Market Roundup
- EUR/USD tight but heavy ahead of ECB policy decision
- EUR/USD -0.1%, USD/JPY +0.26%, GBP/USD -0.16%
- DXY +0.17%, DAX +0.25%, Brent -1.06%, Iron +0.45%
- UK Brexit Min Davis-Not for the UK to determine right or wrong exchange rate
- Indonesia cuts benchmark rate 25 bp-Sixth cut in 2016
- Scottish Government drafts bill fo4 second independence referendum
- Turkish Pres.-I'm an enemy of interest rates
- USD/JPY & Nikkei reap benefits of Softbanks -Saudi fund deal
- Germany September Producer Prices -1.4% y/y vs -1.6% previous, -1.2% expected
- Switzerland Sept Trade surplus CHF 4.374 bln vs revised 3.008 bln previous
- EZ Aug C/A E23.6 bln vs revised 33.8 bln, S/Adjusted 29.7 bln vs revised 27.7 bln
- EZ Aug Net Investment Flow E79.8bln vs revised 80.9 bln
- UK Sept Retail Sales +4.1% y/y vs revised +6.6% previous, 4.8% expected
- ECB seen firmly on hold, charting course to more ease in December
- China war on underground banks uncovers $148 bln in illegal trades
- Australia Q3 NAB biz conditions index off 4 pts, +7, confidence +2 pts, +5
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 250,000 for the week ended Oct. 15 while continuing claims for the week ending Oct 7 is expected to rise to 2.050 m from 2.046 m.
- (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 5.3 in October from 12.8 in September.
- (1000 ET/1400 GMT) National Association of Realtors is likely to show that U.S. existing home sales rose 0.4 percent to 5.35 million-unit in September from 5.33 million-unit in August.
- (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. leading indicator rose 0.2 percent in the month of September, after declining 0.2 percent in August.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 14.
- (1845 ET/2245 GMT) The Statistics New Zealand will release visitor arrivals report for the month of September. The indicator posted an annualized gain of 9.0 percent in the prior month
Key Events Ahead
- (0830 ET/1230 GMT) European Central Bank President Draghi releases the monetary policy statement and gives a press conference.
- (0830 ET/1230 GMT) New York Fed chief William Dudley gives speaks at a conference titled "Reforming culture and behavior in the financial services industry: Expanding the dialogue."
- (0900 ET/1300 GMT) New York Fed chief William Dudley will also moderate the panel "Finance and Society: A Global Perspective" at the conference.
- (0945 ET/1345 GMT) FedTrade operation 15-yr Fannie Mae/Freddie Mac max $675 mln
- (1145 ET/1545 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac max $2.750 bln
- (1945 ET/2345 GMT) New York Fed chief William Dudley gives a speech about New York's economic history at the Lotos Club.
FX Beat
DXY: The dollar gained against its major peers following the third and final debate in the U.S. election campaign between Democrat Hillary Clinton and Republican Donald Trump. The greenback against a basket of currencies rose 0.1 percent at 97.92, having touched an intra-day high of 98.08.
EUR/USD: The euro slumped to a near 3-month low against the dollar, as traders nervously awaited European Central Bank meeting, which is expected to leave its monetary policy unchanged. The ECB is unlikely to make any changes to its asset purchase programme until December; however, investors will look for clues from ECB President Mario Draghi speech for clarity on the recent speculation that the central bank could start tapering down its bond purchases. The major trades flat at 1.0972, having declined to an early low of 1.0952, its lowest point since July 25. The intraday trend is bearish as long as resistance 1.1010 holds and any break above will take the pair to next level till 1.10580/1.10750 in the short-term. On the lower side, any break below 1.0950 (Jul 25 Low) will drag the pair down till 1.0910/1.0835.
USD/JPY: The dollar rebounded from a 1-week low as buying interest in the greenback renewed following the third and final US Presidential debate, which pointed to an eventual win for Democrat Hillary Clinton at the upcoming US Presidential election in November. The major was also supported by bullish comments from New York Fed President William Dudley. The Fed official stated that the central bank will likely hike interest rates later this year if the economy remained close to Fed's goals of 2 percent inflation and sustainable employment. The major resistance is around 104.65 (trend line joining 104.32 and 104.48) and a break above targets 105.08/106. On the lower side, major support is around 103.16 (100- day MA) and any break below 103.30 will drag the pair till 102.80/102.20.
GBP/USD: Sterling declined, extending previous session losses as UK’s weaker-than-expected retail sales hampered investor sentiment. Britain's September retail sales and sales excluding fuel component both remained unchanged against estimates of 0.4 percent gain. On annualized basis, retail sales stood at 4.1 percent versus consensus of 4.8 percent, while excluding fuel sales came in at 4.0 percent against projections of 4.5 percent. Sterling trades 0.2 percent lower at 1.2264, pulling away from an 8-day high of 1.2332 hit on Wednesday. Major resistance is located at 1.2338 and any violation above confirms minor trend reversal, a jump till 1.2400/1.248 is possible. On the lower side, any break below 1.2250 will drag the pair down till 1.2200/ 1.2150 /1.20896 in the short term.Against the euro, the pound declined 0.25 percent to 89.50 pence, after rising to a near 2-week high of 89.00 in the previous session, it’s strongest since Oct. 7.
USD/CHF: The Swiss franc edged down, as the greenback strengthened across the board following the third and final debate in the U.S. election campaign. The dollar trades higher at 0.9893, hovering towards a near 3-month high of 0.9914 hit earlier in the week. Data released earlier in the day showed Switzerland trade balance expanded to 4374 million SFR in September, versus revised 3008 million SFR in the prior month. On the higher side, any close above 0.9910 will take the pair till 0.9960/1.000. The short-term weakness can be seen only below 0.9845 (5- day MA) and any break below targets 0.9790/0.9730.
