Market Roundup
- GBP/USD plays to top of 1.2107-1.2326 into NY
- USD/JPY +0.06%, EUR/USD -0.25%, GBP/USD +1.10%
- DXY +0.2%, DAX -0.05%, Brent +0.75%, Iron -2.75%
- Germany Sept W/sale prices -0.3% y/y vs -1.2% previous
- Switzerland Oct ZEW Inv. Sentiment 5.2 vs 2.7
- EZ Aug Ind. Prod y/y vs -0.5% previous,1.1% expected
- UK - There will not be a vote in parliament on triggering article 50-PM spokesman
- UK- Brexit process should be undertaken in such a way that respects decision of the people
- UK PM May backs down on vote over her Brexit terms, asked for room to negotiate – Bbg
- BoJ Kuroda – Will ease again if needed including more neg rates if merits outweigh costs
- BoJ Policy Board Harada – Must ease further without hesitation if price target in doubt
- Australia Oct Westpac/MI cons/conf idx +1.1% m/m, +4.7% y/y to 102.4, Sept +0.3% m/m
- Japan set to drop sales tax on buying virtual currency – Nikkei
Economic Data Ahead
- (1000 ET/1400 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) for the month of August, which is expected to show that job openings declined to a seasonally adjusted 5.72 million from 5.87 million in July.
- (1400 ET/1800 GMT) Federal Open Market Committee issues minutes from its September 20-21 policy meeting.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1830 ET/2230 GMT) New Zealand will release its Business PMI index for the month of September. The index stood at 55.1 in the previous month.
- (1845 ET/2245 GMT) Statistics New Zealand will release food price index for the month of September. The indicator posted a gain of 1.3 percent in the prior month.
- (1901 ET/2301 GMT) The Royal Institution of Chartered Surveyors (RICS) will report Britain's Housing Price Balance for the month September. The indicator is expected to have increased to 14 percent from 12 percent in August.
Key Events Ahead
- (0800 ET/1200 GMT) Federal Reserve Bank of New York President William C. Dudley conducts an open-press fireside chat with the Business Council of New York State in Albany, New York.
- (0940 ET/1340 GMT) Federal Reserve Bank of Kansas City President Esther George speaks on "The Payments System" before the Federal Reserve Bank of Chicago, Annual Payments Symposium, in Chicago.
- (0945 ET/1345 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.775 bln
- (1145 ET/1545 GMT) FedTrade ops 15-yr Fannie Mae / Freddie Mac max $600 mln
FX Beat
DXY: The dollar strengthened versus the euro and the yen on growing U.S. rate hike expectations, ahead of FOMC latest meeting minutes due later in the day. The greenback against a basket of currencies trades up at 97.77, having touched a fresh 7-month high of 97.82 earlier in the session.
EUR/USD: The euro weakened to a fresh 11-week low of 1.1009 as increasing prospects of an eventual Fed rate hike action by the end of this year, renewed the buying interest in the greenback. Investors seem to have ignored better-than-expected Eurozone's industrial production s.a., which rose 1.6 percent in August, beating expectations of 1.1 percent and previous -0.7 percent. The major initially rose to an early high of 1.1067 but has declined from that level to trade 0.3 percent lower at 1.1022. The pair has formed Bullish Gartley pattern in the daily chart. On the lower side, 1.1000 will be acting as major support and any break below will drag it down till 1.0950/1.0900. Immediate resistance is around 1.1075 and any break above targets 1.1100/1.1160 in the short term.
USD/JPY: The dollar rose against its Japanese counterpart yen, on rising expectations that the U.S. Federal Reserve would hike interest rates as early as this year, with investors pricing in about a 70-percent probability of a rise in Decemer. Investors now await Federal Reserve Open Market Committee's latest meeting minutes for further cues on the U.S. interest rate path. The major trades 0.2 percent higher at 103.75, hovering towards a high of 104.07 hit on Tuesday. The major resistance is around 104.35 (Sept 2 High) and a break above targets 105. On the lower side, major support is around 103.14 (Ichimoku cloud) and any break below 103.14 will drag the pair till 102.80/ 102.12 (daily Kijun-Sen).
GBP/USD: Sterling rose above the 1.2300 handle, after Britain's PM Theresa May's offered to give lawmakers some scrutiny of the Brexit process. However, it trimmed gains following BoE Deputy Governor Jon Cunliffe comments, which indicated that there was high uncertainty about the possible loss of banking activity following the Brexit decision. Sterling trades 1.2 percent higher at 1.2269, having touched an intra-day high of 1.2324. 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 (Ichimoku cloud) and any break above targets 1.2500/1.2609 (200- H MA) in the short term. Against the euro, the pound was trading 1.5 percent higher at 89.79 pence.
