Market Roundup
• US Oct ADP National Employment, 227k, 189k forecast, 230k previous, 218k revised.
• US Q3 Employment Costs, 0.8%, 0.7% forecast, 0.6% previous.
• US 26 Oct w/e MBA Mortgage Applications, -2.5%, 4.9% previous.
• US 26 Oct w/e MBA 30-Yr Mortgage Rate, 5.11%, 5.11% previous.
• Brexit deal should be done by Nov. 21, UK's Raab says.
• Mexican peso falls on Fitch warning, fears over new government.
• Argentine peso closes stronger, finishes October with double-digit growth.
• CA Aug GDP m/m, 0.1%, 0.0% forecast, 0.2% previous.
• CA Sep Producer Prices m/m, 0.1%, 0.0% forecast, -0.5% previous.
• CA Sep Raw Materials Prices m/m, -0.9%, -0.5% forecast, -4.6% previous, -4.8% revised.
• Italy's central bank chief warns on rising borrowing costs, GDP slowdown.
• Trade war could rock Swiss franc, hinder monetary policy - SNB's Jordan.
Looking Ahead - Economic Data (GMT)
• 31 Oct 23:50 Japan 27 Oct w/e Foreign Bond Investment, 8.1B previous
• 31 Oct 23:50 Japan 27 Oct w/e Foreign Investment JP Stock, 76.5B previous
• 1 Nov 00:30 Japan Oct Nikkei Mfg PMI, 53.1 previous
• 1 Nov 00:30 Australia Sep Trade Balance G&S (A$), 1,700M forecast, 1,604M previous
• 1 Nov 00:30 Australia Q3 Export Prices, 1.9% previous
• 1 Nov 00:30 Australia Q3 Import Prices, 3.2% previous
• 1 Nov 1:45 China Oct Caixin Mfg PMI Final, 49.9 forecast, 50.0 previous
Looking Ahead - Events, Other Releases (GMT)
• NA Norway Central Bank's Egil Matsen speaks at Norges Bank in Oslo
• 10:30 Norway Central Bank's Oystein Olsen speaks to Bergen Chamber of Commerce and Industry in Bergen, Norway
• 12:00 Bank of England announces rate decision, releases inflation report, and publishes the minutes of the meeting in London
• 17:00 Bank of Canada's Carolyn A. Wilkins speaks at Max Bell School of Public Policy, McGill University, Montreal
• 17:30 Bank of Canada's Lawrence Schembri speaks at the John Kuszczak Memorial Lecture in Ottawa
• 14:10 New York Fed's Kevin Stiroh speaks at Financial Times U.S. Banking Forum: Charting a Course for Stability and Success in New York
• 15:15 Swiss National Bank's Fritz Zurbrügg speaks on "Macroeconomic overview: view of the SNB" at the NZZ conference in Interlaken, Switzerland
• 19:00 Bank of Canada's Timothy Lane moderates a panel:"Revisiting the Merits of the Inflation Targeting Policy Framework and its Alternatives" in Ottaw
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1309 levels. The pair has made session high at 1.1347 and hit lows at 1.1300 levels. The euro slipped lower against the U.S. dollar on Wednesday as upbeat economic data supported greenback. U.S. private sector payrolls increased by the most in eight months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September.The ADP national employment report on Wednesday showed that U.S. private sector payrolls increased by the most in eight months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September. The U.S. Federal Reserve increased interest rates in September for the third time this year and is expected to raise rates again in December, even as the European Central Bank's plan to raise rates late next year may be challenged by alarmingly slow growth in the euro zone region. The dollar index , tracking it against a basket of six major currencies, rose 0.02 percent, with the euro down 0.2 percent to $1.1321.
GBP/USD is supported in the range of 1.2658 levels and currently trading at 1.2763 levels. It reached session high at 1.2829 and dropped to session low at 1.2691 levels. Sterling firmed against the dollar on Wednesday after Britain's Brexit Secretary said a divorce deal with the European Union could be reached by the end of November. Dominic Raab's suggestion that a deal is imminent saw the pound trade up as much as one percent against the euro and the dollar after weeks of loss. Traders' fears about the lack of progress in Britain's EU divorce talks less than five months before Brexit has led to the currency weakening 4 percent in October. But a deal is now firmly in sight, Raab said in a letter dated Oct. 24 to the chairman of parliament's Brexit committee, although the issue of Northern Ireland remains. After Raab's remarks became public, sterling surged versus the dollar to trade at $1.2831 before settling up half a percent on the day. Versus the euro it rose 0.7 percent to 88.43 pence, its largest daily gain since August. Investors are turning their attention to a Bank of England monetary policy meeting on Thursday, when it is expected to keep interest rates on hold and detail conditions necessary for policy tightening. Some are preparing for more-hawkish-than-expected signals from the central bank.
