Market Roundup
- GBP/USD plays 1.2297-1.2450: highs after court ruling
- EUR/GBP runs to spec bids 0.8920-30 area: 0.8913 low
- GBP/USD +0.85%, EUR/USD -0.04%, USD/JPY -0.32%
- DXY -0.19%, DAX +0.06%, Brent +0.8%, Iron +0.3%
- England’s High Court did not accept government’s argument
- High Court rules that government requires parliament approval to trigger EU divorce
- UK Government seeks permission to appeal Brexit ruling: Courts give permission
- Government lawyer says Supreme Court sets aside Dec 5-8 for A50 appeal
- Sweden Sept Industrial Prod +6.8% m/m vs -4.1% previous, +2.8% expected
- Switzerland Q4 Consumer Confidence -13 vs -15 previous
- UK Oct Service PMI 54.5 vs 52.6 previous, 52.4 expected
- EZ Sept Jobless Rate 10.0% vs 10.1% previous, 10.00% expected
- China Oct Caixin services PMI 52.4, Sept 52.0, best in four months
- Australia Sept trade deficit A$1.23 bln, A$1.7 bln eyed
- UAE, Qatar may invest in Japan SoftBank's $100bn fund – Nikkei
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to remain unchanged at a seasonally adjusted 258,000 for the week ended Oct. 28 while continuing claims for the week ending Oct 21 is expected to rise to 2.044 m from 2.039 m.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of October. The index printed a final reading of 54.9 in the prior month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of October. The index posted a final reading of 54.8 in September.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index dropped to 56.0 in October from 57.1 in September.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 28.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders added 0.2 percent in September, unchanged from previous reading recorded in the prior month.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending October 28.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending October 28.
Key Events Ahead
- (0830 ET/1230 GMT) Bank of England Governor Mark Carney's speech
- (0945 ET/1345 GMT) FedTrade ops 15-Yr F.Mae/Fr.Mac max $725 mln
- (1145 ET/1545 GMT) FedTrade ops 30-Yr Ginnie Mae max $1.275 bln
FX Beat
DXY: The dollar recovered some ground versus the euro and the yen on slightly improved risk-on market sentiment. The greenback against a basket of currencies traded flat at 97.36, pulling away from a more than 3-week low of 97.08 hit earlier in the session.
EUR/USD: The euro declined, as weakness in EUR/GBP cross following Britain's court ruling on the triggering Article 50 weighed on the major. The pair initially rose to more than a 3-week high of 1.1125, as the greenback continued to decline against its major peers. Investors seem to have ignored Eurozone's upbeat unemployment rate, which remained unchanged at 10.0 percent in September. The European currency trades 0.1 percent lower at 1.1080, attempting to regain the 1.1100 handle. The pair finds resistance at 1.11340 (50- day MA) and any break above will take the pair to next level till 1.1175 (200- day MA)/1.12000. On the lower side, immediate support stands 1.1055 (daily Kijun-Sen)/ 1.1000/ 1.0930 (10- day MA).
USD/JPY: The dollar attempted a minor recovery to trade above the 103.00 handle, amid a mild improvement in the risk sentiment. Earlier in the day, the major slumped to a 1-month low of 102.54, as investors worried about the prospects of Donald Trump win at the upcoming U.S. presidential elections. The pair trades 0.1 percent down at 103.16, attempting to sustain gains above the 103.00 handle. The major resistance is around 104 and break above targets 104.45/105/105.50. 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 above the 1.2400 handle after England's high court ruled the government required parliament's approval to trigger Article 50. The major rallied as high as 1.2449 following the decision but trimmed gains on signs that the UK government could appeal the ruling at a hearing in early December. Moreover, better-than-expect Britain's Markit services PMI for October also strengthened the bid tone around the major. Sterling trades 0.9 percent higher at 1.2411, attempting to sustain gains above the 1.2400 level. Against the euro, the pound trades 1.02 percent higher at 89.27 pence, after hitting a fresh 1-week high of 89.11 pence. The immediate support stands at 1.2280 and any indicative break below targets 1.2200/1.2150. The short term trend reversal is only above 1.2500 level.
