Market Roundup
- EUR/USD 0.29%, USD/JPY 0.18%, GBP/USD 0.55%, EUR/GBP -0.25%
- DXY -0.08%, DAX 0.7%, FTSE 0.26%, Brent -1.97%, Gold -0.2%
- Brexit deal possible in next 24-48 hours, May's deputy says
- Euro zone mulls action to isolate Italian turmoil: ECB's Praet
- ECB sees high risk from regulatory complacency: Lautenschlaeger
- U.S. Treasury's Mnuchin spoke with China Vice Premier Liu -WSJ
- China Oct loan data disappoints, points to further slowing in economy
- DE Oct CPI Final YY, 2.5%, 2.5% f’cast, 2.5% prev
- DE Nov ZEW Economic Sentiment, -24.1, -25.0 f’cast, -24.7 prev
- GB Oct Claimant Count Unem Chng, 20.2k, 18.5k prev, 23.2k rvsd
- GB Sep ILO Unemployment Rate, 4.1%, 4.0% f’cast, 4.0% prev
- GB Sep Avg Earnings (Ex-Bonus), 3.2%, 3.1% f’cast, 3.1% prev
Economic Data Ahead
- No major data scheduled
Key Events Ahead
- (1000 ET/1500 GMT) Federal Reserve Board Governor Lael Brainard speaks before the Fintech and the New Financial Landscape event in Philadelphia
- (1000 ET/1500 GMT) Fed Minneapolis President Neel Kashkari speaks at the 2018 Regional Economics Conference hosted by the Federal Reserve Bank of Minneapolis
- (1200 ET/1700 GMT) Riksbank Deputy Governor Per Jansson will visit Linköping, the final stop on the tour as a part of the Riksbank’s 350th anniversary
- (1400 ET/1900 GMT) Speech by ECB Vice President Luis de Guindos at the Bundesbank Reception in Frankfurt
- (1420 ET/1920 GMT) Fed Philadelphia President Patrick Harker participates in conversation before event, Fintech and the New Financial Landscape
- (1700 ET/2200 GMT) Fed San Francisco President Mary Daly gives lecture at Boise State University in Boise, Idaho
FX Beat
DXY: Dollar consolidates near 16-month high. DXY trades in a narrow range, with session high at 97.66 and low at 97.43. Technical bias is higher, we see scope for fresh highs.
EUR/USD: EURUSD has shown a dead cat bounce after hitting 17-month low on account of easing trade tensions between US and China. The Italian 10 year bond yield is trading higher and jumped more than 10% from low of 3.21% . The spread between German bund and Italian 10 year has widened to 310 basis point from 280. Near term support is around 1.1200 and any break below targets 1.11500/1.1100 level. Near term resistance is around 1.1285 (23.6% fib) and any break above targets 1.1305/1.13380 (5- day MA)/1.1380 (10- day MA)/1.1435.
GBP/USD: Sterling staged a mild relief rally after better than expected wage growth data. GBP/USD was up 0.47 percent at 1.2909 at 1115 GMT. UK economy has added lesser than expected jobs in Nov, but wage growth has shown good jump of 3% compared to previous 2.8%. Brexit woes will continue to plague the British pound. A convincing break above 1.2920 will take the pair to next level till 1.2965/1.300. Near-term support is around 1.2865 and any break below targets 1.2820/1.2780 level.
USD/JPY: USD/JPY erases early dip to 113.58 levels, retakes 114 handle. Comments from China's premier Li renewed hopes for improvement in US-China trade ties, supporting the pair higher. The pair maintains its positive tone and has shown a break above major trendline resistance. A decisive break above 114 is likely to see test of 114.55 (Oct 4 high) ahead of 114.74 (Nov 2017 high). On the flipside, close below 5-DMA could see weakness till 21-EMA at 113.17.
EUR/JPY: EUR/JPY attempts recovery from fresh November lows at 127.50, bias remains bearish. Italian yields elevated with government unwavering on deficit. Technical studies on daily charts are bearish. Stochs have rollover from overbought levels. Price has broken below 61.8% Fib at 127.87 and is currently attempting minor recovery. But upside lacks traction. 1H 20-SMA is strong resistance at 127.98. Decisive break above could see further gains. We see bearish invalidation only above 200-DMA.
