Market Roundup
- GBP/USD +0.2%, EUR/USD -0.05%, USD/JPY -0.06%
- DXY -0.03%, DAX -1.0%, Brent -0.25%, Iron +1.1%
- Germany Oct Service PMI 54.2 vs 54.1 previous, 54.1 expected
- EZ Oct Service PMI 52.8 vs 53.5 previous, 53.5 expected
- EZ Sept Producer Prices -1.5% y/y vs -2.1% previous, -1.8% expected
- USD/TRY hits new record high of 3.1305
- Turkey’s pro-Kurdish party HDP’s 11 MOs detained
- Australia Sept retail sales +0.6%, f/c +0.4%
- RBA SOMP upbeat on economy, notes rise in terms of trade
- S. Korea President Park apologizes for scandal, is open to investigation
- 30 of 33 economists polled see RBNZ cutting 25 BPs to 1.75% Nov 10
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of October. The report is likely to show 175,000 jobs were added compared with 156,000 jobs in September.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labour force participation rate for the month of October. The rate stood at 62.9 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate declined to 4.9 percent in October from 5.0 percent in September.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in October after gaining 0.2 percent in the month before.
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of September. The economy's trade deficit is expected to have narrowed to $37.8 billion from 40.7 billion in August.
- (0830 ET/1230 GMT) The Statistics Canada releases employment report for October. The economy probably shed 10,000 jobs, compared to a rise of 67,200 jobs in September, while the participation rate is expected to edged down to 65.6 percent from 65.7 percent in the previous month.
- (0830 ET/1230 GMT) Canada's unemployment rate is expected to stay unchanged at 7 percent for the month of October.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that international trade deficit narrow to C$1.7 billion in September from C$1.94 billion in August.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of October. The index is likely to decline to 56.2 from 58.4 in the prior month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0845 ET/1245 GMT) Federal Reserve Bank of Atlanta chief executive Dennis Lockhart speaks at the 2016 Realtors Conference and Expo in Orlando.
- (0900 ET/1300 GMT) Federal Reserve Board Governor Lael Brainard speaks before the 19th Annual International Banking Conference hosted by the Federal Reserve Bank of Chicago.
- (1145 ET/1545 GMT) FedTrade ops 30-Yr F.Mae/Fr.Mac max $2.250 bln
- (1300 ET/1700 GMT) Dallas Fed President Robert Kaplan speaks at an Association of Banks of Mexico forum.
- (1600 ET/2000 GMT) Federal Reserve Vice Chair Stanley Fischer speaks on "Policy Changes After the Great Recession" before panel at the 17th Jaques Polack Annual Research Conference hosted by the International Monetary Fund.
FX Beat
DXY: The dollar edged up versus the euro and the yen, as investors eagerly awaited the U.S. non-farm payrolls report and Fed officials' speeches for further insights on the December rate hike. The greenback against a basket of currencies traded flat at 97.14, after having hit a more than 3-week low of 97.08 in the previous session, and was poised to fall 1.2 percent for the week.
EUR/USD: The euro edged down, but traded around the 1.1100 level as investors cautiously awaited the U.S. non-farm payrolls report. Eurozone's mixed economic data failed to strengthen the major as the continents upbeat producer price index figures for the month of September were offset by October's weaker-than-expected Markit service PMI data. The European currency traded flat at 1.1101, having touched an intra-day low of 1.1086. The upside is capped at 50 –day SMA and any violation above will take the pair till 1.1177 (200 –day MA)/ 1.1200.On the lower side, any break below 1.1055 will drag the pair down till 1.100/1.0965 (10-day MA).
USD/JPY: The dollar hovered around the 103.00 handle ahead of the U.S. non-farm payrolls report, which is likely expected to strengthened the prospects of December Fed interest rate hike and send the greenback higher. Earlier in the day, the major rose to an intra-day high of 103.35 on a slightly improved risk-on market profile, however, it retreated as worries that Donald Trump could win next week's U.S. presidential election weighed on investor sentiment. The pair trades flat at 102.96, having struck an early low of 102.83 and was set to end the week 1.6 percent lower. The major resistance is around 103.51 (cloud bottom) and a break above targets 104/104.45/105. On the lower side, major support is around 102.15 (38.2% retracement of 100.08 and 105.53) and any break below targets 101/100.
GBP/USD: Sterling rose, hitting fresh 4-week high, as hard Brexit fears eased after England's High Court ruled that the government required parliamentary approval to trigger Article 50. Bank of England Gov Mark Carney's statement to serve for an extra year, BoE's decision to withdraw its plans to cut interest rates and court ruling triggered positive sentiments around the British currency, which helped the pound gain 2.5 percent against the dollar this week, recording its best week since March. Sterling trades 0.3 percent higher at 1.2494, having hit a high of 1.2499, its strongest since Oct. 7. Against the euro, it trades 0.2 percent up at 88.88 pence, after rising as high as 88.59 pence on Thursday. The minor support is around 1.2366/1.2300, while the major support stands at 1.2280 and any indicative break below targets 1.2200/1.2150. The short term trend is reversal only above 1.2500 level.
