Market Roundup
- EUR/USD hits 1.0985 low before 1.1024 rebound
- EUR/USD +0.13%, USD/JPY -0.24%, GBP/USD -0.06%
- DXY -0.16%, DAX -1.13%, Brent +0.15%, Iron +0.83%
- Germany Sept final CPI 0.7% y/y vs 0.7% previous, 0.7% expected
- Germany Sept final HICP 0.5% vs 0.5% previous, 0.5% expected
- Germany Oct TR IPSOS PCSI 53.87 vs 55.9 previous
- Great Britain Oct TR IPSOS PCSI 51.49 vs 51.0 previous
- UK N.Foods head f.casts food price infl. would hit 5% in year’s time
- Tesco pulls dozens of Unilever brands from website after price increase row
- 63% UK food manufacturers report fall in profit margin since Brexit vote
- BoJ likely to cut FY’17/18 CPI forecast in next qtrly report
- BoJ CPI f.cast to 1% zone from 1.7% last- Sanki
- China Sept trade surplus $41.99 bln, $53 bln eyed, exports -10% y/y
- China Sept trade surplus CNY278.35 bln, exports -5.6% y/y
- UK Sept RICS house price balance up to +17, +14 eyed, Aug +13
- ECB Mersch – Raising inflation target now could damage ECB credibility
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 5,000 to a seasonally adjusted 254,000 for the week ended Oct. 7 while continuing claims for the week ended Sept 23 stood at 2.058 m.
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices for the month of September. The import prices are likely to have gained 0.2 percent after declining 0.2 percent in August, while exports are expected to have remained unchanged after decreasing 0.8 percent in the prior month.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that New Housing Price Index (NHPI) edged up 0.3 percent in August after rising 0.4 percent in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 7.
- (1100 ET/1500 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending October 7.
- (1400 ET/1800 GMT) The U.S. government is expected to report a budget surplus of $25 billion for the month of September, as compared with a deficit of $107 billion in August.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending October 7.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending October 7.
Key Events Ahead
- N/A U.S. Treasury Secretary Jack Lew speaks at a Center for American Progress forum on small business economy.
- N/A Bank of England Governor Mark Carney's speech.
- (1215 ET/1615 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on the economic outlook before the World Affairs Council of Philadelphia, Pennsylvania.
FX Beat
DXY: The dollar slumped versus the euro and the yen as investors booked profits at higher levels. The greenback against a basket of currencies traded 0.2 percent down at 97.73, after rising to a 7-month high of 98.12 earlier in the day.
EUR/USD: The euro gained, halting its 3-day losing streak as the greenback weakened across the board. The major fell to an 11-week low below the 1.1000 handle earlier in the session, as increasing prospects of an eventual Fed rate hike action by the end of this year, renewed buying interest in the dollar. The European currency trades 0.2 percent up at 1.1025, attempting to extend gains above the 1.1000 level. On the lower side, 1.0980 will be acting as major support and any break below will drag it down till 1.0950/1.0900. Immediate resistance is around 1.1040 and any break above targets 1.10750 (23.6% retracement of 1.13660 and 1.09850)/1.1100/1.1160 in the short term.
USD/JPY: The dollar declined, pulling away from 11-week highs as risk-averse market sentiment strengthened the bid tone around the safe-haven yen. The major initially rose as high as 104.63 earlier in the day, its highest level since July 27, however, it retreated following the release of worse-than-expected Chinese trade balance data. The pair trades 0.4 percent lower at 103.75, extending losses below the 104.00 handle. The major resistance is around 104.65 (trend line joining 104.32 and 104.48) and a break above targets 105.08/106. On the lower side, major support is around 103.60 (5- day MA) and any break below 103.60 will drag it till 103.15/102.80.
GBP/USD: Sterling consolidates between a narrow range as risk-off sentiment weighed down riskier assets amid weaker global equities and volatile oil prices. Sterling hovered near a record low in trade-weighted terms as markets attention turned to the High Court hearing in the legal challenge to force the British government to seek parliamentary approval to trigger the formal Brexit process. Sterling was trading 0.1 percent up at 1.2217, attempting to sustain gains above the 1.2200 handle, while on a trade-weighted basis, it was down 0.15 percent at 73.7, not far from a record low of 73.383 hit on Tuesday. On the lower side, minor support is around 1.2209 (hourly Kijun-Sen) and any break below will drag the pair to next level till 1.1990. The intraday resistance is around 1.2350 (5- day MA) and any break above targets 1.2500/1.2609 (200- H MA) in the short term, while the minor resistance is around 1.2260/1.2320. Against the euro, the pound was trading 0.1 percent lower at 90.28 pence.
