Market Roundup
- USD/JPY peaks again just ahead of 107.00
- USD/JPY -0.6%, EUR/USD -0.17%, GBP/USD +0.8%
- DXY -0.07%, DAX -0.25%, Brent -1.0%, Iron +6.0%
- Germany Final Oct HICP 0.7% y/y vs 0.7% previous, 0.7% expected
- Germany Final Oct CPI 0.8% y/y vs 0.8% previous, 0.8% expected
- UK Sept Construction o/p +0.2% y/y vs revised +0.8% previous, -0.4% expected
- Moscow Exchange says suspends trading on FX market
- Moscow Exchange says trade on FX market to resume 1310 Msk
- Reports eight Asian central banks intervened to support ccys
- ADB Nakao – US rate hike won’t impact Asian economies much
- President-elect Trump for positive involvement in Asia trade-investment
- Japan FinMin Aso – No comment on FX levels, FX stability necessary
- Markets sense of urgency, exceptional for JPY to 5 yen in 2 days
- Reuters Nov Tankan manufacturing index +14, highest since Aug ’15
Economic Data Ahead
- (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 89.5 in November, compared to a final reading of 87.2 in October.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0830 ET/1330 GMT) Federal Reserve Vice Chair Stanley Fischer speaks on "U.S. Monetary Policy and the Global Economy" via video before the 20th Annual Conference of the Central Bank of Chile in Santiago, Chile.
- (0950 ET/1450 GMT) Bank of Canada Governor Stephen S. Poloz speech
FX Beat
DXY: The dollar stood tall versus most of its major peers as investors continued to ponder over the economic outlook after Republican Donald Trump won the U.S. presidential election. The greenback against a basket of currencies traded flat at 98.83, hovering towards a high of 99.08 hit on Thursday, its highest since Oct. 25.
EUR/USD: The euro declined, hitting fresh 2-week lows below the 1.0900 handle as markets absorbed Republican candidate Donald Trump's victory in the presidential election and began focusing on upcoming European political risks. The major was also weighed down by cross selling in the EUR/GBP as political events in the coming months, from Italy's referendum next month to French presidential elections in the spring weighed on the European currency. The pair trades 0.1 percent down at 1.0882, hovering towards an early low of 1.0854, its lowest since Oct. 25. Immediate resistance is located at 1.0957 (5-DMA) a break above could take it near 1.1000. On the downside, support is seen at 1.0850, a break below could drag it lower till 1.0820.
USD/JPY: The dollar nudged down, after rising to a 3-1/2-month high versus the yen amid subdued demand for the U.S. dollar. However, the downside was capped by higher treasury yields and increasing December U.S rate hike expectations, despite an unexpected Trump-win at the U.S. presidential election. Investors now speculate President Donald Trump's policies would boost spending and inflation and possibly trigger more aggressive rate hikes by the Federal Reserve. The major trades 0.4 percent down at 106.31, having hit a high of 106.93 earlier in the session, its highest since July 21 and was set to end the week with a 3.6 percent gain. Markets now await Fed's Stanley Fischer speech and preliminary Michigan Consumer Sentiment Index, which is expected to rise to 89.5 in November. Immediate resistance is located at 107.00, a break above targets 107.50. On the downside, support is seen at 106.00, a break below could take it lower 105.67 (5-DMA).
GBP/USD: Sterling jumped above the 1.2600 for the first time in five weeks and was on course for its best fortnightly performance in eight years as investors shifted their focus on risky political events in the Eurozone. The British currency hit a month high against the dollar, while versus the euro it touched a 7-week high as investors unwound short positions against the pound, ahead of an Italian constitutional referendum in December with the potential impact of Donald Trump's presidency on global growth. Sterling trades 0.8 percent higher at 1.2656, attempting to regain the 1.2700 handle. Immediate resistance is located at 1.2700, a break above could take it near 1.2760. On the downside, support is seen at 1.2477 (5-DMA), a break below targets 1.2400. Against the euro, the pound trades 0.9 percent higher at 85.92 pence, having hit an early high of 85.66 pence, it’s highest since Sept. 23.
USD/CHF: The Swiss franc edged down, extending losses for the fourth straight day, as the greenback stood tall across the board. The dollar trades higher at 0.9866, hovering towards a 10-day high of 0.9896 hit in the previous session. The major consolidated between a narrow range, as markets await fresh fundamental triggers amid holiday thinned trading. Immediate resistance is located at 0.9900, a break above could take it till 0.9950. On the lower side, support stands at 0.9800 and any indicative close below targets 0.9770/0.9735
AUD/USD: The Australian dollar ran into fresh bids below the 0.7600 handle, as increasing political uncertainty across the globe triggered a fresh bout of risk- aversion sentiment. The major initially rose to an intra-day high of 0.7629, however, reversed gains to hit a 2-week low. The Aussie trades 0.3 percent lower at 0.7585, hovering towards a low of 0.7560, it’s lowest since Oct. 28 and was on track for a 1 percent weekly drop. On the higher side, resistance is around 0.7645 (20-DMA) and any break above will take the pair till 0.7700/0.7760. The major support is around 0.7540 and a break below will drag it till 0.7500.
