Market Roundup
- Japan FinMin Aso – Closely watching FX moves, excess volatility, disorderly moves would hurt economy – Reuters.
- Japan Inc unimpressed with BoJ’s latest attempt to spur growth, 67% see little-no economic impact, 80%+ no boost to investment, prices –Reuters poll.
- RBA Gov Lowe – Economy adjusting well, end in sight for mining slump, commodity prices rising, weighing jobs-household debt, further AUD rise would complicate adjustment process,current AUD-rates levels suitable – Reuters.
- RBA October meeting minutes – Q3 inflation important for November rate call, China growth has stabilized but debt still of concern – Reuters.
- Australia Sept new vehicle sales +2.5% m/m, all-time high, Aug unch.
- Non-resident holdings of NZ govt debt 61.9% in September, Aug 63.5%
- New Zealand Q3 CPI +0.2% q/q, +0.2% y/y, unch and +0.1% forecast, Q2 +0.4% y/y.
- Gold may regain ground in ’17 but bumpy road ahead – Reuters poll.
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Sep CPI, +0.1% m/m, +0.9% y/y forecast; last +0.3%, +0.6%.
- (0430 ET/0830 GMT) Great Britain Sep –core, +0.2% m/m, +1.4% y/y forecast; last +0.4%, +1.3%.
- (0430 ET/0830 GMT) Great Britain GB Sep RPI, +0.1% m/m, +2.0% y/y forecast; last +0.4%, +1.8%, index 264.40.
- (0430 ET/0830 GMT) Great Britain Sep RPIX; last +0.5% m/m, +1.9% y/y.
- (0430 ET/0830 GMT) Great Britain Sep PPI – input, +0.4% m/m forecast; last +0.2%.
- (0430 ET/0830 GMT) Great Britain Sep PPI – output, +0.2% m/m forecast; last +0.1%.
- (0430 ET/0830 GMT) Great Britain Sep – core output, +1.4% y/y forecast; last +1.4%.
- (0830 ET/1230 GMT) United States Sep CPI, +0.3% m/m, +1.5% y/y forecast; last +0.2%, +1.1%, index 240.85.
- (0830 ET/1230 GMT) United States Sep –core, +0.2% m/m, +2.3% y/y forecast; last +0.3%, +2.3%, index 248.34.
- (0830 ET/1230 GMT) United States Sep real weekly earnings; last -0.4% m/m.
- (1000 ET/1400 GMT) United States Oct NAHB housing market index, 63.0 forecast; last 65.0.
- (1130 ET/1530 GMT) United States Sep Cleveland Fed median CPI; last +0.2% m/m.
Key Events Ahead
- N/A ECB quarterly bank lending survey.
- (0430 ET/0830 GMT) London ONS economic forum.
- (0440 ET/0840 GMT) Spain E2-3 bln 3 and 9-month treasury bill auctions.
- (0530 ET/0930 GMT) ECB zero% 7-day refi, E31 bln allotment forecast, E32.9 bln maturing.
- (0630 ET/1030 GMT) ESM E1.5 bln 6-month bill auction.
- (0700 ET/1100 GMT) NZ Fonterra GDT dairy auction, last dairy prices -3.0%.
- (0900 ET/1300 GMT) EU Verhofstadt speaks at Brussels conference.
- (1300 ET/1700 GMT) Riksbank DepGov Ohlsson in Gothenburg panel discussion.
- (1600 ET/2000 GMT) United States Treasury int’l capital flows report (TIC), last $140.6 bln net inflow.
FX Beat
DXY: The dollar edged lower versus the euro and the yen as expectations of Fed interest rate hike by December eased following downbeat U.S. economic release. The greenback against a basket of currencies traded 0.1 percent down at 97.72, hovering away from a 7-month high of 98.17 hit in the previous session.
EUR/USD: The euro rose, extending gains above the 1.1000 handle, as investors looked ahead to the European Central Bank's policy meeting later this week. The ECB is expected to discuss technical changes at the meeting, that would allow it to extend its 1.7 trillion-euro of asset purchases beyond the March 2017 end-date. The major trades 0.2 percent higher at 1.1022, pulling away from a near 3-month low of 1.0963 hit on Monday. In absence of macro-fundamental drivers from the Eurozone, investors will continue to track overall market sentiment, ahead of series of U.S. economic data including consumer price index and housing price index. Immediate resistance is located at 1.1040, a break above could take it till 1.1070/ 1.1100. On the downside, support is seen at 1.0980, a break below could drag it till 1.0950.
USD/JPY: The Japanese yen edged up, extending previous session gains as weak U.S. economic data dampened the Fed’s rate hike outlook for this year. The major failed to benefit from a better risk tone in the markets, triggered by higher oil prices and rising global equities. The dollar trades lower at 103.85, having touched an intra-day low of 103.68. The movement in the major will be driven broad-based market sentiment, ahead of U.S. consumer price index and third & final U.S. presidential debate between Democrat Hillary Clinton and Republican Donald Trump due on Wednesday. Immediate resistance is located at 104.40, a break above targets 104.80/105.00. On the downside, support is seen at 103.60, a break below could take it near 103.20/ 103.00.