AUD/USD: Australian dollar lifted on hopes for U.S.-China trade talks, caution prevails with no concrete details. AUD/USD hovers around .72 handle at the time of writing. Dismal NAB survey indices could strengthen the offered tone around the Australian currency. Major trend is bearish, the pair is extending downside after rejection at 110-EMA. 21-EMA offers strong support, break below will accentuate weakness.
Equities Recap
European markets recover on Tuesday's trade. The pan-European STOXX 600 index was up 0.27 percent at 363.04 points, while the FTSEurofirst 300 index was up 0.21 percent at 1,429.24 points.
Britain's FTSE 100 was up 0.17 percent at 7,065.16 points, while mid-cap FTSE 250 was up 0.43 percent at 18,892.80 points.
Germany's DAX was up 0.55 percent at 11,387.29 points; France's CAC 40 was up 0.14 percent at 5,066.37 points.
Commodities Recap
US oil slips below $59 mark after Trump urges OPEC not to cut supply. Strong dollar also adds downside pressure. Brent crude oil futures were at $69.41 per barrel, down 71 cents, or 1 percent, from their last close. WTI crude oil futures were at $58.27 per barrel at 1040 GMT.
Gold fails to hold weak bounce, extends weakness below 1200 mark. Spot gold was down 0.17 percent at $1,197.97 per ounce at 1056 GMT. U.S. gold futures were flat at $1,203.8 per ounce.
Among other precious metals, silver was up 0.6 percent at $14.04 per ounce. Palladium climbed 0.8 percent to $1,104.70 per ounce, while platinum rose 0.6 percent to $845.60 an ounce.
Treasuries Recap
U.S.: The U.S. Treasuries surged Tuesday ahead of today’s October Federal Budget and the NFIB small business sentiment figures. Also, FOMC members Harker and Daly are scheduled to deliver their speeches today at 19:20GMT and 22:00GMT respectively, which shall add further insight into financial markets. The yield on the benchmark 10-year Treasuries plunged nearly 3 basis points to 3.162 percent, the super-long 30-year bond yields slumped 2-1/2 basis points to 3.367 percent and the yield on the short-term 2-year traded nearly 3-1/2 basis points lower at 2.899 percent.
UK: The UK gilts suffered during European session Tuesday following a near-decade long improvement in the country’s wage growth during the month of September. However, the unemployment rate disappointed market investors, as it topped market expectations, also rising from its previous reading in August. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.463 percent, the super-long 30-year bond yields also gained 1 basis point to 1.923 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 0.764 percent.
EUR: The German bunds remained flat during Tuesday’s afternoon session after the country’s consumer price inflation for the month of October remained unchanged from that in September, also meeting market expectations. Further to that, Germany’s ZEW economic sentiment for the month of November improved, better than what markets had initially anticipated. The German 10-year bond yields, which move inversely to its price, hovered around 0.383 percent, the yield on 30-year note traded flat at 1.033 percent and the yield on short-term 2-year slipped 1 basis point to -0.645 percent.
JGBs: The Japanese government bonds remained tad higher on Tuesday, as investors expect to see a slump in the country’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released today by 23:50GMT. Also, the industrial production for the month of September is seen to remain weak as well, scheduled to be released on November 14 by 04:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded lower at 0.118 percent, the yield on the long-term 30-year note slipped 1/2 basis point to 0.879 percent and the yield on short-term 2-year too remained tad lower at -0.136 percent.
AUD: Australian bonds jumped during Asian session Tuesday amid a muted trading session that witnessed data of little economic significance. However, investors will keep a close eye on the country’s employment report for the month of October, scheduled to be released on November 15 for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 3-1/2 basis points to 2.730 percent, the yield on the long-term 30-year bond fell nearly 1-1/2 basis points to 3.237 percent, and the yield on short-term 2-year too traded 1-1/2 basis points lower at 2.080 percent.
