Market Roundup
- USD/CNY at 6-year highs still, last close 6.7418, PBOC fix today 6.7326, yuan not heading towards a depreciating path according to People’s Daily.
- China Q3 GDP +1.8% q/q, +6.7% y/y, as forecast, Q2 revised +1.9% vs prelim +1.8% q/q, many uncertainties still, foundations for sustained growth not solid, China to push for supply-side reform, expand demand to meet growth target.
- China Sept ind output +6.1% y/y, retail sales +10.7%, +6.4%/+10.6% forecast.
- China Jan-Sept fixed asset investment +8.2% y/y, as forecast, property +5.8%.
- China Sept fiscal spending +11.3% y/y, revenues +4.9%, Jan-Sep +12.5%, +5.9%.
- Japan investors in dilemma over US bonds as hedging costs bite – Reuters.
- Foreigners sold US Treasuries for the fifth month, US net capital inflow $73.8 bln however – US Treasury int’l capital flows data (TIC report).
- Bookmakers pay out £800k+ on Hillary Clinton winning US election – Telegraph.
- Goldman profits soar almost 60% on bond trading comeback – Financial Times.
- New Zealand Fonterra GDT price index +1.4%, volumes down, supply tighter
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Sep claimant count, +3k forecast; last +2.4k.
- (0430 ET/0830 GMT) Great Britain Aug ILO unemployment, 4.9% forecast; last 4.9%.
- (0430 ET/0830 GMT) Great Britain Aug average weekly earnings – 3-mo average, +2.3% y/y forecast; last +2.3%.
- (0430 ET/0830 GMT) Great Britain Aug - ex-bonus, +2.1% y/y forecast; last +2.1%.
- (0830 ET/1230 GMT) United States Sep housing starts, 1.18 mln AR forecast; last 1.14 mln, -5.8% m/m.
- (0830 ET/1230 GMT) United States Sep building permits, 1.17 mln AR forecast; last 1.15 mln, +0.7% m/m.
- (0900 ET/1300 GMT) Belgium Oct consumer confidence index; last -10.0.
Key Events Ahead
- N/A Saudi Arabia 5/10/30-year USD bond likely launch, $15 bln+ forecast.
- N/A European Council Tripartite Social Summit in Brussels.
- N/A Riksbank executive board meeting, Slovenia CB briefing on the banking sector.
- N/A Sweden SEK1 and 2.5 bln 2.5% and 1% 2025 and 2026 government bond auctions.
- N/A Norway NOK3 bln 3.75% 2021 NST474 bond auction.
- (0530 ET/0930 GMT) Germany E1 bln 2.5% 2046 Bund, UK DMO GBP2.5 bln 1.5% 2026 Gilt auctions.
- (0845 ET/1245 GMT) SF Fed Williams (non-voter, centrist) speaks in Neward, NJ.
- (0915 ET/1315 GMT) UK ChancExch Hammond parliamentary testimony.
- (1000 ET/1400 GMT) BoC policy announcement, no change in 0.5% overnight rate forecast.
- (1100 ET/1500 GMT) EC Vestager, France EconMin Macron speak at Brussels forum.
- (1115 ET/1515 GMT) BoC Gov Poloz, DepGov Wilkins press conference/20:15 Senate testimony.
- (1300 ET/1700 GMT) BoE ChiefEcon Haldane lecture in London.
- (1330 ET/1730 GMT) ECB Nouy speaks at Frankfurt European Financial Roundtable.
- (1330 ET/1730 GMT) Dallas Fed Kaplan (’17 voter, centrist) speaks at Fort Worth, TX luncheon.
- (1400 ET/1800 GMT) Fed Beige Book release.
- (1945 ET/2345 GMT) NY Fed Dudley speaks at New York Lotos Club.
FX Beat
DXY: The dollar eased against the euro and the yen as investors trimmed bets on a December Federal Reserve rate hike following moderate U.S. CPI release. The greenback against a basket of currencies traded flat at 97.88, retreating from a low of 97.61 hit in the previous session.
EUR/USD: The euro rose after declining below the 1.1000 handle in the previous session on upbeat U.S. consumer price index data. However, the downside was capped as U.S. CPI showed underlying inflation moderated slightly, prompting markets to reduce bets on a December Federal Reserve rate hike. The major trades up at 1.0984, having touched an intra-day high of 1.0999. Investors now await European Central Bank policy meeting, which is unlikely to tweak its policy tomorrow, however, markets will seek clues from Draghi’s speech on the possible timing of the QE Taper. Later in the day, U.S.-German bond yield differential, Eurozone construction output, followed by U.S. housing data and Fed speeches could influence the pair. 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 1.0960, a break below could drag it till 1.0945.
