Market Roundup
- Donald Trump to become 45th U.S President
- U.S Republicans retain control of the Senate
- USD stages impressive recovery through early Europe
- USD initially crushed: USD/JPY to 101.19, GBP/USD to 1.2547
- Risk markets wobble and safety plays dominate
- CHF out of step: EUR/CHF races to 1.0830 from 1.0753
- USD/MXN to record high 20.5570, low earlier 18.6180
- USD/JPY -1.95%, EUR/USD +0.66%, GBP/USD +0.3%
- DXY -0.63%, DAX -1.0%, Brent -0.65%, Iron +5.95%
- Nikkei down 5.36%, Kospi -2.2%, SSEC -0.6%
- Japan MoF Asakawa – FX moves “rough”, eyeing markets with sense of urgency
- ChiefCabSec Suga – Will take steps in market if needed
- Bank lobby hopes tax data will sway UK’s stance in Brexit talks
- ECB Coeure – Policy side effects limited, accommodation appropriate
- Australia Nov Westpac/MI consumer confidence index slips 1.1% to 101.3
- Fitch - Australia bank profits to fall again this year
Economic Data Ahead
- (1000 ET/1500 GMT) The U.S. Commerce Department is likely to report that wholesale inventories rose 0.2 percent in September after posting a similar gain in August.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 4.
- (1500 ET/2000 GMT) The Reserve Bank of New Zealand will announce its interest rate decision.
- (1750 ET/2250 GMT) Japan's Cabinet Office will release machinery orders for the month of September. Machinery orders slumped 2.2 percent in August, while on annualized basis it stood at 11.6 percent.
- (1800 ET/2300 GMT) The Melbourne Institute will release Australia's Consumer Inflation Expectations for the month of November. The index was at 3.7 percent in October.
- (1830 ET/2330 GMT) Australia reports its investment lending for homes data for the month of September. The indicator edged up 0.1 percent in August.
- (1830 ET/2330 GMT) Australian Bureau of Statistics is likely to report that Home Loans declined 2 percent in September after slumping 3 percent in the previous month.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending November 4.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending November 4.
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade operation 30-Year Ginnie Mae max $1.275 bln
- (1500 ET/2000 GMT) The Reserve Bank of New Zealand Governor releases the monetary policy statement and gives a press conference.
- (1330 ET/1830 GMT) Minneapolis Fed President Neel Kashkari will speak at an economic outlook luncheon hosted by the Eau Claire (Wisconsin) Chamber of Commerce.
FX Beat
DXY: The dollar tumbled against its major peers after a surprise victory for Donald Trump in the U.S. presidential election. The greenback against a basket of currencies trades 0.6 percent lower at 97.33, retreating from an early low of 95.89, its lowest since Oct. 4.
EUR/USD: The euro advanced to 2-month highs but trimmed gains as markets digested the Trump victory in the U.S. presidential election. European Commission released its Economic Growth Forecasts report, which showed Eurozone’s growth projection at 1.7 percent this year, 1.5 percent in 2017 and 1.7 percent in 2018. The major trades 0.7 percent up at 1.1098, having struck a high of 1.1299, its strongest since Sept. 8. Any close above 1.1300 will take the pair till 1.13660/1.1400. On the lower side, any close below 1.1000 will take it to next level till 1.09300/1.085, while the minor support is around 1.1050.
USD/JPY: The Japanese yen rose a 1-month high of 101.19 from an early low of 105.46 after Trump won the U.S. presidency by 270 votes triggering a fresh bout of risk-off market sentiment. The major attempted a minor recovery to trade above the 103.00 handle, after Japan's government official stated that the govt. was ready to intervene if excess volatility and disorderly FX moves persisted. The dollar trades 1.97 percent lower at 103.06, attempting to sustain gains above the 103.00 level. The major resistance is around 103.80 (100- day MA) and a break above targets 104.50/105.46. On the lower side, major support is around 101 and break below targets 100/99.
GBP/USD: Sterling rose in a volatile trade following an unexpected victory for Donald Trump in the U.S. presidential election. The major was also supported by better-than-expected Britain's trade deficit with the rest of the world, which narrowed in the three months to September. Sterling trades 0.4 percent higher at 1.2418, after rising as high as 1.2546 earlier in the session. Against the euro, the pound traded 0.4 percent lower at 89.36, having hit a week's low of 90.26 pence in early trade. On the lower side, any break below 1.2380 will drag the pair down till 1.2350 (100- day 4H MA)/1.2328 (200- day MA)/1.2280. The top formed temporary around 1.2552 might be acting as short term resistance and any break above targets 1.2665 (50% retracement of 1.34461 and 1.19048)/1.2700.
USD/CHF: The Swiss franc rallied to a near 3-month as investors rushed towards safe-haven assets following Donald Trump victory in the U.S. presidential election. The dollar trades 0.4 percent lower at 0.9735, having struck a low of 0.9549, it’s weakest since August 19. The short term trend is weak as long as pair struggles to close above 21 –day MA 0.9835 holds. Any violation above 0.9835 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 0.9630/0.9580/0.9535.
