Market Roundup
- China offer unlikely to spur major trade breakthrough -senior U.S. official
- 'I'm going to see this through': UK PM May vows to fight for Brexit deal
- USTR Lighthizer denies he said China tariffs on hold
- U.S. says confident North Korean promises will be fulfilled, despite weapons test
- Fed plans review of how it pursues inflation, employment goals
- Fed's Kashkari sticks to view that rates do not need to rise
- Hand recount ordered in Florida's divisive U.S. Senate race
- U.S. imposes sanctions for Khashoggi killing, Saudis seek death penalty
- Foreign CB US debt holdings +$5.045 bln to $3.420 trln Nov 14 week
- Treasuries +$4.291 bln to $3.046 trln, Agencies +599 mln to $306.637 bln
- Investors pull record $53 bln from U.S. taxable funds in October - Lipper
- New Zealand Oct Manufacturing PMI, 53.5, 51.7 prev
Economic Data Ahead
- (0500 ET/1000 GMT) EZ Oct HICP Final (mm), 0.2% f'cast, 0.5% prev
- (0500 ET/1000 GMT) EZ Oct HICP Final (yy), 2.2% f'cast, 2.2% prev
- (0500 ET/1000 GMT) EZ Oct HICP-X F, E, A, T Final (mm), 0.1% f'cast, 0.1% prev
- (0500 ET/1000 GMT) EZ Oct HICP-X F, E, A, T Final (yy), 1.1% f'cast, 1.1% prev
Key Events Ahead
- N/A BoE Deputy Governor Sam Woods takes part in online Q&A session as part of 'The Future of Money' event in London.
- (0230 ET/0830 GMT) ECB President Mario Draghi gives a keynote speech at Frankfurt European Banking Congress during Euro Finance Week in Frankfurt, Germany.
- (0700 ET/1200 GMT) Riksbank General Council meeting in Stockholm
- (0800 ET/1300 GMT) Bundesbank President Jens Weidmann speak at a conference in Frankfurt
- (0915 ET/1415 GMT) German Finance Minister Olaf Scholz speak at a conference speak at a conference in Frankfurt.
- (1115 ET/1630 GMT) Chicago Fed President Charles Evans participates in a moderated question-and-answer session before the Fixed Income Forum Roundtable in Chicago, Illinois.
FX Beat
DXY: The dollar index declined, reversing some of its previous session gains, amid signs China and the United States may be heading towards de-escalating their trade dispute. The greenback against a basket of currencies trades 0.2 percent down at 96.92, having touched a high of 97.69 on Monday, its highest since June 2017. FxWirePro's Hourly Dollar Strength Index stood at -49.89 (Neutral) by 0500 GMT.
EUR/USD: The euro surged, extending gains for the fourth straight session, as the greenback eased after President Donald Trump publicly slammed the Fed's gradual interest rate hikes, stating higher borrowing costs threaten the economic expansion. The European currency traded 0.2 percent up at 1.1341, having touched a low of 1.1215 on Monday, its lowest since June 2017. FxWirePro's Hourly Euro Strength Index stood at -49.89 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, EZ consumer price index and ECB President Draghi's speech, ahead of the U.S. capacity utilization and industrial production. Immediate resistance is located at 1.1368 (November 9 High), a break above targets 1.1420 (October 26 High). On the downside, support is seen at 1.1302 (October 31 Low), a break below could drag it till 1.1264.
USD/JPY: The dollar slumped against the Japanese yen as Brexit uncertainties fanned geopolitical concerns, sending investors seeking safety in safe-haven assets. The major was trading 0.2 percent down at 113.36, having hit a low of 113.09 on Thursday, its lowest since November 7. FxWirePro's Hourly Yen Strength Index stood at -11.59 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. capacity utilization and industrial production. Immediate resistance is located at 114.00 (November 14 High), a break above targets 114.55 (October 4 High). On the downside, support is seen at 113.07 (November 5 Low), a break below could take it lower 112.60 (November 1 Low).
