Market Roundup
- China slashes banks' reserve requirements as trade war imperils growth
- China Sep Caixin Services PMI, 53.1, 51.5 prev
- Japan's Abe says would welcome Britain to TPP - FT
- Far right, ex-military officer to face leftist in Brazil presidential runoff
- Brexiteers set limit for UK Prime Minister Theresa May's trade deal with EU -The Times
- Brexit uncertainty is "starting to bite" for UK firms - surveys
- EU's Juncker upbeat on Brexit agreement, no-deal not an option
- EU concerned by Italy's budget gaps for next 3 years
- N.Korea's Kim Jong Un says talks with Pompeo 'productive and wonderful'- KCNA
Economic Data Ahead
- (0430 ET/0830 GMT) EZ Oct Sentix Index, 11.7 f’cast, 12.0 prev
Key Events Ahead
- (1200 ET/1600 GMT) ECB’s Ewald Nowotny, Austrian Finance Minister Hartwig Loeger and Erste Group Chief Executive Andreas Treichl take part in panel discussion about the future of the financial sector in Vienna.
FX Beat
DXY: The dollar index steadied, supported by a sudden and steep rise in Treasury yield amid holiday-thinned trading with Japan and the U.S. market closed on account of Health-Sports Day and Columbus Day, respectively. The greenback against a basket of currencies trades 0.2 percent up at 95.76, having touched a high of 96.12 on Thursday, its highest since August 20.
EUR/USD: The euro declined, weighed down by Italian politics as the European Commission raised concerns over Italy's budget deficit plans for the next three years since they breach what the EU asked the country to do in July. The European currency traded 0.1 percent down at 1.1514, having touched a low of 1.1463 on Thursday, its lowest since Aug 20. Investors’ attention will remain on Eurozone Sentix investor confidence, as U.S. economic data calendar remains absolutely data empty. Immediate resistance is located at 1.1580 (October 2 High), a break above targets 1.1624 (October 1 High). On the downside, support is seen at 1.1450, a break below could drag it till 1.1415.
USD/JPY: The dollar surged, reversing some of its previous session losses, after China's central bank eased its domestic policy to support the economy amid concerns over the economic drag from an escalating trade dispute with the United States. The major was trading 0.1 percent up at 113.82, having hit a high of 114.55 on Thursday, its highest since Nov. 6. Investors’ will continue to track broad-based market sentiment, as U.S. markets remain closed on account of Columbus Day. Immediate resistance is located at 114.73 (Nov 6 High), a break above targets 115.00 (Mar 9 High). On the downside, support is seen at 113.51 (10-DMA), a break below could take it lower 113.00.
GBP/USD: Sterling rallied to an over 1-week peak earlier in the session, as the European Union's Brexit negotiators saw the outline of a compromise on the Irish border issue last week, raising expectations that a new British offer could secure a deal with less than 180 days before Britain leaves the EU bloc. The major traded flat at 1.3110, having hit a high of 1.3132 earlier; it’s highest since September 27. Immediate resistance is located at 1.3173 (September 18 High), a break above could take it near 1.3115 (October 1 High). On the downside, support is seen at 1.3065 (10-DMA), a break below targets 1.3017 (5-DMA). Against the euro, the pound was trading flat at 87.79 pence, having hit a high of 87.74, it’s highest since June 22.
AUD/USD: The Australian dollar consolidated near a 30-month low touched in the previous session after People's Bank of China (PBOC) cut the level of cash that banks must hold as reserves, aimed at lowering financing costs amid increasing worries about fallout from the tariff war with the United States. The Aussie trades 0.1 percent up at 0.7057, having hit a low of 0.7042 on Friday; it’s lowest since February 2016. Immediate support is seen at 0.7005, a break below targets 0.6965. On the upside, resistance is located at 0.7112 (October 4 High), a break above could take it near 7182 (September 12 High).
NZD/USD: The New Zealand dollar slumped to a fresh 30-month low, as higher U.S. Treasury yields underpinned the greenback amid pressuring emerging markets. The Kiwi trades 0.1 percent up at 0.6443, having touched a low of 0.6424 earlier, its lowest level since February 2016. Immediate resistance is located at 0.6527 (5-DMA), a break above could take it near 0.6581 (10-DMA). On the downside, support is seen at 0.6420, a break below could drag it below 0.6400.
Equities Recap
Asian shares plunged on a Bloomberg report that the systems of multiple U.S. companies had been compromised by malicious computer chips inserted by Chinese spies.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.8 percent.
Australia's S&P/ASX 200 index declined 1.4 percent to 6,100.30 points and South Korea's KOSPI tumbled 0.3 percent to 2,260.93 points.
Shanghai composite index fell 3.2 percent to 2,730.77 points, while CSI300 index traded 3.8 percent down at 3,307.00 points.
Hong Kong’s Hang Seng traded 0.9 percent lower at 26,343.28 points. Taiwan shares shed 0.6 percent to 10,455.93 points.
Commodities Recap
Crude oil prices declined to a 1-week low after Washington stated that it may grant waivers to sanctions against Iran's oil exports next month. International benchmark Brent crude was trading 0.8 percent down at $82.34 per barrel by 0454 GMT, having hit a high of $86.71 on Wednesday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.7 percent down at $73.78 a barrel, after rising as high as $76.88 on Wednesday, its highest since Nov 2014.
Gold prices slumped as the greenback steadied after China's central bank eased its domestic policy to support the economy. Spot gold declined 0.5 percent at $1,196.80 an ounce at 0457 GMT, having hit a high of $1208.17 on Wednesday, its highest since September 21. U.S. gold futures fell 0.1 percent to $1,204.40 an ounce.
Treasuries Recap
The Australian government bonds slumped across the curve during Asian session after the U.S. 10-year Treasury yield jumped to a 7-year high. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose over 5 basis points to 2.781 percent (highest since September 26) , the yield on the long-term 30-year bond surged 5 basis points to 3.260 percent and the yield on short-term 2-year up 3 basis points to 2.027 percent