USD/CHF: The Swiss franc edged down as the greenback recovered some lost ground, ahead of the U.S. non-farm payrolls report due later in the day. However, the recovery mode seems fragile as risk-off market sentiment continued to strengthen safe-haven assets. The dollar trades flat at 0.9736, having hit a 1-month low of 0.9695 in the previous session. The short term trend is weak as long as 200 –day MA 0.9780 holds and any violation above confirms further bullishness, a jump till 0.9860/0.9900 is possible. On the lower side, support stands at 0.9690 and any indicative close below targets 0.9630/0.9580
AUD/USD: The Australian dollar declined, halting its 5-day winning streak, as markets continued to wary over U.S. presidential election uncertainty. The major initially rose to a high of 0.7697 following domestic upbeat retail sales data, however, reversed gains as risk off market sentiment weakened the bid tone around the Aussie. The pair trades flat at 0.7680, having hit an intra-day low of 0.7663. On the higher side, major resistance is around 0.7710 and any break above will take the pair till 0.7730/0.7760. The major support is around 0.7620 (daily Kijun-Sen) and a break below will drag it till 0.7590/0.7530.
NZD/USD: The New Zealand dollar slumped, turning lower from a 6-week peak as a fresh bout of risk aversion dampened markets sentiment amid ongoing U.S. election uncertainty. Moreover, a Reuters poll showed a majority of economists expecting RBNZ to cut rates next week, which further added to the renewed weakness in the Kiwi. The major trades 0.3 percent down at 0.7317, having declined as low as 0.7300 earlier in the day. Immediate resistance is located at 0.7350, a break above targets 0.7400. On the downside, support is seen at 0.7278, a break below could drag it near 0.7256 (5-DMA).
Equities Recap
World share prices slumped to their lowest levels since early July as uncertainty about the outcome of the U.S. presidential election and developments surrounding Brexit weighed on market sentiment.
MSCI's global share index slipped 0.5 percent, hitting to its lowest since July 11 and was down almost 5 percent over the past two weeks.
The pan-European STOXX 600 index decreased 0.97 percent at 328.34 points, while the FTSEurofirst 300 index shed 0.9 percent at 1,295.02 points.
Britain's FTSE 100 trades 1.27 percent down at 6,703.88 points, while mid-cap FTSE 250 fell 1.60 percent to 17,300.01 points.
Germany's DAX tumbled 0.95 percent at 10,227.92 points; France's CAC 40 trades 0.77 percent lower at 4,377.67 points.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4 percent after touching its lowest levels since early August and was set for a loss of 1.7 percent for the week.
Tokyo's Nikkei slumped 1.34 percent at 16,905.36 points, Australia's S&P/ASX 200 index fell 0.90 percent to 5,178.60 points and South Korea's KOSPI lost 0.09 percent at 1,982.02 points.
Shanghai composite index edged down 0.1 percent to 3,125.32 points, while CSI300 index tumbled 0.3 percent at 3,354.17 points. Hong Kong’s Hang Seng slipped 0.2 percent to 22,642.62 points.
Commodities Recap
Crude oil prices tumbled to fresh lows as a surge in U.S. crude inventories and uncertainty over the ability of producers to coordinate output cuts weigh on market sentiment. International benchmark Brent crude was trading lower at $46.24 per barrel by 0944 GMT, after declining as low as $45.93 earlier in the session, its lowest since Sept 28. U.S. West Texas Intermediate crude fell to $44.50 a barrel, having hit fresh 5-week low of $44.27.
Gold eased as the dollar steadied ahead of U.S. employment report, however, was set for a weekly gain of nearly 2 percent as signs of a close-run U.S. presidential election kept investors' appetite for the safe-haven asset intact. Spot gold was down at $1,301.01 an ounce by 1000 GMT, while U.S. gold futures fell 0.4 percent to $1,298.00 per ounce.
Treasuries Recap
The U.S. Treasuries were pushed higher across the curve as markets remained cautious ahead of the October employment report. The yield on the benchmark 10-year Treasury note fell nearly 2 basis points to 1.794 percent, the yield on long-term 30-year Treasury also dipped 2 basis points to 2.58 percent and the yield on short-term 2-year note slid 1/2 basis point to 0.810 percent.
The UK gilts traded nearly flat as investors remain sidelined in any big deal ahead of the Bank of England MPC member Jon Cunliffe speech. The yield on the benchmark 10-year gilts hovered around 1.19 percent mark, the super-long 40-year bond yield remained steady at 1.70 percent and the yield on short-term 2-year stood flat at 0.18 percent.
The German bunds traded modestly firmer as investors poured into safe-haven instruments amid losses in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond fell 1 basis point to 0.150 percent, the yield on long-term 30-year note dipped 1-1/2 basis points to 0.763 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.632 percent.
The Japanese government bonds traded nearly flat, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield hovered around -0.06 percent mark, the yield on long-term 30-year Treasury remained steady at 0.49 percent and the yield on short-term 2-year note stood flat at -0.25 percent.
The New Zealand government bonds closed mixed ahead of the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, which is scheduled to be held on November 10. The yield on the benchmark 10-year bond fell 1 basis point to 2.785 percent, the yield on 5-year note ended nearly 5 basis points higher at 2.323 percent and the yield on short-term 2-year note climbed 3 basis points to 2.105 percent.
The Australian government bonds slumped as the Reserve Bank of Australia kept its economic growth and inflation forecasts virtually unchanged in its November Monetary Policy Statement (SoMP), signaling no near-term rate cut. The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.346 percent, the yield on 15-year note also climbed 4 basis points to 2.717 percent and the yield on short-term 2-year bounced 2 basis points to 1.656 percent.