GBP/USD: Sterling steadied after falling to a 2-week low in the previous session on news that British Prime Minister Theresa May's Brexit secretary and other ministers quit one by one, triggering worries that the country could leave the European Union without a separation deal. The major traded 0.2 percent up at 1.2799, having hit a low of 1.2732 on Thursday; it’s lowest since October 31. FxWirePro's Hourly Sterling Strength Index stood at -106.23 (Highly Bearish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.2853 (October 29 High), a break above could take it near 1.2919 (October 25 High). On the downside, support is seen at 1.2700, a break below targets 1.2665. Against the euro, the pound was trading 0.05 percent up at 88.60 pence, having hit a low of 88.88 on Thursday, it’s lowest since October 31.
AUD/USD: The Australian dollar gained amid expectations that the Reserve Bank of Australia will keep interest rates at a record low 1.50 percent in the near term as inflation is still tepid and wage growth is low. The Aussie trades 0.05 percent up at 0.7277, having hit a high of 0.7298 earlier; it’s highest since November 8. FxWirePro's Hourly Aussie Strength Index stood at 71.62 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7247 (November 8 Low), a break below targets 0.7205 (November 6 Low). On the upside, resistance is located at 0.7300, a break above could take it near 0.7345.
NZD/USD: The New Zealand dollar surged to a 3-1/2 month peak and was set for its third straight weekly gain as the greenback eased across the board. The Kiwi trades 0.2 percent up at 0.6836, having touched a high of 0.6841 earlier, its highest level since late July. FxWirePro's Hourly Kiwi Strength Index was at 140.73 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6850 (July 26 High), a break above could take it near 0.6883 (June 21 High). On the downside, support is seen at 0.6787 (November 15 Low), a break below could drag it below 0.6720 (August 3 Low)
Equities Recap
Asian shares gained on a report that the United States might pause on further China tariff, while sterling consolidated near recent lows amid Brexit deal concerns.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.3 percent.
Tokyo's Nikkei declined 0.6 percent to 21,680.34 points, Australia's S&P/ASX 200 index fell 0.1 percent to 5,730.60 points and South Korea's KOSPI gained 0.2 percent to 2,092.62 points.
Shanghai composite index rose 0.5 percent to 2,682.43 points, while CSI300 index traded 0.7 percent up at 3,263.72 points.
Hong Kong’s Hang Seng traded 0.2 percent lower at 26,064.97 points. Taiwan shares shed 0.3 percent to 9,797.09 points.
Commodities Recap
Crude oil prices rallied, extending gains for the third straight session, amid expectations of supply cuts from OPEC, although record U.S. production dented market sentiment. International benchmark Brent crude was trading 0.7 percent up at $67.13 per barrel by 0522 GMT, having hit a low of $65.20 on Tuesday, its lowest since mid- March. U.S. West Texas Intermediate was trading 0.5 percent up at $56.83 a barrel, after falling as low as $54.79 on Tuesday, its lowest since Nov. 2017.
Gold prices surged to a 1-week high earlier in the session, as investors sought safe-haven assets amid concerns of a chaotic departure for Britain from the European Union. Spot gold was 0.2 percent up at $1,215.44 per ounce by 0524 GMT, having hit a high of $1216.69 on Tuesday, its highest since Nov. 9. U.S. gold futures were flat at $1,215.3 per ounce.
Treasuries Recap
The Japanese government bond prices held steady as Brexit uncertainties fanned geopolitical concerns. The 10-year JGB yield and the 30-year yield were unchanged at 0.105 percent and 0.860 percent, respectively. December 10-year JGB futures climbed 0.06 point to 150.94.
The Australian government bonds surged during Asian session tracking a similar movement in the United States Treasuries, after chaos struck over Brexit negotiations as UK Minister Dominic Raab resigned on late Thursday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 4-1/2 basis points to 2.685 percent, the yield on the long-term 30-year bond slumped 4 basis points to 3.199 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points lower at 2.063 percent.
The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 5.5 Canadian cents to yield 2.25 percent and the 10-year climbed 36 Canadian cents to yield 2.393 percent. The gap between Canada's 30-year yield and its U.S. equivalent widened by 2.3 basis points to a spread of 90.3 basis points in favor of the U.S. bond, its widest since July 2011.