USD/CHF: The Swiss franc rose, extending gains for the third straight day, as the greenback tumbled across the board on U.S. presidential election uncertainty. The dollar trades 0.1 percent lower at 0.9725, having touched a 1-month low of 0.9695 earlier in the session. The Swiss currency was also supported by domestic upbeat consumer sentiment index, which came in at -13 points in the fourth quarter as compared to -15 points in the third quarter. 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 advanced after a report showed the economy's trade deficit narrowed to A$1.23 billion in September as compared with expectations of A$1.7 billion. However, the major ran into fresh offers as investors worried over next week's U.S. presidential election outcome, triggering a fresh bout of risk aversion. The Aussie trades 0.1 percent up at 0.7672, hovering towards a high of 0.7688 hit on Tuesday. On the higher side, major resistance is around 0.7730 and any break above will take the pair till 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 to a 1-month high above the 0.7300 handle, as markets expect the Reserve Bank of New Zealand to stand pat at its upcoming policy meeting next week. The major hit a high of 0.7329 earlier in the session but retreated as risk-off market sentiment undermined the bid tone around the major. The Kiwi trades 0.2 percent at 0.7302, attempting to sustain gains above the 0.7300 level. Immediate resistance is located at 0.7330, a break above targets 0.7350. On the downside, support is seen at 0.7230, a break below could drag it near 0.7220.
Equities Recap
European shares gained, halting their longest streak of losses in more than two years as positive corporate results, particularly from Eurozone banks strengthened market sentiment.
The pan-European STOXX 600 index increased 0.36 percent at 332.74 points, while the FTSEurofirst 300 index added 0.37 percent at 1,313.24 points.
Britain's FTSE 100 trades 0.18 percent up at 6,858.27 points, while mid-cap FTSE 250 gained 0.59 percent to 17,565.99 points.
Germany's DAX rose 0.05 percent at 10,376.63 points; France's CAC 40 trades 0.39 percent higher at 4,431.98 points.
Tokyo markets remained closed for a holiday.
Australia's S&P/ASX 200 index fell 0.04 percent to 5,227.00 points and South Korea's KOSPI gained 0.25 percent at 1,983.80 points.
Shanghai composite index rose 0.8 percent to 3,128.94 points, while CSI300 index advanced 1.0 percent at 3,365.09 points. Hong Kong’s Hang Seng slipped 0.6 percent to 22,683.51 points.
Commodities Recap
Crude oil prices steadied after declining to a near 5-week low on Wednesday as an attack on a Nigerian oil pipeline and board based U.S. dollar weakness supported prices. Global benchmark Brent crude was trading 0.11 percent higher at $47.10 per barrel at 0936 GMT, after declining to a low of $46.45 on Wednesday, its lowest since Sept 28. U.S. West Texas Intermediate crude rose 0.1 percent at $45.51 a barrel, having hit a 1-month low of $44.95 in the previous session.
Gold prices edged down but remained within the sight of near 1-month high as increasing uncertainty over the outcome of the U.S. presidential election weighed down the greenback. Spot nudged down 0.1 percent to $1,294.29 an ounce at 0942 GMT, after rising as high as $1,307.89 in the previous session, it's highest since Oct. 4.U.S. gold futures were down 0.4 percent at $1,302.40 per ounce.
Treasuries Recap
The U.S. Treasuries traded narrowly mixed with little overall reaction to the November FOMC statement that left rates unchanged as policy makers remain in search of some further evidence of continued progress toward its objectives. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 1.803 percent, the yield on long-term 30-year Treasury remained steady at 2.56 percent and the yield on short-term 2-year note slid 1 basis point to 0.814 percent.
The UK gilts slumped ahead of the Bank of England’s monetary policy decision. Also, better-than-expected PMI figures supported the cause. The yield on the benchmark 10-year gilts rose 2-1/2 basis points to 1.193 percent, the super-long 40-year bond yield jumped 4 basis points to 1.712 percent and the yield on short-term 2-year bounced 2 basis points to 0.205 percent.
The German bunds slumped as investors cashed in profit after relishing the previous rally. The yield on the benchmark 10-year bond rose 2-1/2 basis points to 0.155 percent, the yield on long-term 30-year note climbed 3 basis points to 0.777 percent and the yield on short-term 2-year bond bounced nearly 1 basis point to -0.626 percent.
The New Zealand government bonds closed modestly firmer as investors poured into safe-haven instruments at the end of the trading session after S&P/NZX 50 stock index declined more than 1 percent on subdued risk appetite ahead of the U.S. presidential election. The yield on the benchmark 10-year bond fell 1 basis point to 2.755 percent, the yield on 5-year note ended nearly 1 basis point lower at 2.263 percent and the yield on short-term 2-year note slid 1 basis point to 2.065 percent.
The Australian government bonds rallied ahead of the Reserve Bank of Australia’s (RBA) monetary policy statement, which is scheduled to be released Friday morning. The yield on the benchmark 10-year Treasury note fell 4 basis points to 2.309 percent, the yield on 15-year note also dipped 4 basis points to 2.675 percent and the yield on short-term 2-year slid 1/2 basis point to 1.638 percent.
