Market Roundup
- USD/JPY +0.3%, EUR/USD -0.14%, GBP/USD -0.02%
- DXY +0.18%, DAX -0.25%, Brent -0.55%, Iron -6.5%
- EU Commission decides not to suspend funds to Spain/Port for breach of rules
- Fed’s Bullard –Rate regime not expected to turn around and mean revert
- SNB’s Jordan CHF still significantly overvalued, will intervene if necessary
- UK Oct Claimant Count +9.8k vs revised 5.6k previous, 2.0k expected
- UK Sept ILO Jobless Rate 4.8% vs 4.9% previous, 4.9% expected
- UK Sept Average Earnings 2.3% vs 2.3% previous, 2.4% expected
- Switzerland Nov ZEW vs 5.2 previous,
- Australia Oct Westpac/MI leading index 97.11, Sept 97.05
- New Zealand Fonterra GDT price index +4.5% at latest dairy auction, last +11.4%
- PBOC fixes CNY at 6.8592 vs USD, spot (CNH=D3) as high as 6.8819
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. producer price index is likely to remain unchanged at 0.3 percent in October, while in the 12 months through October, it is expected to have advanced 1.2 percent. PPI excluding food and energy probably rose 0.2 percent after posting a similar gain in the prior month.
- (0830 ET/1330 GMT) Statistics Canada releases manufacturing shipments data for the month of September. Manufacturing sales are likely to have edged down 0.1 percent after rising 0.9 percent in August.
- (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.2 percent in October from 0.1 percent in September.
- (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 75.5 percent in October from 75.4 percent in September.
- (0930 ET/1430 GMT) The Conference Board releases Britain's Leading Economic Index for the month of October. The index remained unchanged in the prior month.
- (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index remained steady at 63 for the month of November.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 11.
- (1500 ET/2000 GMT) The Reserve Bank of New Zealand will release its Financial Stability Report.
- (1645 ET/2145 GMT) The Statistics New Zealand will report its producer price index input and output data for the third quarter. PPI input rose 0.9 percent and output increased 0.2 percent during the second quarter.
- (1615 ET/2145 GMT) The Statistics New Zealand will release its Retail Sales figures for the third quarter. The indicator stood at 2.3 percent, while retail sales ex-autos were at 2.6 percent in the previous quarter.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending November 11.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending November 11.
Key Events Ahead
- (0700 ET/1200 GMT) Minneapolis Federal Reserve President Neel Kashkari will give a speech and participate in Q&A.
- (1145 ET/1645 GMT) FedTrade 30-year Ginnie Mae max $1.225 bln
- (1150 ET/1650 GMT) Bank of Canada Deputy Governor Timothy Lane's speech.
- (1430 ET/1930 GMT) FedTrade 15-year Fannie Mae/Freddie Mac max $650 mln
- (1600 ET/2100 GMT) Federal Reserve Chair Janet Yellen and Treasury Secretary Jack Lew will attend a meeting of the Financial Stability Oversight Council, in Washington.
- (1830 ET/2330 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speech.
FX Beat
DXY: The dollar rallied across the board after FOMC member James Bullard stated that rate-hike was possible in December. The greenback against a basket of currencies trades 0.3 percent up at 100.42, having touched a fresh 11-month high of 100.48 earlier in the session. FxWirePro's Hourly Dollar Strength Index stood at 112.72 (Bias Highly Bullish) by 1100 GMT.
EUR/USD: The euro slumped, hitting a fresh 11-month low, as the greenback strengthened on the back of a solid rebound in the U.S. treasury yields and increasing expectations that the Federal Reserve would hike interest rate in December. The bid tone around the dollar stood strong as markets speculate that President-elect Donald Trump’s fiscal spending plans will stimulate demand and drive inflation higher, which sent the major as low as 1.0699, its lowest since the start of December last year. The European currency trades 0.1 percent lower at 1.0710, attempting to sustain gains above the 1.0700 handle. FxWirePro's Hourly Euro Strength Index stood at -12.07 (Bias Neutral) by 1000 GMT. The upside is capped by 5- day MA and any break above will take the pair till 1.0850 (Support turned into resistance) / 1.0950 (10- day MA). On the lower side, major support 1.0700 and any indicative break below will drag it down till 1.06400 (161.8% retracement of 1.07091 and 1.08163)/1.0600.
