Market Roundup
- EUR/USD recovers from Friday's 1.0705 6-1/2mth low. Plays 1.0720/1.0790.
- USD/JPY hits new 2-1/2 month low at 123.60 fm 123.16.
- USD/ZAR hits new all time high of 14.29.
- DAX capped ahead of Fri's 11055 peak. -0.4% on day.
- EZ Nov SENTIX index 15.1 vs previous 11.7. 13.2 expected.
- Catalonia votes to start breakaway from Spain process.
- Britain will stay if EU more flexible-PM Cameron speech to CBI.
- William Hill cuts Brexit odds H2 2016 Referendum to 5/2 from 9/2.
- Swiss domestic sight deposits rise to 402.590bln in w/e Nov 6 vs previous 401.254.
- French FinMin: France wants an agreement on Greek non-performing loans at today's EG.
- Britain will stay if EU more flexible, says PM Cameron in speech to CBI.
- Japan Oct foreign reserves fall to $1.244tn.
Economic Data Ahead
- (0815 ET/1315 GMT) Canadian housing starts are expected to have dropped in October from September. The seasonally adjusted annualized rate of housing starts probably fell to 200,000 in October from 230,701 the prior month.
- (0900 ET/1400 GMT) Investors eye on Mexico's inflation data for October, after the annual inflation rate stood at a new record low in September, cooling to 2.52 percent in the 12 months through September.
- (1000/1500 GMT) US Labor Market Conditions Index for Oct is scheduled for release.
Key Events Ahead
- (1230 ET/1730 GMT) Federal Reserve Bank of Boston President Eric Rosengren will be speaking on the economic outlook at the Newport County Chamber of Commerce Economic Update Luncheon in Portsmouth.
- (1330 ET/1830 GMT) FedTrade 15-year Fannie Mae/Freddie Mac (max $425 mn).
FX Beat
USD: The dollar lost some gains to the euro as investors booked profits on Monday, after strong U.S. employment data prompted more investors to bet on an interest rate increase in December. The dollar index was down about 0.2 percent to 98.995, but the dollar extended gains against yen, adding 0.2 percent to 123.37, after rising as high as 123.48 earlier in the Asian session, its highest since late August.
EUR/USD: The euro added 0.3 percent to $1.0768, after dropping to a 7-month low of $1.0704 on Friday following a stronger-than-expected rise in U.S. jobs last month underscored expectations of monetary policy divergence, with the Fed seen on track to hike next month. The pair has broken major support 1.0800 and declined till 1.0707 after the release of positive US Nonfarm payroll. It has recovered till 1.0778 at the time of writing, intraday trend is still weak as long as resistance 1.0800 holds. The major support is around 1.0700 and break below targets 1.0660/1.0600. On the higher side minor resistance is around 1.0800 and any break above targets 1.0850/1.0900. Further bullishness can be seen only above 1.0900.
GBP/USD: Sterling was just 0.1 percent up on the day at $1.5069, compared to Friday's more than 6-month low of $1.5027. It was 0.1 percent weaker at 71.46 pence per euro. The pair has broken major support 1.5130 and declined till 1.5027 level. Its minor resistance is around 1.5085 and break above will take the pair to 1.5140/1.5185. On the downside any break below 1.5016 targets 1.4950/1.4900 in short term,overall bullishness can be seen only above 1.5225.
USD/JPY: The pair has broken major resistance 122 and jumped till 123.60. It is trading around 123.50, overall trend is bullish and is expected to reach124.10 in the short term. Its weakness can be seen only below 122.50 and break below 122.50 will target 122/121.49. The major support is around 121.25, bullish invalidation is only below 120.
USD/CHF: The pair has broken major resistance around 0.9980 and jumped till 1.00764. It is currently trading around 1.003, the minor resistance is around 1.0075 and break above targets 1.0125/1.0200. On the downside any break below 0.9980 will drag the pair further down till 0.9950/0.9930 level.Overall weakness only below 0.9900.
AUD/USD: The Australian dollar gained some lost ground, rising about 0.2 percent to $0.7057. Earlier in the session, it dropped as low as $0.7016, its lowest since early October, pummelled by both the upbeat U.S. labour report as well as disappointing Chinese trade figures. The Aussie has broken major support 0.7050 and declined till 0.7020. The pair is facing strong resistance around 0.7170 and further bullishness only above that level. It is currently trading at 0.7057, overall bullishness can be seen only above 0.7225 and break above targets 0.7300/0.7360. On the lower side minor support is around 0.7020 and break below targets 0.6935/0.0.6900.
NZD/USD: The New Zealand dollar was trading at $0.6520, having briefly dipped to a five-week trough below 65 cents after the U.S. labour report. The Aussie held at NZ$1.0770, having bounced three cents from a low touched last week.
Equities Recap
European and Asian shares both started the week in a quiet mood as China's softer trade data added the uncertainty to Fed's rate hike.
Europe's FSTSEurofirst 300 was up 0.01 pct at 1,499.19 points in early deals, UK's FTSE rose 0.19 pct, France's CAC fell 0.08 pct and Germany's DAX inched higher up 0.05 pct.
Tokyo's Nikkei closed up 1.96 pct at 19,642.74, China's CSI300 index climbed 1.2 pct at 3,840.35 points, while Shanghai composite index ended up 1.6 pct at 3,646.88 points.
Commodities Recap
Oil futures climbed above $47.50 a barrel as OPEC said it expected global demand to remain strong next year, while weak Chinese trade data and concerns over rising supplies weighed. A weaker dollar further supported oil, with Brent crude for December delivery was up 22 cents at $47.64 a barrel by 0905 GMT, after falling more than 4 percent last week. December U.S. crude gained 12 cents to $44.41 a barrel after falling nearly five percent last week.
Gold inched up after an 8-day losing streak on Monday, but languished near its lowest in three months as surging US NFP boosted expectations of a December rate hike. Spot gold rose 0.5 percent to $1,093.51 an ounce by 0639 GMT on short covering.
Treasuries Recap
The yield on benchmark U.S. 10-year Treasury notes rose to 2.339 percent in Asian trading, from its U.S. close of 2.333 percent on Friday.
JGB prices finished the day lower in relatively active trading, with the 5s/40s curve steepening by 2bp from last Friday. JGBs started weaker on the back of weaker US TSY last Friday after stronger-than-expected US jobs data. JGBs remained weaker amid higher Tokyo stocks and the USD/JPY. After lunch, The Nikkei 225 index briefly soared as high as 19,684 (+419pts), the highest level since August 20, while the USD/JPY also surged as high as 123.48, the highest level since Aug 21.
German Bund yields were being dragged higher, Portugal 10-year bond yields hit 10-week high of 2.78 percent after leftist parties agreed on govt formation.Spanish equivalents were up 7 bps at a six-week high of 1.98 percent.
UK Dec Gilts opened up 5 ticks but almost immediately traded lower to trade around 116.50 which tallies with our original call of around 0 -10 ticks lower than Friday's 116.60 settlement price. 10-year cash yield is around 1bp higher at 2.05% after convincingly breaking the 2.0% psychological resistance.
The yield on the Australian 2-year bond jumped to 1.93 percent, an attractive rate compared with the near zero rates of Japan and negative yields of Germany and France. Australian government bond futures were down sharply near 3-month lows, with the 3-year bond contract off 10 ticks at 97.950. The 10-year contract skidded 10.5 ticks to 97.0750, while the 20-year contract slipped 8.5 ticks to 96.5450. New Zealand government bonds fell, sending yields as much as 6 basis points higher at the long end of the curve.