NZD/USD: The New Zealand dollar declined, extending losses below the 0.7200 handle, as dovish RBNZ and Trump win weakened the bid tone around the major. The pair came under renewed selling pressure, extending losses for the third consecutive session after data released overnight showed New Zealand's Business PMI weakened to 55.2 in October from 57.5 in September. The Kiwi trades 0.3 percent lower at 0.7191, having hit a 9-day low of 0.7176 on Thursday and was down 2.0 percent for the week after registering gains in the last three weeks. Immediate resistance is located at 0.7250, a break above targets 0.7300. On the downside, support is seen at 0.7176 (Previous Session Low), a break below could drag it lower 0.7150.
Equities Recap
European shares advanced, underpinned by gains among financial stocks and prospects of massive fiscal stimulus from U.S. President-elect Donald Trump.
The pan-European STOXX 600 index increased 0.08 percent at 339.14 points, while the FTSEurofirst 300 index shed 0.07 percent at 1,338.90 points.
Britain's FTSE 100 trades 1.23 percent down at 6,745.18 points, while mid-cap FTSE 250 fell 1.06 percent at 17,472.84 points.
Germany's DAX advanced 0.49 percent at 10,682.06 points; France's CAC 40 trades 0.89 percent lower at 4,525.10 points.
Tokyo's Nikkei added 0.18 percent at 17,374.79 points, Australia's S&P/ASX 200 index gained 0.44 percent to 5,352.20 points and South Korea's KOSPI lost 0.91 percent at 1,984.43 points.
Shanghai composite index jumped 0.8 percent to 3,196.04 points, while CSI300 index also advanced 0.8 percent at 3,417.22 points. Hong Kong’s Hang Seng shed 1.4 percent at 22,531.09 points.
Commodities Recap
Crude oil prices held ground, as the market refocused on an ongoing crude and refined product supply overhang, which is unlikely to decrease unless producers make a significant cut to their output. Global benchmark Brent crude was trading 0.3 percent higher at $45.72 per barrel by 0938 GMT, pulling away from a 3-month low of $44.38 hit on Wednesday. U.S. West Texas Intermediate crude rose 0.2 percent at $44.37 a barrel, having hit a low of $43.06 earlier in the week, its lowest since Sept. 20.
Gold prices tumbled and were set for its first weekly decline in four, as the markets prepared for a Donald Trump presidency. Spot gold was 0.1 percent down at $1,256.03 an ounce at 0942 GMT, having declined to a more than 3-week low at $1,251.11 and was set to shed over 3 percent so far this week. U.S. gold futures were down 0.4 percent at $1,261.60 per ounce after falling as much as 1.3 percent to a 4-week low of $1,250.40 earlier.
Treasuries Recap
The United States benchmark 10-year Treasury yield rose 8 basis points to the highest in 2016 of 2.138 percent on expectations that U.S. President-elect Donald Trump's policies, such as fiscal expansion and protectionism on international trade, could support growth and inflation.
The UK 10-year gilt yields hit highest in 6 months as investors moved away from safe-haven buying amid global debt sell-off. The yield on the benchmark 10-year gilts rose 4 basis points to 1.381 percent, the super-long 40-year bond yield jumped 3 basis points to 1.862 percent and the yield on short-term 2-year bounced 1-1/2 basis points to 0.243 percent.
The German 10-year bund yields jumped above 3 percent mark for the first time since February this year on hopes that Donald Trump's economic policies could boost inflation, granting more space to the Federal Reserve for hiking interest rate in the near future. The yield on the benchmark 10-year bond rose 3 basis points to 0.308 percent, the yield on long-term 30-year note also jumped 3 basis points to 0.944 percent and the yield on short-term 2-year bond climbed 2 basis points to -0.595 percent.
The Japanese government bonds plunged following weakness in the U.S. Treasuries. The implied probability of the Federal Reserve December rate hike jumped to 80 percent on Trump’s inflation spectre. The benchmark 10-year bond yield rose more than 1 basis point to -0.03 percent, the yield on long-term 30-year note climbed nearly 2 basis points to 0.534 percent and the yield on short-term 2-year note jumped 1-1/2 basis points to -0.243 percent.
The New Zealand 10-year Treasury yields jumped above 3 percent mark for the first time in eight months following weakness in the global debt market. The yield on the benchmark 10-year bond rose 9 basis points to 3.065 percent, the yield on 7-year note also ended 7-1/2 basis points higher at 2.733 percent and the yield on short-term 2-year note slid 1 basis point to 2.135 percent (rose 5 basis points from yesterday’s close of 2.085 percent).
The Australian government bonds slumped on expectations that U.S. President-elect Donald Trump's policies, such as fiscal expansion and protectionism on international trade, could support growth and inflation. The yield on the benchmark 10-year Treasury note rose nearly 9 basis points to 2.583 percent (highest in 6 months), the yield on 15-year note jumped 8 basis points to 3.012 percent and the yield on short-term 2-year climbed 4 basis points to 1.723 percent.
