Market Roundup
- Dollar index touches fresh 8-1/2-month high at 100.31. 100.39 was Mar peak.
- EUR/USD makes new trend low at 1.0563. Closing in on 1.0457 2015 base.
- GBP/USD briefly tests 1.50 before recovering. 1.5050 earlier high.
- Oil set for 10 pct fall in November as supply glut persists.
- China offshore yuan up, suspected intervention by Chinese state banks on behalf of PBOC.
- Swiss cable car group wants new cap on franc - Schweiz am Sonntag.
- Swiss domestic sight deposits fall to 401.629bln w/e Nov 27 vs previous 402.695.
- Swiss Nov KOF Indicator 97.9 vs prev 100.4 revised. 100.2 expected.
- UK Oct BOE Consumer Credit 1.178bln vs prev 1.303bln revised. 1.300bln expected.
- UK Oct Mortgage Lending 3.629bln vs prev 3.562bln revised. 3.450bln expected.
- UK Oct Mortgage Approvals 69.630k vs prev 69.012k revised. 70.0k expected.
- UK Oct M4 Money Supply 0.6% vs prev -1.0%.
- BoJ Kuroda remains determined to achieve CPI target.
- Kuroda: Central Bank can't control wages but can help push them up.
- Kuroda: Weak yen good for exports but hurts households, small firms.
- Japan's public pension fund suffers record yen 7.9tn Q3 loss.
- GPIF put the losses down to yen rise & domestic stock weakness.
Economic Data Ahead
- (0700 ET/1200 GMT) Chile's government will release jobless rate for October, which is likely unchanged at 6.4 pct. Unemployment has stayed low through the recent slowdown. The country's statistics institute will also issue factory output for October.
- (0730 ET/1230 GMT) Brazil's central bank reports the federal budget balance for October. The budget deficit likely increased to $13.75 bln from $7.318 bln.
- (0830 ET/1330 GMT) Statistics Canada releases figures for current account. Canada's current account deficit is expected to have narrowed in the third quarter to C$15.15 billion from C$17.4 bln.
- (1000 ET/1500 GMT) The National Association of Realtors releases data on pending home sales for October. Contracts to buy previously owned U.S. homes are likely to have risen 1.5 percent in October, compared to a drop of 2.3 percent in September.
- (1400 ET/19 00 GMT) Argentina's government is due to release October industrial production data.
Key Events Ahead
- (0830 ET/1330 GMT) The Federal Reserve Board of Governors holds open meeting to discuss a final rule to implement the Dodd-Frank amendments to the emergency lending authority under Section 13(3) of the Federal Reserve Act.
- (0845 ET/1345 GMT) FedTrade Operation 15-yr Fannie Mae/Freddie Mac (max $500 mn).
- (1045 ET/1545 GMT) FedTrade Operation 30-yr Ginnie Mae (max $1.050 bn).
- The International Monetary Fund is expected to add China's yuan to its benchmark currency basket at a board meeting in a symbolic win for Beijing. Adding the yuan to the Special Drawing Rights basket would mark the biggest change since 1980, when the number of currencies in the basket was cut from 16.
FX Beat
USD: The dollar touched an 8 1/2-month high against a basket of currencies on Monday, as the prospect of further stimulus from the ECB drove the euro to its lowest since April. The dollar index rose 0.1 percent to 100.16 after earlier rising as high as 100.23, closing in on a 12-year high of 100.39 set in March. It was up more than 3 percent for the month and nearly 11 percent for the year.
EUR/USD: The euro fell against the dollar, before the ECB meeting on Thursday that is expected to unveil fresh monetary easing measures. It fell a third of a percent to $1.05645, just below last week's low of $1.0565. It is down around 4 percent for the month and more than 12 percent in 2015 so far. The pair slightly recovered till 1.06375 and was trading at 1.05802. Major intraday resistance is around 1.0620 (34 day 4 H EMA) and break above targets 1.0660/1.0690 (Nov 25th high). On the downside watch out 1.0556 (trend line joining 1.06731 and 1.06168) for further weakness and break below targets 1.0500 is possible.
USD/JPY: The pair recovered till 123.14 today at the time of writing after making a low of 122.30 and is currently trading around 123.04. Short term trend is slightly bullish as long as support 122.20 holds. On the higher side minor resistance is around 123.20 and any break above targets 123.60/124.15. Minor support is at 122.70 and break below targets 122.4/122.20.