AUD/USD: The Australian dollar declined, erasing previous session’s strong gains as weaker-than-expected employment report fueled speculations that the central bank might ease its monetary policy in near-term. The major initially rose a 6-week high but halted its six consecutive days of winning streak after employment report showed that the number of employed people in September declined by 9.8K as against an expected rise of 15K. The Aussie trades 0.8 percent lower at 0.7659, having touched an early high of 0.7734, it’s highest since August 16. 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 0.76400 and break below will drag it till 0.7580/0.7530.
NZD/USD: The New Zealand dollar tumbled after rising to a more than 2-week high, as the greenback strengthened following the third and final US Presidential election debate that pointed towards a win for Hillary Clinton. However, the downside in major was limited as the major found support after Fitch Ratings affirmed New Zealand’s dairy giant, Fonterra Co-operative Group Limited's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A', with the Outlook ‘Stable’. The Kiwi trades 0.1 percent down at 0.7223, having touched an early high of 0.7265, its strongest since Oct. 4. Immediate resistance is located at 0.7280, break above targets 0.7330/ 0.7340. On the downside, support is seen at 0.7191 (20-DMA), a break below could drag it near 0.7160.
Equities Recap
European shares declined as profit warnings from companies throughout the region weighed on markets sentiment.
The pan-European STOXX 600 index decreased 0.11 percent at 343.25 points, while the FTSEurofirst 300 index edged down 0.1 percent at 1,354.30 points.
Britain's FTSE 100 trades 0.1 percent down at 7,015.66 points, while mid-cap FTSE 250 shed 0.5 percent at 17,951.20 points.
Germany's DAX rose 0.27 percent at 10,674.43 points; France's CAC 40 trades 0.20 percent higher at 4,529.75 points.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent on the day.
Tokyo's Nikkei rose 1.39 percent at 17,235.50 points, Australia's S&P/ASX 200 index climbed 0.08 percent to 5,439.90 points and South Korea's KOSPI ended flat at 2,040.60 points.
Shanghai composite index ended flat at 3,084.46 points, while CSI300 index edged up 0.1 percent at 3,318.60 points. Hong Kong’s Hang Seng rose 0.3 percent to 23,374.40 points.
Commodities Recap
Crude oil prices declined on profit-taking after rising to an 8-day high the day before following a draw in U.S. stocks and an expectation of an OPEC-led cut in production. Global benchmark Brent crude was trading 0.8 percent lower at $52.12 per barrel at 0924 GMT, pulling away from a high of $53.11 hit in the previous session. U.S. West Texas Intermediate crude fell 0.6 percent at $51.27 a barrel.
Gold prices nudged down after rising earlier in the session, as the dollar strengthened following the U.S. presidential debate between Democrat Hillary Clinton and Republican Donald Trump. Spot gold was trading flat at $1,268.92 an ounce as of 0929 GMT, having touched a high of $1273.22 on Wednesday, its strongest since Oct.5. U.S. gold futures were up 0.2 percent at $1,271.80 an ounce.
Treasuries Recap
The U.S. Treasuries were little changed as markets look ahead to a greater flow of data on Thursday, highlighted by jobless claims, Philadelphia Fed manufacturing, existing home sales and leading indicators releases. The yield on the benchmark 10-year Treasury note hovered around 1.75 percent mark and the yield on short-term 2-year note remained steady at 0.807 percent.
The Eurozone periphery bonds traded modestly lower ahead of the European Central Bank (ECB) monetary policy meeting. The French 10-year bond yields rose 1-1/2 basis points to 0.322 percent, Irish 10-year bonds yield climbed 1/2 basis point to 0.499 percent, Italian equivalent bounced nearly 1 basis point to 1.452 percent, Netherlands 10-year bonds yield inched 1-1/2 basis points higher to 0.149 percent and the Spanish 10-year bonds yield jumped 1-1/2 basis points to 1.124 percent.
The UK gilts slumped as markets largely shrugged off weaker-than-expected retail sales data for September. The yield on the benchmark 10-year gilts rose 3 basis points to 1.116 percent, the super-long 40-year bond yield climbed 1-1/2 basis points to 1.619 percent and the yield on short-term 2-year bond jumped 3 basis points to 0.247 percent.
The German bunds slumped after Chambers of Commerce (DIHK) raised economic growth forecast for 2016. The yield on the benchmark 10-year bond rose 2 basis points to 0.04 percent, the yield on long-term 30-year note also climbed 2 basis points to 0.66 percent and the yield on short-term 2-year bond bounced 1 basis point to -0.65 percent.
The Japanese government bonds traded narrowly mixed Thursday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield fell ½ basis point to -0.06 percent, the yield on long-term 30-year Treasury remained steady at 0.50 percent and the yield on short-term 2-year note rose ½ basis point to -0.26 percent.
The New Zealand government bonds closed marginally higher as investors speculate that the Reserve Bank of New Zealand (RBNZ) will lower its interest rate in November’s monetary policy meeting in the wake of persistent weak inflation. The yield on the benchmark 10-year bond fell 1/2 basis point to 2.615 percent (fell for the first time this week), the yield on 7-year note also ended 1/2 basis point lower at 2.288 percent and the yield on short-term 2-year note slid ½ basis point to 1.945 percent.
The Australian government bonds strengthened after latest economic data showed that the country registered its biggest monthly drop in full-time employment in five years in September. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.300 percent, the yield on 15-year note dipped 2 basis points to 2.667 percent and the yield on short-term 2-year slid 4-1/2 basis points to 1.677 percent.