USD/CHF: The Swiss franc edged up, pulling away from an 11-weeks low hit in the previous session as soft Chinese trade data triggered a fresh bout of risk aversion. The dollar trades 0.1 percent down at 0.9897, having touched an early high of 0.9907, it’s strongest since July 27. On the higher side, any close above 0.9910 will take the pair till 0.9960/1.000. The short term weakness can be seen only below 0.9790 and any break below targets 0.9730/0.9680. The minor support is around 0.9835.
AUD/USD: The Australian dollar trimmed losses after declining to a fresh 3-1/2 week low following the release of worse-than-expected Chinese trade balance data. The recovery momentum strengthened as markets seem to have digested the downbeat Chinese trade figures amid a board based greenback weakness. The Aussie trades flat at 0.7556, after declining as low as 0.7506, its lowest since Sept 19. On the higher side, major resistance is around 0.7575 (5- day MA) and any break above will take the pair till 0.7595 (21- day MA)/0.7640/0.7680. The major support is around 0.74860 (trend line joining 0.74420 and 0.74460) and a break below will drag it till 0.7440/0.7400.
NZD/USD: The New Zealand dollar rose, retreating from a 2-1/2 month low as the greenback declined across the board. However, the upside will be capped by rising speculations on RBNZ rate cut at its November meeting and expectations of a December Fed rate-hike, amid volatile oil prices. The Kiwi trades 0.1 percent higher at, having touched a low of 0.7034, it’s weakest since July 27. Immediate resistance is located at 0.7096 (5-DMA), break above targets 0.7120/ 0.7150. On the downside, support is seen at 0.7010, a break below could drag it lower 0.7000.
Equities Recap
World shares slumped to 3-week lows after Chinese trade data showed a sharp decline in exports, raising doubts about the health of the world's second-biggest economy.
The pan-European STOXX 600 index decreased 0.99 percent at 335.22 points, while the FTSEurofirst 300 index shed 1.06 percent at 1,322.02 points.
Britain's FTSE 100 trades 0.64 percent down at 6,979.16 points, while mid-cap FTSE 250 tumbled 0.19 percent at 17,922.22 points.
Germany's DAX edged down 1.26 percent at 10,390.46 points; France's CAC 40 trades 1.33 percent lower at 4,392.98 points.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, hitting its lowest since Sept.
Tokyo's Nikkei slumped 0.39 percent at 16,774.24 points, Australia's S&P/ASX 200 index lost 0.68 percent at 5,437.30 points and South Korea's KOSPI shed 0.9 percent at 2,015.44 points.
Shanghai composite index rose 0.1 percent at 3,061.35 points, while CSI300 index also edged up 0.1 percent at 3,302.65 points. Hong Kong’s Hang Seng slumped 1.6 percent at 23,301.30 points.
Commodities Recap
Crude oil prices edged up, after declining initially in the session on reports that showed a rise in U.S. crude stockpiles and as production increased to the highest level in at least eight years. Global benchmark Brent crude was trading 0.44 percent up at $51.88 per barrel at 1010 GMT, having declined to an intra-day low of 51.31. U.S. West Texas Intermediate crude rose 0.3 percent at $50.16 a barrel, having touched a 4-month of 51.57on Monday.
Gold prices rose as the dollar eased and global equities tumbled on weaker-than-expected Chinese trade data that raised concerns about the health of the world's second largest economy. Spot gold was trading 0.35 percent higher at $1,259.47 an ounce by 1016 GMT, while U.S. gold futures advanced 0.5 percent to $1,259.80 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7534 percent lower by 0.025 bps, while 5-year was 0.026 bps down at 1.2782 percent.
Europe's benchmark government bond yield fell back from 1-month highs after the latest signals from the global central banks raised doubts that monetary stimulus could be petering out.
German 10-year yields fell 2 basis points to 0.04 percent, pulling back from a one-month high hit on Wednesday, while most other euro zone yields were down 2-3 bps on the day.
Gilts opened 28 ticks higher than the settlement of 127.16 as core fixed income markets drew support from the soft September trade data from China.
Japanese longer dated government bond prices rose, with the Bank of Japan's regular debt-buying operation and follow-through support from a firm 30-year auction shoring up the market.
The benchmark 10-year JGB yield was unchanged at minus 0.065 percent, while the 20-year yield fell 1 basis point to 0.370 percent. The 30-year yield declined 1.5 basis points to 0.485 percent.
Australian government bond futures were higher, with the 3-year bond contract up 5 ticks at 98.34, while the 10-year contract rose 6.5 ticks to 97.785.
New Zealand government bonds rose, sending yields down about 5 ticks at the long-end of the curve.