USD/JPY: The dollar edged down as moderate U.S. consumer prices and steeper treasuries yield curve, diminished bets of a Fed rate hike this year. The major attempted a minor recovery earlier in the session, however, mixed Chinese Q3 GDP report, industrial production, and retail sales data triggered a fresh bout of risk aversion. The pair traded flat at 103.84, recovering from a daily low of 103.65. Data released earlier showed Japan's All Industry Activity Index in August coming in at 0.2 percent, against previous 0.3 percent. Investors will continue to track overall market sentiment ahead of the U.S. housing starts, building permits data and Fed official's speech due later in the NY session. Immediate resistance is located at 104.20, a break above targets 104.80/105.00. On the downside, support is seen at 103.50, a break below could take it near 103.20/ 103.00.
GBP/USD: Sterling edged down after rising by more than 1 percent above the 1.2300 handle on Tuesday. The major hit a 1-week high recording its biggest gain in six weeks, on suggestions that parliament will have to approve a British deal to leave the European Union. Sterling traded 0.1 percent down at 1.2278, pulling away from a high of 1.2324, its highest since October 12. The pair will be driven by developments surrounding Brexit negotiations ahead of the UK's employment data, which is expected to show a rise in the claimant count. Immediate resistance is located at 1.2370, a break above could take it over 1.2400. On the downside, support is seen at 1.2100, break below targets 1.1900. Against the euro, the pound trades 0.2 percent down at 89.40 pence.
AUD/USD: The Australian dollar rose to fresh 2-week highs, but it trimmed gains after a series of Chinese macro releases portrayed a mixed picture of the Chinese economic outlook. The major was support by Australia's upbeat Westpac Leading Index data, which rose 0.1 percent in September, after remaining unchanged in the previous month. The Aussie trades flat at 0.7666, having touched a high of 0.7690, its highest since Oct. 4 and was heading for a sixth straight day of gains. The pair is likely to remain on the downside amid volatile oil prices and risk-off market sentiment. Investors will continue to digest latest Chinese economic data, ahead of the U.S. housing data and EIA crude oil inventory report. Immediate support is seen at 0.7640, a break below could drag it till 0.7624 (20-DMA). On the upside, resistance is located at 0.7700, a break above targets 0.7720/ 0.7750.
NZD/USD: The New Zealand dollar jumped above the 0.7200 handle to hit a fresh 2-week high, following upbeat Global Dairy Trade Price index release. The GDT price index at the latest dairy auction rose 1.4 percent as compared to 3 percent contraction in the previous auction. On Tuesday, the major rose largely on the back of better-than-expected New Zealand CPI print, which trimmed expectations of a further rate cut by RBNZ at its meeting in November. The Kiwi trades 0.2 percent higher at 0.7205, having touched a peak of 0.7234, it’s strongest since Oct. 4. The pair is likely to remain on the upside, amid board based U.S. dollar weakness. Traders will continue to track broad based markets sentiment, ahead of the U.S. economic data. Immediate resistance is located at 0.7250, break above targets 0.7290/ 0.7310. On the downside, support is seen at 0.71645, a break below could drag it lower 0.7150.
Equities Recap
Asian shares held gains as series of Chinese data showed that the economy had stabilized on the back of government spending and a hot housing market, despite worries about growing debt.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.4 percent, after rising 1.4 percent on Tuesday.
Tokyo's Nikkei rose 0.21 percent at 16,998.91 points, Australia's S&P/ASX 200 index climbed 0.38 percent to 5,431.30 points and South Korea's KOSPI was trading flat at 2,040.35 points.
Shanghai composite index gained 0.1 percent at 3,086.09 points, while CSI300 index traded 0.1 percent lower at 3,319.37 points.
Hong Kong’s Hang Seng was trading 0.2 percent down at 23,349.46 points. Taiwan shares rose 0.7 percent to 9,283.99 points.
Commodities Recap
Crude oil prices edged up, strengthened by an upbeat OPEC statement on its planned output cut while declining production in China and a fall in U.S. crude inventories also supported the market. International benchmark Brent crude was trading 0.12 percent up at $51.13 per barrel at 0403 GMT, while U.S. West Texas Intermediate crude was little changed at $50.74 a barrel.
Gold prices gained, after rising 0.6 percent in the previous session as the U.S. dollar continued to weaken, however, rising global equities limited the upside. Spot gold was marginally up at $1,262.76 an ounce by 0408 GMT, extending gains for the third consecutive session. U.S. gold futures edged up to $1,264.10 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7468 percent lower by 0.001 bps, while 5-year was unchanged at 1.2360 percent.
The Australian government bonds gained for the first time in four days as investors remained cautious ahead of the September unemployment data. The yield on the benchmark 10-year Treasury note fell 5-1/2 basis points to 2.310 percent, the yield on 15-year note dipped nearly 5 basis points to 2.681 percent and the yield on short-term 2-year slid 3 basis points to 1.721 percent.
The New Zealand 10-year bond yields closed a tad lower after international dairy prices improved slightly at the Global Dairy Trade (GDT) auction. The yield on the benchmark 10-year bond rose 1 basis point to 2.645 percent, the yield on 7-year note ended 1/2 basis point higher at 2.308 percent and the yield on short-term 2-year note remained steady at 1.980 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year price up 2 Canadian cents to yield 0.592 percent and the benchmark 10-year rising 24 Canadian cents to yield 1.195 percent.
