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Europe Roundup: DXY pauses downside amid upbeat data and positive signals around US-China trade negotiations, Bullion halts the three-day rise, European indices set to hit fresh multi-month highs - Monday, November 4th 2019

Market Roundup

  • Oil ticks up slightly as tentative U.S.-China hopes lend support
     
  • UK construction slide barely slows in October – PMI
     
  • Euro zone Oct. factory activity stuck in reverse as demand declines: PMI
     
  • German manufacturing stuck in recession, factory job losses accelerate: PMI
     
  • French factory activity expands slightly in October – PMI
     
  • Philippine inflation seen easing for fifth straight month in October: Reuters poll

Economic Data Ahead

  • (1045 ET/1445 GMT) U.S. ISM-NY Business Confidence Index (Oct) (Forecast 45.8, Prior 42.8)
     
  • (1100 ET/1500 GMT) U.S. Factory Orders M/M (Sept) (Forecast -0.5%, Prior -0.1%)

Key Events Ahead 

  • (1530 ET/1930 GMT) ECB's President Lagarde speech

FX Beat

DXY: The US Dollar (USD) extended gains across the board following positive signals around US-China trade negotiations as well as an indication of resilience in the world’s biggest economy. DXY was trading 0.19% higher at 97.31 at 11:05 GMT. Technical studies support weakness. Price action has slipped below 200-DMA, retrace above negates bearish bias.

EUR/USD: EUR/USD edges off lows after final October’s manufacturing PMI in Germany came in at 42.1 and 45.9 for the broader Euroland, marginally above preliminary readings. EUR/USD paused a 5-day winning streak. The pair was trading largely muted at 1.1163 at 11:30 GMT. Major and minor trend have shifted to bullish. But the pair finds stiff resistance at 200-DMA (1.1195). Some consolidation at current levels likely. Breakout at 200-DMA will propel the pair higher. Focus now will be on first speech by ECB’s President C.Lagarde in Berlin later today for further impetus. 

USD/CHF: Positive signals surrounding US-China trade negotiations as well as an indication of resilience in the world’s biggest economy keep the dollar supported across the board. USD/CHF edges higher from 9-day low at 0.9850 and was trading at 0.9876, up 0.23% at 11:40 GMT. The pair finds major support at 200W SMA at 0.9845. We see weakness only on break below. Immediate resistance is at 5-DMA at 0.9885. Break above could see gains till 20-DMA at 0.9917.

GBP/USD: Short-covering underpins the Sterling at its current levels. GBP/USD was trading largely muted at 1.2923 at 11:45 GMT. Caution prevails as we head toward the BoE rate decision later this week. Bank of England is largely expected to leave rates unchanged at this weeks policy meeting. The central bank's monetary policy stance the tone of the statement will be in focus amidst UK election and Brexit. Technical studies support upside in the pair. Price action currently holds above 200-DMA (1.2707). Retrace below could see bearish resumption.

USD/JPY: USD/JPY extends gains for the 2nd straight session. Price action has bounced off 55-EMA support. However, Japanese holiday limit market moves. The major was trading at 108.447 at 11:50 GMT, up 0.26% at the time of writing after closing 0.12% higher on Friday's trade. Technical bias is neutral. 5-DMA caps intraday upside. 200-DMA is major resistance at 109.02. September’s Factory Orders and Durable Goods Orders will be in focus for further impetus. 

Equities Recap

European stocks on track to hit fresh multi-month highs. At around 11:00 GMT, The Stoxx Europe 600 was up 0.93% at 403.14. The German DAX gained 1.17% to 13113.25.

The French CAC 40 was up 1.12% at 5826.58 and the U.K. FTSE 100 was up 1.13% to 7384.68.

Commodities Recap

Crude Oil prices push higher following comments from Iranian Oil Minister Zanganeh, who said we could be looking at more OPEC cuts. WTI was trading 1.09% higher at 10:55 GMT after closing 3.62% higher on Friday's trade.

Gold prices edged lower. Mixed sentiment concerning the US-China trade deal caps upside momentum. Spot gold was trading at $1510.33, down 0.23% at 10:50 GMT.

Treasuries Recap

U.S.: The U.S. Treasuries slumped during Monday’s afternoon session, as risk sentiments were lifted by the better-than-expected US’ nonfarm payrolls print of 128k despite the GM strike and the consensus in principle on Phase 1 of the US-China trade deal. US President Donald Trump hinted that the trade deal will be signed somewhere within the country, while Saudi Arabia’s Aramco has officially started its IPO process. The yield on the benchmark 10-year Treasury yield jumped nearly 3 basis points to 1.756 percent, the super-long 30-year bond yield surged nearly 3 basis points to 2.239 percent and the yield on the short-term 2-year traded a tad over 2 basis points higher at 1.584 percent.

UK: The United Kingdom’s gilts slumped during European trading hours Monday after the country’s construction PMI for the month of October surpassed market expectations, with eyes still on the services PMI for the similar period, scheduled to be released on November 5 by 09:30GMT. The yield on the benchmark 10-year gilts, gained nearly 1-1/2 basis points to 0.677 percent, the 30-year yield surged 2-1/2 basis points to 1.187 percent while the yield on the short-term 2-year hovered around 0.515 percent.

EUR: The German bunds suffered during European session Monday after the country’s manufacturing PMI for the month of October cheered market participants beyond expectations. Focus will now remain on a host of 2-tier economic data throughout the week, for additional direction in the debt market. The German 10-year bond yield, which move inversely to its price, gained 1 basis point to -0.365 percent, the yield on 30-year note jumped nearly 2 basis points to 0.145 percent while the yield on short-term 2-year remained flat at -0.661 percent.

JGBs: Japanese markets remain closed today on account of Culture Day.

AUS: The Australian government bonds plunged during Asian session of the first trading day of the week Monday even as investors remained disappointed on lower-than-expected rise in the country’s retail sales for the month of September, while still eyeing the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be revealed on November 5 by 03:30GMT for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 6-1/2 basis points to 1.170 percent, the yield on the long-term 30-year bond surged nearly 6 basis points to 1.744 percent and the yield on short-term 2-year gained nearly 2-1/2 basis points to 0.857 percent.

By Anupama Grandhi
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