Market Roundup
- Oil prices ease on weak demand outlook
- Japan factory activity shrinks at the quickest pace since 2016 in October
- Gold consolidates as investors await clarity on Brexit
Economic Data Ahead
- (0400 ET/0800 GMT) EZ Markit Prelim Manufacturing PMI October
- (0400 ET/0800 GMT) EZ Markit Prelim Service PMI October
- (0400 ET/0800 GMT) EZ Markit Prelim Composite PMI October
Key Events Ahead
- (0745 ET/1145 GMT) ECB Deposit Rate Decision
FX Beat
DXY: The dollar index declined as investors cautiously awaited the U.S. central bank policy meeting for clues on its interest rate trajectory. The greenback against a basket of currencies traded 0.1 percent down at 97.33, having touched a low of 97.14 on Friday, its lowest since August 9.
EUR/USD: The euro steadied after tumbling to a near 1-week low in the previous session on a flash estimate that showed eurozone consumer morale decreased to -7.6 this month from -6.5 in September, worse than a -6.7 expectation. The European currency traded flat at 1.1134, having touched a high of 1.1179 on Monday, its highest since August 14. Investors’ attention will remain on a series of data out of Eurozone economies, EZ Markit PMI's and ECB policy decision, ahead of the U.S. unemployment benefit claims, durable goods orders, new home sales and Markit prelim PMI's. Immediate resistance is located at 1.1150, a break above targets 1.1190. On the downside, support is seen at 1.1101, a break below could drag it below 1.1086 (10-DMA).
USD/JPY: The dollar consolidated within narrow ranges as traders awaited U.S. Vice President Mike Pence’s speech later in the day, after his strong criticism of China in a speech in October last year escalated bilateral tensions. The major was trading flat at 108.68, having hit a low of 108.24 on Wednesday, its lowest since October 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, durable goods orders, new home sales and Markit prelim PMI's. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.03 (October 14), a break below could take it near at 107.65.
GBP/USD: Sterling rose, extending previous session gains after European Council President Donald Tusk said he recommended the leaders of the EU’s 27 other member states back a delay, with senior EU diplomats saying a three-month delay is most likely. The major traded 0.2 percent higher at 1.2936, having hit a low of 1.2841 on Wednesday, it’s lowest since October 18. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2977, a break above could take it near 1.3019. On the downside, support is seen at 1.2800, a break below targets 1.2748. Against the euro, the pound was trading 0.1 percent up at 86.07 pence, having hit a high of 85.74 last week, it’s highest since May 8.
AUD/USD: The Australian dollar declined after data released by both the Commonwealth Bank of Australia and the Markit Economics showed preliminary PMI service index fell to 50.8 in October from 52.4 in the prior month. The Aussie trades 0.1 percent down at 0.6844, having hit a high of 0.6882 on Tuesday, it’s highest since September 16. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6820, a break below targets 0.6801. On the upside, resistance is located at 0.6894, a break above could take it near 0.6918.
NZD/USD: The New Zealand dollar eased as investor sentiment weakened after data showed Japanese factory activity shrank at the fastest pace in over three years in October, largely hurt by slumping new orders and output. The Kiwi trades 0.3 percent down at 0.6404, having touched a high of 0.6435 on Tuesday, its highest level since September 12. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6450 (September 12 High), a break above could take it near 0.6471 (August 13 High). On the downside, support is seen at 0.6366 (5-DMA), a break below could drag it below 0.6326.
Equities Recap
Asian shares edged higher ahead of the European Central Bank meeting, with no change to policy expected at President Mario Draghi’s last meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo's Nikkei gained 0.6 percent to 22,750.60 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,693.60 points and South Korea's KOSPI rallied 0.2 percent to 2,085.66 points.
Shanghai composite index declined 0.05 percent to 2,940.92 points, while CSI 300 index traded 0.05 percent down at 3,870.67 points.
Hong Kong’s Hang Seng traded 0.8 percent higher at 26,787.79 points. Taiwan shares shed 0.7 percent to 11,320.14 points.
Commodities Recap
Crude oil prices declined amid persistent concerns about a weak demand outlook. International benchmark Brent crude was trading 0.1 percent down at $60.94 per barrel by 0620 GMT, having hit a high of $61.27 the day before, its highest since September 30. U.S. West Texas Intermediate was trading 0.5 percent lower at $55.59 a barrel, after rising as high as $56.04 on Wednesday, its highest since September 30.
Gold prices steadied as investors waited for clarity on Brexit after the European Union delayed a decision on granting an extension to Britain. Spot gold was trading flat at $1,491.38 per ounce by 0625 GMT, having touched a low of $1,480.73 on Tuesday, its lowest since October 16. U.S. gold futures were flat at $1,495.70 per ounce.
Treasuries Recap
The prices for longer-dated Japanese government bonds rose. The benchmark 10-year JGB futures fell 0.02 point to 154.12, while the 10-year JGB yield was flat at minus 0.140 percent. The 20-year JGB yield fell 0.5 basis point to 0.245 percent. The 30-year JGB yield fell 1 basis point to 0.400 percent. The five-year yield rose 0.5 basis point to minus 0.270 percent. At the short end of the yield curve, the two-year JGB yield was flat at minus 0.250 percent.
