- AUD/USD hits highs of 0.7217 targets mid-Sept 0.7280 high.
- USD/CAD hits 1.2992 lows and looks like to buy.
- Germany August Industrial output -1.2% m/m vs 0.7% previous, 0.2% expected.
- UK August Industrial output +1.9% y/y vs 0.8% previous, 1.2% expected.
- UK August manufacturing output -0.8% y/y vs -0.5% previous, -0.1% expected.
- Germany economy institute to lower German 2015 growth estimated to 1.8% vs 2.1%.
- BoJ leaves policy, economic assessment as is, as eyed, vote 8-1.
- Japan's Abe set to keep allies in key posts as attention returns to economy.
- BOJ Kuroda - No change in stance, will not hesitate to ease policy further.
- Kuroda - still half-way to meeting 2% inflation target.
- Kuroda - Japan is no longer in deflation.
- Riksbank's Floden rapid SEK rise a risk to infl. Upturn.
- Floden ready to act even between meetings.
- (0830 ET/1230 GMT) Canadian Building permits.
- (0830 ET/1230 GMT) Chile Trade balance.
- (1130 ET/1530 GMT) Brazil FX flow data.
- (1500 ET/1900 GMT) US August consumer credit, $19.0 bln eyed; last $19.1 bln.
Key Events Ahead
- (1430 ET/1830 GMT) Fed Trade ops 30-yr Ginnie Mae max $1.150bln.
FX Recap
EUR/USD: Industrial production in Germany significantly weakened in August compared to the previous month, official data showed on Wednesday. Industrial output in Germany posted a 1.2% fall in the reported period, seasonally adjusted, after reporting a revised 1.2% growth in the preceding month. Analysts had expected a 0.2% gain. The Greek Parliament confidence vote is scheduled on Prime Minister Alexis Tsipras' new government, following a three-day debate. Looking ahead, the US calendar holds nothing of relevance except the Canadian building permits data and the weekly crude oil inventory report published by EIA. It made intraday high at 1.1283 and low at 1.1222 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1150-60 (370M), 1.1300 (401M).
USD/JPY: The yen climbed after the Bank of Japan kept its monetary policy unchanged and Kuroda expressed optimistic tone about the economy despite recent weakness. The dollar was down 0.2 pct at 119.97 yen, pulling back from the day's high of 120.36. The euro slid 0.4 pct to 134.85 yen. The Bank of Japan has kept policy unchanged since October last year when the central bank last expanded its Qualitative and Quantitative Easing (QQE) program, which currently has the monetary base expanding at a rate of around ¥80 trillion per year. However, recession worries will likely keep the BoJ under pressure to continue with the stimulus and easing policies at an upcoming board meeting on October 30, when the BOJ is expected to trim its long-term economic and inflation forecasts. Pair made intraday high at 120.36 and low at 119.76 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (1.375BLN), 121.00 (1.5BLN).
GBP/USD: Sterling hit its highest in more than two weeks against the dollar after data showed industrial output had recovered better-than-expected from a July drop, pushing the pound back above $1.53 for the first time since September 23. Against the euro, it hit a 10-day high of 73.43 pence per euro. UK industrial production in August rose by 1.0% after contracting 0.3% in July, while manufacturing production rose 0.5% after having declined 0.7% in the previous month. The cable currency added to previous gains on Wednesday, rising 0.56% to $1.5308, its highest since September 23. Pair made intraday high at 1.5311 and low at 1.5219 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels. Option expiries are at 1.5195 (200M), 1.5400 (300M).
NZD/USD: Pair rallied in the afternoon, reaching a new six-week high as the kiwi responded to the Fonterra's favourable dairy auction, while the buck lacked the necessary tools for response. It made intraday high at 0.6630 and low at 0.6533 levels. In addition, risk-on appetite flourished as traders believed in a postponed interest rate hike by the Federal Reserve (Fed), following a mediocre non-farm payrolls update in September. Initial support is seen at 0.6195 and resistance at 0.6605 levels. Option expiry is at 0.6500 (867M).
AUD/USD: The US dollar was dropping due to disappointing macro news, which led to investors reducing their US dollar exposure. Meanwhile, commodities have seen some relief rally as well, which supported the Aussie further. On Tuesday, the Reserve Bank of Australia left its monetary policy unchanged, with the statement sounding neutral, which helped the pair to rise as well. Pair made intraday high at 0.7215 levels and low around 0.7149 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels. Option expiries are at 0.7200 (6BLN), 0.7250 (1.6BLN).
Equities Recap
A recovery in oil prices spread to stock markets and emerging market currencies on Wednesday, with the prospect of more support from the world's central banks off-setting more disappointing economic data.
Europe's FTSEurofirst 300 rose 0.4 pct. Mining and energy shares were the big winners in Europe, up 2 to 4 pct. Emerging-market stocks also jumped 2 pct, to their highest level since mid-August. Britain's FTSE 100 rose 0.5 pct, France's CAC 40 climbed 0.4 pct and Germany's DAX was up 0.7 pct in early trades.
Asian shares hit a 7-week high. Tokyo's Nikkei closed up 0.75 pct at 18,322.98. H.K.'s Hang Seng index ended up 3.1 pct at 22,515.76 points, while Taiwan stocks closed up 1.2 pct at 8,495.23 points.
Commodities Recap
Oil prices rose on Wednesday after data showed the U.S. market is on track to tighten, with falling supply and lower inventories after two years of heavy surplus. Benchmark Brent crude fell to around $50 from a high above $115 a barrel in June 2014 and many oil companies are losing money with oil prices at current levels.
Brent climbed 90 cents a barrel at $52.82 by noon, having jumped as much as $3 on Tuesday to close above $50 for the first time in a month. U.S. light crude jumped $1.18 a barrel to high of $49.71 before easing back to trade around $49.60.
Gold rose to its highest in nearly two weeks on Wednesday, as more sluggish U.S. economic data supported views that the Federal Reserve would delay a rate hike to next year. Spot gold rose 0.4 pct to $1,151.60 an ounce, after earlier hitting $1,152.90, its highest since Sept. 24. Liquidity was thin in Asian hours with top consumer China out on a holiday.
Treasuries Recap
U.S. 10-year treasury yield stood at 2.045 percent vs close of 2.035 percent on Tuesday.
UK Gilts opened 18 ticks lower than the settlement of 118.80, as expected, as core markets weighed at the open. After the industrial output data they extended losses by around 10 ticks, 10-year gilt yields rose to their highest since Sept. 25 at 1.850 percent, 5 basis points up on the day.
JGB prices closed the day slightly lower, pushing yields up 0.5bp from yesterday's afternoon close, except for the 30-yr zone which was flat. The 10s and the 20s trimmed part of their earlier losses, while the 30s recouped most of their earlier losses in very thin trading, pushing yields down from their intraday high of 1.38% (+1.5bp) to 1.365% (flat).
Australian government bond futures eased, with the 3-year bond contract off 1 tick at 98.200. The 10-year contract shed 1.5 tick to 97.3500. New Zealand government bonds were softer, sending yields 1.5 bps higher along the curve.