USD/JPY: The dollar rallied to a fresh 5-1/2 month high after FOMC member James Bullard stated that one rate hike was likely in December, reinforcing markets expectation. The major initially declined to an intra-day low of 108.79, however, retreated after a rebound in U.S. Treasury yields and risk-on market sentiment, underpinned the bid tone around the greenback. The pair trades 0.4 percent up at 109.57, having touched a high of 109.62, it’s highest since June 1. FxWirePro's Hourly Yen Strength Index stood at -63.58 (Bias Neutral) by 1000 GMT. The major resistance is around 110 and break above targets 111.80. On the lower side, minor support is around 109.25 (10- day MA) and any break below targets 108.45 (55- day EMA)/ 107.66 (100- day MA).
GBP/USD: Sterling edged down, despite data showed Britain's unemployment rate had fallen to the lowest level in 11 years, as markets attention remained on the risks surrounding Brexit. The economy's unemployment rate fell to 4.8 percent in the July-September period, however, the number of people in work rose by 49,000, the slowest increase since the three months to March this year, indicating that there were some signs of a slowdown in the labor market. Sterling trades 0.1 percent down at 1.2443, having hit an early high of 1.2502. FxWirePro's Hourly Sterling Strength Index stood at 22.23 (Bias Neutral) by 1000 GMT. The short term trend is slightly bearish as long as resistance 1.2530 holds. It should break below 1.2379 (Kijun-Sen) for further weakness, a decline till 1.2350/1.2300 is possible. On the higher side, any break above 1.2530 will take the cable to next level till 1.2600/1.2675. Against the euro, the pound trades flat at 86.00 pence, having hit a low of 87.07 pence in the previous session, its lowest since Nov. 10.
USD/CHF: The Swiss franc tumbled, extending losses for the seventh consecutive session, as the greenback strengthened across the board on increasing prospects of U.S. interest rate hike in December. The major hit a fresh 8-month high above the 1.0000 handle, amid renewed prevalent risk-on sentiment, which weakened the bid tone around safe-haven Swiss Franc. Moreover, ZEW Survey showed Switzerland's business expectations rose to 8.9 in November, surpassing previous print of 5.2. FxWirePro's Hourly Swiss Franc Strength Index stood at -96.41 (Bias Slightly Bearish) by 1000 GMT. The short-term trend is bullish as long as support 0.9915 (10- day MA) holds. Any violation below 0.9915 confirms minor weakness, a decline till 0.9860/0.9780 is possible. On the higher side, resistance stands at 1.0095 and any indicative close above targets 1.0180
AUD/USD: The Australian dollar declined to a 2-month low below the 0.7500 handle, as the greenback gained momentum across the board on the back of stabilizing U.S. bond yields. The major attempted a minor recovery earlier in the session to trade above the 0.7500 level, however, it came under renewed selling pressure after Fed official James Bullard strengthened the prospects of December interest rate hike. The Aussie trades 1 percent lower at 0.7483, having hit a low of 0.7482, it’s lowest since Sept. 19. FxWirePro's Hourly Aussie Strength Index stood at - 105.44 (Bias Highly Bearish) by 1100 GMT. On the higher side, major resistance is around 0.7580 and any break above will take the pair till 0.7650/0.7680. The major support is around 0.7440 and break below will drag it till 0.7400/0.7360.
NZD/USD: The New Zealand dollar tumbled to a fresh 1-month low as increasing bets on an imminent Fed rate-hike action continued to underpin the bid tone around the greenback. Moreover, the prevalent weakness in commodity prices and ongoing U.S. dollar strengthen is likely to contribute to the bearish sentiment surrounding the major. The Kiwi trades 0.7 percent lower at 0.7051, hovering towards a low of 0.7050, it’s weakest since Oct 13. FxWirePro's Hourly Kiwi Strength Index was at -76.36 (Bias Slightly Bearish) by 1100 GMT. Immediate resistance is located at 0.7120 (5-DMA), a break above targets 0.7150. On the downside, support is seen at 0.7034 (Oct. 13 Low), a break below could drag it near 0.7000.
