Market Roundup
- GBP/USD -2.6%, EUR/USD -0.25%, USD/JPY -0.13%
- DXY +0.12%, FTSE +0.9%, Brent +0.3%, DAX -0.02%
- GBP/USD fell around 9% from 1.2610 to a revised low of 1.1491
- Big cable option structures cleared away by the fall
- -Recovery equally as swift to1.2484 before consolidation wound licking
- Much debate on cause but stops would have figured heavily
- EUR/GBP climbed to 0.9403 from 0.8839
- HSBC f/cast GBP fall to parity vsw EUR by end -2017: Matches UBS
- BoE says looking into cause of sharp fall of Sterling overnight
- UK Hse prices +5.8% 3-mths to Sept, RTrs Poll 5.8%
- Blair hints at return to frontline politics to save Brexit Britain
- Deutsche Bk shares up 2.1% at 12.29"
- ECB ChiefEcon Praet – ECB committed to keeping policy ultra-easy
- France Pres Hollande – EU must be tough after UK opts for hard Brexit – FT
- IMF – US rate hike could disrupt Asian capital flows
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month September, which is expected to have added 175,000 jobs, after rising 151,000 in August.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate remained unchanged at 4.9 percent in September.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in September after edging up 0.1 percent in August.
- (0830 ET/1230 GMT) The Statistics Canada releases employment report for September. The economy probably added 10,000 jobs, compared to a rise of 26,200 jobs in August, while the participation rate came in at 65.5 percent in the same month.
- (0830 ET/1230 GMT) Canada's unemployment rate is expected to stay unchanged at 7 percent in the month of September.
- (1000 ET/1400 GMT) The U.S. wholesale inventories are likely to have edged down 0.1 percent in August after remaining steady in July.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of September. The index stood at 52.3 in the prior month.
- (1030 ET/1430 GMT) The Bank of Canada releases Business Outlook Survey.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to report that consumer credit rose to $16.50 billion in August.
Key Events Ahead
- (1030 ET/1430 GMT) Federal Reserve Vice Chair Stanley Fischer participates in a conversation on the economy and federal regulation before the Institute of International Finance Annual Membership Meeting, in Washington.
- (115 ET/1545 GMT) FedTrade operation 15-yr Fannie Mae/Freddie Mac max $600 mln
- (1245 ET/1645 GMT) Federal Reserve Bank of Cleveland President Loretta Mester speaks on "Fed Communications" before the Shadow Open Market Committee Fall Luncheon Meeting, in New York.
- (1500 ET/1900 GMT) Federal Reserve Bank of Kansas City President Esther George participates in a conversation on the U.S. economic outlook.
- (1600 ET/2000 GMT) Federal Reserve Board Governor Lael Brainard participates in a discussion on "Blockchain Technology".
- (1600 ET/2000 GMT) U.S. Treasury Secretary Jack Lew holds news conference regarding the annual meetings of the International Monetary Fund (IMF) and World Bank in Washington.
- (1600 ET/2000 GMT) Bank of Canada Senior Deputy Governor Carolyn Wilkins will give remarks on a panel on blockchain technology at the Institute of International Finance, Washington.
FX Beat
DXY: The dollar rose to a 2-month high versus the euro, as investors awaited U.S non-farm payroll data, which could strengthen the case of U.S. interest rate hike this year. The greenback against a basket of currencies trades 0.3 percent up at 96.94, after rising as high as 97.14, its strongest since July 27.
EUR/USD: The euro recovered after declining to a 2-month low, supported by better-than-expected German and French industrial production for the month of August. However, the upside was capped as investors expect the Non-farm payroll data to show addition of 172K jobs in September, as compared to 151K jobs added in the prior month, which could convince the Federal Reserve to raise U.S. interest rates in this year. The major trades 0.1 percent lower at 1.1138, retreating from a low of 1.1104, a level last seen since August 9. On the lower side, 1.1060 will be acting as major support and any break below confirms major weakness, a decline till 1.1000/1.0950/1.09100 is possible. The major resistance is around 1.1160 and any violation above will take the pair to next immediate resistance at 1.1180 (100- day MA) /1.12440 (61.8% retracement of 1.12793. and 1.1104)/1.1280.
USD/JPY: The dollar eased, after rising to a 1-month high in the previous session, as increasing concerns over Brexit impact dampened investors risk appetite. The Japanese yen benefited from the persisting risk-off market sentiment, however, the recovery mode likely appears to be fragile as markets anticipate that positive U.S employment data could strengthen the case of imminent Fed interest rate hike by the end of this year. The major trades 0.2 percent down at 103.69, pulling away from a high of 104.15 hit on Thursday, its strongest since Sept. 5. The major resistance is around 103.67 (100- day MA) and break above targets 104.35 (Sep 2nd high)/105. On the lower side, major support is around 102.20 (daily Kijun-Sen) and any break below 102.20 will drag the pair till 101.66 (10- day MA)/101.
GBP/USD: Sterling slumped to a 31-year low on intense selling pressure as investors remained concerned over the impact of Britain "hard" exit from the European Union. The major fell about 10 percent from 1.2621 to 1.1992 in thin early Asian trade, but trimmed losses to trade at 1.2347, but still 2.1 percent down for the day. Data released earlier showed that UK's August goods trade deficit widened to 12.112 billion pounds, while industrial and manufacturing production for the same period came in worse-than-expected at -0.4 percent and 0.2 percent, respectively, further weakening the bid tone around the pound. On the lower side, major support is around 1.1990 and any break below will drag the pair to next level till 1.1690. The intraday resistance is around 1.2505 (21- H MA) and any break above targets 1.2675 (90- H EMA)/1.2850(200- HMA) in the short term. Against the euro, the pound trades 1.85 percent down at 89.97 pence, having hit an early 7-year low of 92.25 pence.
