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Europe Roundup: DXY extends post FOMC losses, Gold retraces above $1500 mark amid renewed US-China trade uncertainties, European Stocks drop - Thursday, October 31st 2019

Market Roundup

  • ECB's Visco says monetary policy to remain accommodative
  • Hong Kong falls into first recession in 10 years as protests, trade war weigh
  • Euro zone third-quarter growth unexpectedly steady, inflation slows on cheaper energy
  • Euro rises as dollar weakens on questions about more Fed rate cuts
  • Oil prices rise, shrug off inventory gain, look for China stimulus
  • French inflation slower than expected in October
  • UK consumer sentiment returns to joint-weakest since 2013 - GfK

Economic Data Ahead

  • (0830 ET/1230 GMT) U.S. Core PCE price index M/M (Sept) (Forecast 0.1%, Prior 0.1%)
  • (0830 ET/1230 GMT) U.S. Core PCE price index Y/Y (Sept) (Forecast 1.7%, Prior 1.8%)
  • (0830 ET/1230 GMT) U.S. Initial Jobless Claims (Oct 25) (Forecast 215K, Prior 212K)
  • (0830 ET/1230 GMT) U.S. Continuing Jobless Claims (Oct 18) (Forecast 1.68M, Prior 1.682M)
  • (0830 ET/1230 GMT) U.S. Personal Spending (Sept) (Forecast 0.2%, Prior 0.1%)
  • (0830 ET/1230 GMT) U.S. Personal Income M/M (Sept) (Forecast 0.3%, Prior 0.4%)
  • (0830 ET/1230 GMT) Canada  GDP M/M (Aug) (Forecast 0.2%, Prior 0%)
  • (0945 ET/1345 GMT) U.S. Chicago PMI (Oct) (Forecast 48, Prior 47.1)

Key Events Ahead 

  • (1130 ET/1530 GMT) SNB's Chairman Jordan speech

FX Beat

DXY:  The dollar index slumps as geopolitical risks test market sentiment. DXY extends post FOMC losses, slips below 200-DMA, bias strongly bearish. 

EUR/USD: Euro grinds higher as Eurozone economy maintained its pace of expansion at 0.2% q/q  in Q3, beating 0.1% expected, data showed on Thursday. EUR/USD was trading 0.10% higher at 1.1161 at 11:30 GMT. Momentum studies are bullish, scope for further gains. Next major hurdle lies at 200-DMA at 1.1197. Breakout at 200-DMA to propel the pair higher. 110-EMA is strong support at 1.1118, break below to see some weakness.

USD/CHF: USD/CHF slumps lower for the 3rd straight session. The safe-haven Swiss Frank buoyed as geopolitical risks and possible hurdles in U.S.-China long-term trade deal dent market sentiment. USD/CHF was down 0.27% at 0.9866 at 11:30 GMT. The pair has closed 0.47% lower on Wednesday's trade after USD slumped post FOMC policy meeting. Technical bias for the pair is bearish. Rejection at 200-DMA and breach below major EMAs has opened up downside. Next major support lies at 200W SMA at 0.9846. Breach below 200W SMA will plummet prices.

GBP/USD: Sterling benefits from increasing odds of sustained Tory leadership. GBP/USD is extending FOMC led gains. The major trades 0.53% higher at 1.2965 at 11:40 GMT after closing 0.23% higher on Wednesday's trade. Technical indicators for near and long term are biased higher. Immediate hurdle on the upside lies at 1.2968 (110W EMA). Scope for further gains on decisive break above. 5-DMA is immediate support at 1.2881. Retrace below 200-DMA (1.2710) negates near-term bullish bias.

USD/JPY: USD/JPY dives over 6% on the day, trades at 108.15 at 11:40 GMT. The major hit 2-weeks low and is on track to test 108 handle. Sellers dominate as BoJ policy update did little to impress traders or provide any impetus. Price action was rejected at 200-DMA with successive doji formations. The pair remained depressed for the third consecutive session. Technical indicators are turning bearish for the pair. Strong support is seen at 110-EMA at 108.12. Breach below will confirm more weakness. Dip till 107.45 likely. Bearish invalidation only above 200-DMA.

Equities Recap

European stocks dented on Thursday as hurdles resurface in U.S.-China long-term trade deal. 

At around 11:00 GMT, The Stoxx Europe 600 was down 0.35% at 397.20. The German DAX declined 0.24% to 12879.26.

The French CAC 40 declined 0.40% at 5742.54 and the U.K. FTSE 100 declined 0.83% to 7269.74.

Commodities Recap

WTI crude struggles to hold weak USD-led gains, extends weakness after higher than anticipated EIA inventory data. WTI slips lower from session highs at 55.55 and was trading at 54.95 at 10:30 GMT.

Gold benefited amid renewed US-China trade uncertainties. Spot gold extends follow-through traction, trades 0.68% higher at 1505.74 at 10:25 GMT after closing 0.54% higher in the previous session.

Silver gains upside traction, spikes 1.33% to trade at $18.075 at 10:35 GMT. 

Treasuries Recap

U.S.: The U.S. Treasury yields plummeted during Thursday’s afternoon session, following hangover effect from the Fed’s overnight monetary policy meeting, where it adopted a 25bp rate cut, albeit signalling a pause in the months ahead. On the economic front, today will receive the country’s weekly initial jobless claims and personal consumption expenditure (PCE), both scheduled to be released by 12:30GMT. Also, the Chicago PMI for October, due today at 13:45GMT, shall provide extra direction to the debt market. The yield on the benchmark 10-year Treasury yield plunged 5-1/2 basis points to 1.742 percent, the super-long 30-year bond yield plummeted 6 basis points to 2.212 percent and the yield on the short-term 2-year slumped nearly 4 basis points to 1.592 percent.

EUR: The German bunds jumped during European session Thursday after the eurozone’s consumer price inflation (CPI) for the month of October expanded at a slower pace than in September, albeit remaining in line with expectations. However, the unemployment rate remained steady for September, disappointing market expectations of a fall. The German 10-year bond yield, which move inversely to its price, plunged 5 basis points to -0.407 percent, the yield on 30-year note plummeted 6 basis points to 0.080 percent and the yield on short-term 2-year suffered 1-1/2 basis points down at -0.661 percent.

JGBs: The Japanese government bond yields slumped at close Thursday after the Federal Reserve adopted a 25bp interest rate cut at its policy meeting in the overnight session, as was widely anticipated by market participants. However, the Bank of Japan’s (BoJ) monetary policy meeting, concluded early today, delivered no change, failing to creating any major impact on domestic bond market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 13 basis points to -0.138 percent, the yield on the long-term 30-year slipped nearly 1-1/2 basis points to 0.399 percent and the yield on short-term 2-year slumped 18 basis points to -0.234 percent.

AUS: The Australian government bonds slipped during Asian session Thursday amid a muted trading day that witnessed data of little economic significance as investors shrugged-off the 25bp interest rate cut by the Federal Reserve late yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 1.156 percent, the yield on the long-term 30-year bond hovered around 1.726 percent and the yield on short-term 2-year slumped nearly 3 basis points to 0.853 percent.

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