Equities Recap
European shares advanced, strengthened by a rally among commodity-related stocks, while the dollar index hit fresh 11-month high on growing prospects of U.S. interest rate hike.
The pan-European STOXX 600 index increased 0.21 percent at 339.87 points, while the FTSEurofirst 300 index added 0.1 percent at 1,340.78 points.
Britain's FTSE 100 trades 0.25 percent down at 6,776.94 points, while mid-cap FTSE 250 lost 0.05 percent at 17,565.98 points.
Germany's DAX tumbled 0.22 percent at 10,711.39 points; France's CAC 40 trades 0.1 percent lower at 4,532.60 points.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, retreating from a 4-month low struck earlier this week.
Tokyo's Nikkei added 1.10 percent at 17,862.21 points, Australia's S&P/ASX 200 index rose 0.04 percent to 5,328.50 points and South Korea's KOSPI gained 0.62 percent at 1,979.65 points.
Shanghai composite index edged down 0.1 percent to 3,205.06 points, while CSI300 index ended flat at 3,429.59 points. Hong Kong’s Hang Seng shed 0.2 percent at 22,280.53 points.
Commodities Recap
Crude oil futures tumbled after an industry report showed crude inventories increased by 3.6 million barrels to 488.8 million barrels in the week ended Nov. 11, surpassing expectations for an increase of 1.5 million barrels. Global benchmark Brent crude was trading 0.8 percent lower at $46.56 per barrel by 0925 GMT, having hit an early high of $47.35, its highest since Nov. 3. U.S. West Texas Intermediate crude declined 0.85 percent at $45.35 a barrel, having touched a 2-week high of $46.16, earlier in the session.
Gold prices edged down, reversing some of its previous session gains, as the U.S dollar strengthened on increasing expectations of an interest rate hike by the Federal Reserve. Spot gold was 0.1 percent down at $1,227.56 an ounce at 0934 GMT, after gaining 0.67 percent in the previous session. U.S. gold futures rose 0.41 percent to $1,229.50.
Treasuries Recap
The U.S. Treasuries were pushed lower across the curve as investors moved away from safe-haven buying on rising Federal Reserve December rate hike hopes. The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.276 percent, the yield on long-term 30-year Treasury jumped 2 basis points to 2.993 percent and the yield on short-term 2-year note climbed 1/2 basis point to 1.009 percent.
The UK gilts slumped after recent data showed that the unemployment rate fell to the lowest since 2005 in September. Also, rising probability of a December rate hike by the Federal Reserve drove out investors from safe-haven buying. The yield on the benchmark 10-year gilts rose 4-1/2 basis points to 1.425 percent, the super-long 30-year bond yield jumped 4 basis points to 2.055 percent and the yield on short-term 2-year climbed 2 basis points to 0.224 percent.
The German bunds plunged following weakness in the U.S. Treasuries as the probability of a December rate hike by the Federal Reserve jumped to 94 percent. The yield on the benchmark 10-year bond rose 2 basis points to 0.326 percent, the yield on long-term 30-year note jumped 2-1/2 basis points to 0.946 percent and the yield on short-term 3-year bond climbed 1/2 basis point to -0.582 percent.
The Japanese government bonds plunged as the probability of a December rate hike by the Federal Reserve jumped to 94 percent from previous 30 percent before the presidential election. The benchmark 10-year bond yield rose 2-1/2 basis points to 0.030 percent, the yield on long-term 40-year note climbed 1 basis points to 0.696 percent and the yield on short-term 2-year note jumped 3 basis points to -0.150 percent.
The New Zealand government bonds closed marginally higher as the economy is still reeling from the impact of powerful earthquakes. The yield on the benchmark 10-year bond fell 1 basis point to 3.100 percent, the yield on 7-year note ended nearly 1 basis point lower at 2.753 percent and the yield on short-term 2-year note slid 1 basis point to 2.125 percent.
The Australian government bonds traded nearly flat Wednesday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note hovered around 2.66 percent mark and the yield on short-term 2-year remained steady at 1.81 percent.