AUD/USD: The Australian dollar tumbled, but recovered some ground after declining to a 1-1/2-week low amid board based risk aversion in the markets. The Aussie dropped 5.9 percent against the yen, recording its biggest fall since May 2010, while it slipped 4 percent to the Swiss francs and also underperformed against the euro, which rose more 4 percent. The major trades 1.10 percent lower at 0.7676, having declined to a low of 0.7580, its lowest since Oct. 28 and its biggest daily percentage loss since May 3. 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 0.7580 (100- day MA) and a break below will drag it till 0.7530.
NZD/USD: The New Zealand dollar slumped, after rising to a 2-month high in the previous session amid board based sell-off in the risk assets across the financial markets. The Kiwi lost nearly 5 percent on the yen while the euro rose more than 3.5 percent against the New Zealand currency. Markets now await the Reserve Bank of New Zealand policy meeting, where it is widely expected to cut interest rates to a record low 1.75 percent. The major trades 1.07 percent lower at 0.7306, having struck a low of 0.7272, registering its biggest drop since Sept.13. Immediate resistance is located at 0.7350, a break above targets 0.7400. On the downside, support is seen at 0.7260 (10-DMA), a break below could drag it near 0.7200.
Equities Recap
European shares declined as Republican Donald Trump victory over Democrat Hillary Clinton in the U.S. presidential election could cause global economic and trade turmoil and years of policy unpredictability.
The pan-European STOXX 600 index decreased 0.49 percent at 332.28 points, while the FTSEurofirst 300 index shed 0.5 percent at 1,315.88 points.
Britain's FTSE 100 trades 0.3 percent down at 6,823.03 points, while mid-cap FTSE 250 trades flat at 17,439.92 points.
Germany's DAX declined 0.68 percent at 10,407.44 points; France's CAC 40 trades 1.07 percent lower at 4,429.72 points.
MSCI's broadest index of Asia-Pacific stocks outside Japan slipped 2.3 percent.
Tokyo's Nikkei lost 5.88 percent at 16,161.00 points, Australia's S&P/ASX 200 index slumped 1.92 percent to 5,156.60 points and South Korea's KOSPI tumbled 2.25 percent at 1,598.38 points.
Shanghai composite index declined 0.6 percent to 3,128.37 points, while CSI300 index fell 0.5 percent at 3,353.05 points. Hong Kong’s Hang Seng shed 2.2 percent at 22,415.19 points.
Commodities Recap
Crude oil prices retreated from a near 3-month low after declining below $46 a barrel on Donald Trump's surprise victory in the U.S. presidential election. International benchmark Brent crude was trading 0.1 percent up at $46.01 per barrel by 1004 GMT, having hit an intraday low of $44.38, its weakest since Aug. 11. U.S. West Texas Intermediate crude declined 1.3 percent at $44.73 a barrel, after dropping to an early low of $43.06, its lowest since Sept. 16.
Gold advanced nearly 5 percent, hitting its strongest in six weeks as investors sought safe havens after Republican Donald Trump presidency win. Spot gold trades 2.0 percent higher at $1,300.56 an ounce by 1016 GMT, having hit a high of $1337.16, its strongest since Sept. 27. U.S. gold for December delivery was last up 3.5 percent at $1,319.40 an ounce.
Treasuries Recap
The U.S. Treasuries remained highly volatile following Donald Trump's surprise presidential election victory. The yield on the benchmark 10-year Treasury note rose 3-1/2 basis points to 1.896 percent, the yield on long-term 30-year Treasury jumped 10-1/2 basis points to 2.732 percent and the yield on short-term 2-year note slid 5 basis points to 0.814 percent.
The UK gilts snapped long winning streak as investors cashed in profit after relishing long winning streak. Also, we expect the Treasury prices to remain volatile for the short-term until market digest Trump victory. The yield on the benchmark 10-year gilts rose 3-1/2 basis points to 1.250 percent, the super-long 30-year bond yield jumped 4 basis points to 1.928 percent and the yield on short-term 2-year bounced ½ basis point to 0.21 percent.
The German bunds rallied after the United States Republican candidate Donald Trump pinned his victory against Democrat opponent Hillary Clinton in the 2016 presidential election. The yield on the benchmark 10-year bond fell 5 basis points to 0.131 percent, the yield on long-term 30-year note dipped 3 basis points to 0.755 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.650 percent.
The Japanese government bonds gained as investors poured into safe-haven assets after the United States Republican candidate Donald Trump conquered victory in the 2016 presidential election against Democrat opponent Hillary Clinton. The benchmark 10-year bond yield fell 2 basis points to -0.08 percent, the yield on long-term 30-year Treasury dipped 2-1/2 basis points to 0.47 percent and the yield on short-term 2-year slid 1-1/2 basis points to -0.27 percent
The New Zealand government bonds closed lower ahead of the Reserve Bank of New Zealand monetary policy decision, where it is widely expected to lower its official cash rate by 25 basis points to a new record low of 1.75 percent. The yield on the benchmark 10-year bond rose 1 basis points to 2.755 percent, the yield on 5-year note ended 1-1/2 basis points higher at 2.280 percent and the yield on short-term 2-year note bounced 2 basis points to 2.030 percent.
The Australian government bonds rallied as Republican presidential candidate Donald Trump took a surprise lead over his Democratic opponent Hillary Clinton in one of the most bitterly contested fights for Presidency. The yield on the benchmark 10-year Treasury note fell 10-1/2 basis points to 2.256 percent, the yield on 15-year note also dipped 10 basis points to 2.642 percent and the yield on short-term 2-year slid 7 basis points to 1.601 percent.