GBP/USD: Sterling dropped against the stronger dollar, hitting $1.50 for the first time in seven months, after a Bank of England policymaker, Gertjan Vlieghe warned about the impact of a strong pound on inflation. He said in a newspaper interview over the weekend the tightening effect of a strong pound was "huge" and that he wanted to see growth stabilise or pick up before interest rates started to rise. Although the currency is trading at a 7-month low against the dollar, down 0.2 percent on Monday, on a trade-weighted basis it is close to eight-year highs. Further weakness can be seen only below 1.4980 (Trend line joining 1.5107 and 1.50290), on the higher side major resistance is around 1.5050 and break above targets 1.5100/1.5150. Its major support is around 1.5000 and break below targets 1.4980/1.4950. It was flat against the euro at 70.485 pence, but that was less than a cent away from an 8-year high of 69.35 pence hit earlier this year.
USD/CHF: The pair has made a 5-year high 1.03284 and slightly declined from that level. Intraday support is around 1.02600 and break below will drag the pair till 1.0200/1.0140. Overall bullish invalidation only below 1.0140. Major resistance is around 1.03280 and break above targets 1.03500/1.0400.
AUD/USD: The Australian dollar struggled as investors took profits ahead of a week packed with events and data. It fell to $0.7173, from $0.7196 late on Friday and a one-month peak of $0.7283 touched last week, support was found at $0.7159. It has recovered and was trading at 0.72090, major support is around 0.7150 and break below targets 0.7100/0.7070. Any intraday bullishness can be seen only above 0.7240 and break above targets 0.7280/0.7300. Short term bullish invalidation only below 0.7150. Aussie also lost ground against euro which edged up to A$1.4751. Yet, It has gained 4.5 percent in November which, if sustained, would be the largest monthly rise in three years.
NZD/USD: The New Zealand dollar edged down 0.2 percent to $0.6520 as investors waited for a stream of data due this week.
Equities Recap
European shares opened lower but picked up later, following falls in Asia, with investors being nervous before the Thursday's ECB meeting at which the the bank may extend its bond-buying programme and cut its already negative deposit rate.
The pan-European FTSEurofirst 300 index was up 0.2 pct, Britain's FTSE 100 dropped 0.25 pct, France's CAC 40 was down 0.24 pct and Germany's DAX fell 0.23 pct in early trades.
Tokyo's Nikkei stocks index dropped 0.7 pct on concern over China and after Japanese industrial output data was below forecasts. The CSI300 index and the Shanghai Composite both ended up 0.3 pct. HK's Hang Seng Index closed down 0.3 pct at 21,996.42 points.
Commodities Recap
Oil prices were on course to end November some 10 pct lower as a global oversupply showed no sign of easing and weak stocks and a strong dollar further weighed on prices.
Brent crude slipped 6 cents at $44.80 a barrel, on track for a 10 pct fall for the month. U.S. crude futures fell 7 cents lower at $41.64 per barrel and looked likely to reach the same monthly milestone.
Gold extended losses on Monday, falling towards its lowest level in six years, and was poised to record its steepest monthly slide in 2-1/2 years on prospects of a U.S. interest rate hike this year. Spot gold plunged 0.2 pct to $1,055.60 an ounce..
Treasuries Recap
U.S. 10-year Treasury yield stood at 2.228 pct versus U.S. close of 2.225 pct on Friday.
JGB prices closed the day mostly unchanged from last Friday due to the BoJ's massive JGB buying operations. The 10-yr to 25-yr zone and 25-yr to 40-yr zone were weaker than expected in terms of their yield changes on the day and the offer-to-cover ratios. But JGBs in the 30-yr to 40-yr zone recovered all of their earlier losses into the afternoon close, sending yields down from their intraday high of 1.385% (+1bp) and 1.53% (+0.5bp), respectively.
Eurozone 10-year bond yields were 1 to 3 bps higher across the region, with benchmark 10-year German Bund yields up 2.6 basis points at 0.48 per cent and above Friday's one-month low of 0.44 per cent.
UK Gilts opened 4 ticks lower than the settlement of 117.88 due a soggy eurozone market paring back some of last week's gains. The 10-year cash posed an early test of Friday's high of 1.844% with 50% of October lows and November highs above that at 1.868%.
New Zealand government bonds eased, pushing yields 1.5 bps higher at the long end of the curve. Australian government bond futures were little changed. The 3-year bond contract dropped 1 tick at 97.900, while the 10-year contract was stable at 97.1250. The 20-year contract gained half a tick to 96.6350.