GBP/USD: Sterling rose above the 1.2200 handle, as investors awaited Britain’s consumer price index release due later in the day. The economy's CPI is expected to show cost of living nudged higher in September probably due to a weaker pound and higher energy prices. However, diverging rate expectations from the United States and the United Kingdom could lead to fresh sell-off in the pair, especially after the US CPI due for release later in the day, which could boost the prospects of U.S. rate hike this year. Sterling trades 0.3 percent higher at 1.2222, after rising to an early high of 1.2272. Immediate resistance is located at 1.2320, a break above could take it above 1.2370. On the downside, support is seen at 1.2100, break below targets 1.1900. Against the euro, the pound trades 0.2 percent up at 90.09 pence.
AUD/USD: The Australian dollar rallied, extending gains for the fifth consecutive session, after Reserve Bank of Australia Governor Philip Lowe stated that the current level of the exchange rate and interest rates were appropriate for the economy, however, warned a further considerable rise in the currency would complicate the outlook. The Aussie trades 0.55 percent higher at 0.7670, having hit an early 2-week high of 0.7675. The pair is likely to remain on the upside amid higher oil and copper prices. Investors will continue to digest latest RBA meeting minutes and Gov Lowe's comments , ahead of US CPI report and Chinese GDP data due tomorrow for fresh direction on the major. Immediate support is seen at 0.7622 (20-DMA), a break below could drag it till 0.7600. On the upside, resistance is located at 0.7680, a break above targets 0.7770/ 0.7720.
NZD/USD: The New Zealand dollar rose to a 1-week high on the back of better-than-expected positive New Zealand's inflation report, amid risk-on market profile. The economy's consumer price index unexpectedly increased 0.2 percent in the third quarter versus no growth expected during the same period. The major trades 0.75 percent higher at 0.7185, after rising as high as 0.7188, it’s strongest since October 7. Moreover, a latest RBNZ report showed that 3Q sectoral factor model inflation index rose 1.5 percent y/y, which further provided support to the upbeat tone behind the Kiwi. Markets will continue to track broad based markets sentiment, ahead of the US CPI figures and Fonterra’s fortnightly dairy auction results due later in the day. Immediate resistance is located at 0.7200, break above targets 0.7250/ 0.7280. On the downside, support is seen at 0.7111 (5-DMA), a break below could drag it lower 0.7100.
Equities Recap
Asian shares advanced largely on the back of higher oil prices, while the dollar pared recent gains as investors cautiously awaited European Central Bank's policy meeting due later in the week.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5 percent in early trade.
Tokyo's Nikkei rose 0.38 percent at 16,963.61 points, Australia's S&P/ASX 200 index climbed 0.46 percent to 5,413.30 points and South Korea's KOSPI added 0.32 percent at 2,034.87 points.
Shanghai composite index gained 1.06 percent at 3,073.45 points, while CSI300 index traded 1.04 percent higher at 3,311.97 points.
Hong Kong’s Hang Seng was trading 1.4 percent up at 23,359.18 points. Taiwan shares rose 0.51 percent to 9,222.58 points.
Commodities Recap
Crude oil prices gained as global inventories rose less than expected ahead of the high-demand winter heating season in the northern hemisphere. International benchmark Brent crude was trading 0.35 percent up at $51.82 per barrel at 0400 GMT, retreating from a low of $51.13 hit in the previous session. U.S. West Texas Intermediate crude rose 0.4 percent at $50.23 a barrel, having hit a low of 49.45 on Monday.
Gold prices edged up as the U.S. dollar weakened, however, a rebound in the global equity markets capped gains. Spot gold was trading 0.3 percent up at $1,256 an ounce by 0404 GMT, while U.S. gold futures were mostly unchanged at $1,256.80 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7749 percent higher by 0.009 bps, while 5-year was 0.008 bps up at 1.2639 percent.
The Australian 10-year bond yields hit highest in five months on rising market expectations that the Reserve bank of Australia will hold its official cash rate at record low of 1.5 percent in its upcoming monetary policy meeting. The yield on the benchmark 10-year Treasury note rose 3-1/2 basis points to 2.358 percent, the yield on 15-year note jumped nearly 4 basis points to 2.722 percent and the yield on short-term 3-year climbed 1 basis point to 1.773 percent.
The New Zealand 10-year bond yields closed nearly five months high after higher-than-expected third quarter consumer inflation data lowered the Reserve Bank of New Zealand’s easing bets. The yield on the benchmark 10-year bond rose 7-1/2 basis points to 2.635 percent, the yield on 7-year note ended 6 basis points higher at 2.303 percent and the yield on short-term 2-year note also climbed 6 basis points to 1.980 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year price up 4 Canadian cents to yield 0.601 percent and the benchmark 10-year rising 26 Canadian cents to yield 1.220 percent. The 10-year yield touched its highest intraday since June 23 at 1.300 percent.
