chinese data.
UK Gilts opened 34 ticks higher than the settlement of 118.46, as predicted, as core markets remain elevated on ongoing China growth concerns. Gilt buyers have respected yesterday's lows on 10-year cash at 1.786% in a thin session ahead of the labour data. There was no much reaction from Gilts after the UK average earnings data, Dec Gilts were a touch higher at 118.88.
New Zealand government bonds had a firm tone on the short end of the curve with yields between 1 and 2 tick lower. Australian government bond futures climbed, with the 3-year bond contract rising 5 ticks at 98.210. The 10-year contract gained 5 ticks to 97.3600, while the 20-year contract added 9 ticks to 96.8450.
