Market Roundup
- USD/CHF -0.32%, EUR/CHF -0.06%, EUR/USD +0.2%
- USD/JPY -0.5%, GBP/USD +0.15%, NZD/USD +0.8%
- DXY -0.2%, DAX -0.8%, Brent -1.45%, Iron -1.8%
- UK Oct Nationwide House prices +4.6% y/y vs 5.3% previous, 5.0% expected
- Germany Oct Manufacturing PMI 55.0 vs 55.1 previous, 55.1 expected
- EZ Oct Manufacturing PMI 53.5 vs 53.3 previous, 53.3 expected
- Germany Oct Jobless s/adjusted rate 6.0% vs 6.1% previous, 6.1% expected
- UK Oct Construction PMI vs 53.3 previous, 51.8 expected
- UK rating at risk of downgrade if UK gets poor Brexit deal–Moody’s
- Broadbent favourite to succeed Carney as BoE Governor – Paddy Power
- NIESR estimates UK economy will grow 0.2% in Q4 2016 & 1.4% in 2017
- Tweet from Jo Maugham’s twitter account: “Rumours we’ll get an A50 judgment tomorrow”
- Hilton said “expect 2.5% cut in UK VAT” via Nov 23 autumn statement – London Evening Standard Tuesday
- BoJ Gov Kuroda – Risks to economic outlook skewed to downside
- Italy bond yields fall sharply on speculation of referendum delay
- Japan Oct monetary base at fresh record high, Y417.63 trln, +21.3% y/y
- US Valeant in talks to sell unit to Japan Takeda for @$10 bln – Nikkei
- NIESR - Political attacks on BoE threaten its independence
- China starts credit default swap trading to lessen bond risks – Xinhua
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of October. The report is expected to show that 165,000 jobs were added as compared with 154,000 jobs in September.
- (0830 ET/1230 GMT) The NAPM-New York releases ISM-New York Index for the month of October. The index stood at 49.6 in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending October 28.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Services Index for the month of September. The index stood at 48.9 in August.
Key Events Ahead
- (1400 ET/1800 GMT)The Federal Reserve Federal Open Market Committee concludes its two-day meeting on interest rate policy and releases its statement.
- (1315 ET/1715 GMT) Bank of Canada Senior Deputy Governor Carolyn Wilkins will speak as part of a panel at an Ontario Securities Commission event in Toronto.
FX Beat
DXY: The dollar declined across the board as investors worried about the prospect of a Donald Trump presidency. The greenback against a basket of currencies trades 0.3 percent down at 97.41, having hit a fresh 3-week low of 97.39.
EUR/USD: The euro rallied to a 3-week high of 1.1099 after data showed Eurozone's Markit manufacturing PMI in October rose to 52.6, surpassing forecasts of 51.8 and previous 52.3. However, the major retreated thereafter, as German and Italy's manufacturing PMI came in weaker-than-expected. The euro trades 0.3 percent higher at 1.1087, having touched a high of 1.1099, is highest since Oct. 11. The pair finds resistance at 1.1100 (psychological resistance) and any break above will take it to next level till 1.1128 (50- day MA)/1.1175 (200- day MA). On the lower side, immediate support stands 1.1055 (daily Kijun-Sen)/1.1000/1.0930 (10- day MA).
USD/JPY: The dollar slumped on growing concerns that Donald Trump could win the U.S. presidential election, which fueled demand for safe-haven assets such as Japanese yen. Investors now await Federal Reserve monetary policy outcome, which is widely expected to keep rates unchanged and provide further insights on the timing of a possible U.S. interest rate hike. The major trades 0.75 percent lower at 103.38, having struck a low of 103.35, its weakest since Oct. 19. The major resistance is around 104 and break above targets 104.45/105/105.50. On the lower, side major support is around 103.25 (55- day EMA) and any break below targets 102.80.
GBP/USD: Sterling hit a 2-week high against the dollar, on the back of better-than-expected Britain's construction sector data and as the greenback weakened by worries about the U.S. presidential election. Data released by Markit Economics showed construction PMI for the month of October rose to 52.6, beating estimates of 51.8 and previous reading of 52.3, suggesting that the economy stood strong despite Brexit shock vote. Markets now await Thursday's BoE policy decision and quarterly inflation report which would provide further momentum for the pair. Sterling trades 0.4 percent up at 1.2294, having hit a high of 1.2299, its highest since Oct. 20. Against the euro, the pound was flat at 90.31 pence, after declining to a 2-week low of 90.48 earlier in the session. Cable faces strong resistance at 1.2303 and any break above targets 1.2350/1.2400. The immediate support stands at 1.2250 and any indicative break below targets 1.2150/1.20880 (Oct 11 Low).
USD/CHF: The Swiss franc rose to its strongest level in more than 4-months against the euro and in a month versus the dollar as investors wary over the prospects of a Donald Trump winning the U.S presidential election. The dollar slumped to 0.9695, it’s lowest since Oct. 3 and was last trading 0.3 percent lower at 0.9724. While against the euro, it traded flat at 1.0774, having declined to a low of 1.0753, a level last seen since June 27. The short term trend is weak as long as 200 –day MA 0.9780 holds. Any violation above 0.9780 confirms further bullishness, a jump till 0.9860/0.9900 is possible. On the lower side, support stands at 0.9715 and any indicative close below targets 0.9630/0.9580
AUD/USD: The Australian dollar declined to an intra-day low 0.7612 as risk-off sentiment intensified after latest poll results showed Trump had a lead in the US presidential elections race. However, the major trimmed losses to trade flat at 0.7650 as the greenback weakened across the board. The recovery mode is likely to remain fragile as reports indicating that the Australian fiscal outlook has deteriorated since 2015-16 and lower crude oil prices weighed on the Aussie. On the higher side, major resistance is around 0.7680 and any break above will take the pair till 0.7730/0.7760/0.7800. The major support is around 0.7613 (21- day MA) and a break below will drag it till 0.7590/0.7530.