USD/CAD is supported at 1.3100 levels and is trading at 1.3154 levels. It has made session high at 1.3167 and lows at 1.3108 levels. The Canadian dollar edged lower against its U.S. counterpart on Wednesday as the greenback broadly climbed, offsetting data that showed a surprise strengthening of the domestic economy in August.The U.S. dollar climbed to its highest level in 16 months against a basket of currencies as investors bought the greenback after Treasury yields moved higher. The Canadian economy grew by 0.1 percent in August from July on gains in the oil and gas extraction sector, as well as finance and insurance, Statistics Canada said. Analysts had forecast no change. On Tuesday, the Bank of Canada reiterated that more interest rate hikes would be needed to achieve its inflation target and said now was the ideal time to remove monetary stimulus given how well the economy was doing. Bank of Canada Governor Stephen Poloz will testify to senators this afternoon. The central bank will raise interest rates three times next year, although a firm majority of economists in a snap poll said it would hold fire at its December meeting. The Canadian dollar was last trading 0.2 percent lower at 1.3155 to the greenback.
AUD/USD is supported around 0.7050 levels and currently trading at 0.7071 levels. It hit session high at 0.7101 and made session lows at 0.7067 levels. The Australian dollar dipped against its U.S. counterpart on Wednesday after weaker-than-expected inflation data cemented views policy will remain accommodative for a long time to come. The Australian dollar was last down 0.3 percent at $0.7080.It went as low as $0.7072 in the aftermath of Wednesday's figures which showed core measures of inflation closely watched by the central bank rose an average 1.75 percent in the third quarter compared with 1.9 percent in the second. The headline consumer price index crawled at 1.9 percent for the year, in-line with forecasts but below the 2.1 percent pace in the second quarter.Core inflation has now undershot the RBA's long-term target band of 2 percent to 3 percent for the 11th quarter on the trot, the longest run of misses on record.As a result, the RBA has kept interest rates at an all-time low of 1.5 percent since August 2016. Analysts said the RBA is likely to look through the weakness in the third-quarter data as it was well flagged and included some one-off price decreases in government-administered services such as child care.
Equities Recap
European shares rallied on Wednesday as a tumultuous October drew to a close and strong results from L'Oreal, Sanofi and banks Standard Chartered and Santander soothed investors' nerves.
UK's benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 1.79 percent, Germany's Dax ended up by 1.6 percent, France’s CAC finished the day up by 2.4 percent.
U.S. stocks rebounded for a second day on Wednesday, as investors snapped up beaten-down technology and internet favorites and strong company results lifted spirits, even as the S&P 500 closed out its worst month in seven years.
Dow Jones closed up by 0.97 percent, S&P 500 ended up 1.07 percent, Nasdaq finished the day up by 2.00 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday in step with equities, as a stronger stock market reduced safe-haven demand for U.S. government debt.
Benchmark 10-year Treasuries yields were up nearly 3 basis points in mid-afternoon trade, last at 3.153 percent, but holding below a more than seven-year high of 3.261 percent hit on Oct. 9.Yields at either end of the curve were up, with the 30-year bond up about 2 basis points on the day last at 3.401 percent and the 2-year note up about one basis point, last at 2.875 percent.
Commodities Recap
Oil prices fell on Wednesday and posted the worst monthly performance since mid-2016 on evidence of rising global crude supply, but losses were limited by signs of strong U.S. demand for fuel.
The Brent crude December futures contract, which expired Wednesday, fell 44 cents to settle at $75.47 a barrel. The more-active January contract fell 91 cents to settle at $75.04 a barrel.
West Texas Intermediate (WTI) crude futures fell 87 cents to settle at $65.31 a barrel.
Gold fell to a near three-week low on Wednesday as the dollar scaled a 16-month peak and a stock market rebound stirred renewed appetite for riskier investments.
Spot gold was down 0.8 percent at $1,213 per ounce at 13:34 p.m EDT (1734 GMT), having touched its lowest since Oct. 11 at $1,211.52. U.S. gold futures settled down $10.30, or 0.8 percent, at $1,215.