USD/CHF: The Swiss franc edged down, hitting fresh 5-week low as the greenback strengthened on growing speculation of U.S. interest rate hike this year. The dollar trades 0.1 percent up at 0.9815, having touched an intra-day high of 0.9833, its highest since September 1. Data released earlier showed that Swiss National Bank's Forex Reserves rose to 628.047 billion sfr against 626.912 billion sfr at the end of August. On the higher side, any close above 0.9800 (200- MA) will take the pair till 0.9890. The short-term weakness can be seen only below 0.9730 and any break below targets 0.9680/0.9630.
AUD/USD: The Australian dollar trimmed losses after declining to a 2-week low struck earlier in the day. However, the recovery momentum stalled amid a broadly higher US dollar and subdued commodities prices. Moreover, persisting risk-off sentiment triggered by Brexit worries weakened the bid tone around the major. The Aussie trades 0.1 percent down at 0.7575, having hit an early low of 0.7561, its weakest since September 21. On the higher side, major resistance is around 0.7640 and any break above will take the pair till 0.7680/0.7730. The major support is around 0.7550 (90- day EMA) and break below will drag it till 0.7530/0.7480.
NZD/USD: The New Zealand dollar extended its bearish mode for the fourth consecutive session, hitting fresh 2-month low earlier in the day, as the U.S. dollar stood strong across the broad. The major has declined during the week as weak GDT Price Index release, coupled with rising prospects of Fed rate-hike action and expectations of further monetary easing by RBNZ at its November meeting, weighed on Kiwi bull’s sentiment. The pair trades 0.3 percent lower at 0.7139, after falling to a low of 0.7122, its softest since August 9. Immediate resistance is located at 0.7191 (5-DMA), break above targets 0.7220/ 0.7250. On the downside, support is seen at 0.7110, break below could drag it till 0.7080.
Equities Recap
European shares slumped as the pound plunged almost 10 percent amid growing concerns of a "hard" exit by Britain from the European Union.
The pan-European STOXX 600 index decreased 0.97 percent at 339.51 points, while the FTSEurofirst 300 index fell 0.80 percent at 1,339.87 points.
Britain's FTSE 100 trades 1.02 percent up at 7,070.88 points, while mid-cap FTSE 250 declined 0.07 percent at 18,103.35 points.
Germany's DAX tumbled 0.3 percent at 10,538.25 points; France's CAC 40 trades 0.18 percent lower at 4,472.21 points.
MSCI's broadest index of Asia-Pacific shares outside Japan declined around 0.4 percent.
Chinese banks will be closed in observance of National Day.
Tokyo's Nikkei dropped 0.23 percent at 16,830.09 points and Australia's S&P/ASX 200 index fell 0.32 percent at 5,465.70 points.
Hong Kong’s Hang Seng declined 0.4 percent at 23,851.82 points and South Korea's KOSPI shed 0.5 percent at 2,053.80 points.
Commodities Recap
Crude oil prices eased after rising for consecutive seven sessions, but both front-month contracts were above $50 per barrel. International benchmark Brent crude was trading 0.9 percent lower at $52.07 per barrel at 1003 GMT, pulling away from a 4-month high of $52.69 on Thursday. U.S. West Texas Intermediate crude declined 0.93 percent at $50.08 a barrel, having touched a high of 50.60 in the prior session, its highest since June 10.
Gold steadied after declining for eight straight session, but was set for its worst weekly fall in over three years as the dollar gained on increased expectations of a Federal Reserve rate rise by year end. Spot gold rose 0.2 percent to $1,257.26 an ounce by 1008 GMT, having touched a 4-month low of $1,249.70 in the prior session and was on course for its second straight weekly loss, its biggest weekly decline since June 2013. U.S. gold futures were up 0.1 percent at $1,254.50 an ounce.
Treasuries Recap
The U.S. Treasuries continued their weeklong slide as markets now stand in anticipation of the September employment report to finish off the week. The yield on the benchmark 10-year Treasury note rose 2 basis points to 1.73 percent, the yield on 5-year bond jumped 2 basis points to 1.27 percent and the yield on short-term 2-year note climbed nearly 1 basis point to 0.85 percent.
The UK gilts plunged as country’s inflation expectations continued to increase in response to the pound's weakness. The yield on the benchmark 10-year gilts rose 8 basis points to 0.955 percent, the super-long 40-year bond yield jumped 9 basis points to 1.574 percent and the yield on short-term 2-year bond climbed 5 basis points to 0.179 percent.
German bunds slumped as investors moved away from the safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond rose nearly 3 basis points to 0.020 percent, the yield on long-term 30-year note also jumped to 0.648 percent and the yield on short-term 2-year bond climbed 2 basis points to -0.652 percent
The Japanese government bonds traded nearly flat as investors refrained from engaging in bulky trading activity following a day of little significant data. The yield on the benchmark 10-year bonds, which moves inversely to its price, hovered around -0.056 percent mark, the yield on long-term 40-year note remained steady at 0.58 percent and the yield on short-term 2-year bonds stood flat at -0.27 percent.
The New Zealand government bonds traded flat during a relatively quiet session that saw little data of much significance. The yield on benchmark 10-year bond hovered around 2.51 percent mark, yield on 7-year note also remained steady at 2.24 percent and the yield on short-term 2-year note ended 1-1/2 basis point lower at 1.975 percent.
The Australian government bonds traded modestly lower as investors remained optimistic about the upcoming United States employment report. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis point to 2.183 percent, the yield on 15-year note jumped 2-1/2 basis points to 2.559 percent and the yield on short-term 2-year climbed 1-1/2 basis points to 1.675 percent.