NZD/USD: The New Zealand dollar rose by more than 1 percent after the economy's jobless rate declined to near 8-year lows in the third quarter, triggering speculation that the central bank would refrain from easing further at its policy meeting next week. Moreover, board based U.S. dollar weakness and a rebound in the price of milk strengthened the bid tone around the major. The Kiwi trades 1.11 percent higher at 0.7263, attempting to extend gains above the 0.7250 level. Immediate resistance is located at 0.7290, a break above targets 0.7330. On the downside, support is seen at 0.7169 (10-DMA), a break below could drag it near 0.7130/ 0.7100.
Equities Recap
World shares and the dollar slumped, while safe-haven assets rose as investors worried about the prospects of Donald Trump presidency just days before the vote.
The pan-European STOXX 600 index decreased 0.65 percent at 333.15 points, while the FTSEurofirst 300 index shed 0.66 percent at 1,315.79 points.
Britain's FTSE 100 trades 0.45 percent down at 6,886.47 points, while mid-cap FTSE 250 skidded 0.59 percent to 17,420.61 points.
Germany's DAX tumbled 0.87 percent at 10,434.29 points; France's CAC 40 trades 0.69 percent lower at 4,439.47 points.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.2 percent to seven-week lows.
Tokyo's Nikkei slumped 1.76 percent at 17,134.68 points, Australia's S&P/ASX 200 index fell 1.20 percent to 5,227.00 points and South Korea's KOSPI shed 1.42 percent at 1,978.94 points.
Shanghai composite index lost 0.6 percent to 3,102.73 points, while CSI300 index dropped 0.8 percent at 3,333.35 points. Hong Kong’s Hang Seng slipped 1.5 percent to 23,810.50 points.
Commodities Recap
Crude oil prices tumbled to fresh 1-month low, extending losses for a fourth consecutive session, after an industry report showed crude stockpiles rose unexpectedly by 9.3 million barrels in the week to Oct. 28, highlighting a persistent global glut. International benchmark Brent crude was trading 0.94 percent lower at $47.43 per barrel at 0928 GMT, having hit a fresh 1-month low of $47.40. U.S. West Texas Intermediate crude declined 0.86 percent at $45.92 a barrel, hovering towards an early low of $45.90, its lowest since Sept 28.
Gold prices rose to a near 1-month high as investors worried over the global economic outlook and rushed towards safe-haven assets on rising U.S. presidential election uncertainty. Spot gold was up 0.6 percent at $1,296.01 an ounce at 0944 GMT, after rising as high as $1297.21 per ounce, it’s highest since Oct. 4. U.S. gold futures rose 0.47 percent to $1,294.00 per ounce, having touched a 1-month high of $1,295.70 earlier in the session.
Treasuries Recap
The U.S. Treasuries saw further gains across much of the curve ahead of the Federal Reserve interest rate decision; no change is expected from the FOMC at the November meeting and the statement could go a long way in setting up markets for a move in December. The yield on the benchmark 10-year Treasury note fell 2-1/2 basis points to 1.797 percent, the yield on long-term 30-year Treasury dipped 3 basis points to 2.541 percent and the yield on short-term 2-year note slid 1/2 basis point to 0.825 percent.
The Eurozone periphery bonds gained as the possibility of a victory for Republican Party nominee Donald Trump in next week’s U.S. Presidential election pushed investors to buy safe-haven assets. The French 10-year bond yields fell 6 basis points to 0.440 percent, Irish 10-year bonds yield dipped 4 basis points to 0.618 percent, Italian equivalent tumbled 8 basis points to 1.668 percent, Netherlands 10-year bonds yield inched 4-1/2 basis points lower to 0.251 percent, Portuguese equivalents down 7-1/2 basis points to 3.277 percent and the Spanish 10-year bonds yield slid 9 basis points to 1.212 percent.
The UK gilts rallied after recent data showed that the country’s house prices failed to rise in October and annual inflation slowed to the weakest since January. The yield on the benchmark 10-year gilts fell 9 basis points to 1.189 percent, the super-long 40-year bond yield dipped 8 basis points to 1.682 percent and the yield on short-term 2-year slid 7 basis points to 0.191 percent.
The German bunds strengthened 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 4 basis points to 0.13 percent, the yield on long-term 30-year note dipped 4-1/2 basis points to 0.753 percent and the yield on short-term 2-year bond slid 1-1/2 basis points to -0.632 percent.
The Japanese government bonds traded modestly firmer as investors bought safe-haven assets to cover previous short positions. The benchmark 10-year bond yield fell 1 basis point to -0.059 percent, the yield on long-term 30-year Treasury dipped 2-1/2 basis points to 0.485 percent and the yield on short-term 2-year note slid nearly 1 basis point to -0.247 percent.
The New Zealand 10-year bond yields hit highest in six months after recent data showed that the country’s unemployment rate fell to lowest in nearly eight years. The yield on the benchmark 10-year bond rose 6 basis points to 2.780 percent.
The Australian government bonds rebounded as growing uncertainties over the U.S. presidential election sparked demand for safe-haven buying. The yield on the benchmark 10-year Treasury note fell 4-1/2 basis points to 2.349 percent, the yield on 15-year note dipped 4 basis points to 2.717 percent and the yield on short-term 2-year slid 4-1/2 basis points to 1.642 percent.