USD/CHF: The Swiss franc tumbled hitting fresh 11-weeks low as the greenback continues to strengthen on increasing U.S. interest rate hike speculation. However, losses were capped as upbeat Switzerland's ZEW survey which showed business expectations at 5.2, beating previous 2.7, kept the bid tone around the Swiss franc intact. The dollar trades higher at 0.9893, having touched a high of 0.9903, its highest since July 27. On the higher side, any close above 0.98845 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.
AUD/USD: The Australian dollar retreated, pulling away from 3-week lows, however, the recovery mode ran out of steam below the 0.7600 handle, as the greenback strengthened on rising bets of an eventual Fed rate hike action by the end of 2016. The major benefited from upbeat Westpac Consumer Sentiment index for October, which rose to 1.1 percent from previous month's 0.3 percent, amid a rebound in sterling triggering risk-on market sentiment. The Aussie trades 0.54 percent higher at 0.7577, attempting to regain the 0.7600 handle. On the higher side, major resistance is around 0.7595 (21- day MA) and any break above will take the pair till 0.7640/0.7680. The major support is around 0.7530 (cloud bottom) and a break below will drag it till 0.7480/0.7440.
NZD/USD: The New Zealand dollar initially rose to an intra-day high of 0.7094, recovering from a near 2-1/2 month low, however, it trimmed gains as the U.S. dollar gained across the board on growing U.S. interest rate hike by December speculation. Moreover, RBNZ's warning about further policy easing to push inflation higher continued to weigh on the Kiwi bulls. The pair trades 0.2 percent higher at 0.7065, but within the sight of a 2-1/2 low of 0.7047 hit in the previous session. Immediate resistance is located at 0.7100, break above targets 0.7120/ 0.7150. On the downside, support is seen at 0.7020, a break below could drag it till 0.7000.
Equities Recap
World shares declined towards 3-week lows as disappointing U.S. earnings reports weighed on market sentiment, while sterling rose for the first time in five days following British PM Theresa May comments.
The pan-European STOXX 600 index decreased 0.07 percent at 339.94 points, while the FTSEurofirst 300 index shed 0.1 percent at 1,340.96 points.
Britain's FTSE 100 trades 0.31 percent down at 7,049.04 points, while mid-cap FTSE 250 tumbled 0.32 percent at 18,014.98 points.
Germany's DAX edged down 0.15 percent at 10,560.62 points; France's CAC 40 trades 0.23 percent lower at 4,461.52 points.
MSCI's broadest index of Asia-Pacific shares outside Japan fell to 3-week lows.
Tokyo's Nikkei slumped 1.09 percent at 16,840.00 points, Australia's S&P/ASX 200 index lost 0.17 percent at 5,470.40 points and South Korea's KOSPI shed 0.6 percent at 23,407.05 points.
Shanghai composite index fell 0.2 percent at 3,058.50 points, while CSI300 index also dropped 0.2 percent at 3,300.01 points. Hong Kong’s Hang Seng slumped 0.6 percent down at 23,407.05 points.
Commodities Recap
Crude oil prices gained, strengthened by record Indian crude imports and talks between OPEC and non-OPEC producers on restraining output to end a glut in the global market. Global benchmark Brent crude was trading 0.44 percent up at $52.72 per barrel at 0950 GMT, having hit a 1-year high of $53.71 on Monday. U.S. West Texas Intermediate crude rose 0.2 percent at $50.93 a barrel, after rising as high as 51.57on Monday, its highest since June 9.
Gold nudged higher as the U.S. dollar eased against major peers, while markets awaited Federal Reserve September policy meeting minutes for further insights on the U.S interest rate path. Spot gold was up 0.3 percent at $1,255.42 an ounce by 0958 GMT, after declining 0.5 percent in the previous session. U.S. gold futures gained 0.1 percent to $1,257.4 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7780 percent higher by 0.019 bps, while 5-year was 0.02 bps up at 1.3141 percent.
The Eurozone bond yields edged higher after concerns over a "hard Brexit" reduced on reports that Britain's parliament will scrutinize in exit negotiations. Germany's 10-year Bund rose by 1.7 basis points (bps) to 0.054 percent, while the yield on Spain's 10-year bond rose 4 bps to 1.13 percent.
Gilts opened 23 ticks lower than the settlement of 127.70 as Gilts remain under pressure due to the weaker sterling.
The Japanese government bonds mostly firmed, shrugging off an overnight rise in U.S. Treasury yields. The benchmark 10-year JGB yield edged down half a basis point to minus 0.060 percent, while December 10-year futures ended up 0.05 point at 151.86. The yield curve flattened as prices in the superlong zone gained after the auction, with the 20-year JGB yield falling 1 bp to 0.385 percent, while the 30-year yield shed 2.5 bps to 0.500 percent.
The Australian government bond futures eased, with both the 3-year and the 10-year bond contracts down 3 ticks at 98.31 and 97.750 respectively.
The New Zealand government bonds gained, sending yields 1 basis point lower at the short end of the curve.
