Market Roundup
- EUR/USD -0.49%, USD/JPY 0.19%, GBP/USD -0.55%, EUR/GBP -0.01%
- DXY 0.35%, DAX 0.39%, FTSE 0.67%, Brent -0.51%, Gold 0.05%
- EZ Oct Markit Mfg Flash PMI, 52.1, 53.0 f'cast, 53.2 prev
- EZ Oct Markit Serv Flash PMI, 53.3, 54.5 f'cast, 54.7 prev
- EZ Oct Markit Comp Flash PMI, 52.7, 53.9 f'cast, 54.1 prev
- DE Oct Markit Mfg Flash PMI, 52.3, 53.4 f'cast, 53.7 prev
- DE Oct Markit Serv Flash PMI, 53.6, 55.5 f'cast, 55.9 prev
- FR Oct Business Climate Mfg, 104, 107 f'cast, 107 prev
- FR Oct Markit Mfg Flash PMI, 51.2, 52.4 f'cast, 52.5 prev
- FR Oct Markit Serv Flash PMI, 55.6, 54.7 f'cast, 54.8 prev
- UK PM May to address her lawmakers after attacks over Brexit
- Japan grants cryptocurrency industry self-regulatory status
- Salvini says Italy won't change budget, "Italians come first"
- Oil falls to $76 as worries mount on demand outlook
Economic Data Ahead
- (0945 ET/1345 GMT) US Oct Markit Mfg PMI Flash, 55.5 f'cast, 55.6 prev
- (1000 ET/1400 GMT) US Sep New Home Sales -Units, 0.625 mln f'cast, 0.629 mln prev
- (1000 ET/1400 GMT) CA 24 Oct BoC Rate Decision, 1.75% f'cast, 1.50% prev
Key Events Ahead
- (0915 ET/1315 GMT) Fed's Minneapolis President Neel Kashkari participates in a conference at Minneapolis
- (1115 ET/1515 GMT) BoC Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference in Ottawa
- (1310 ET/1710 GMT) Fed's Cleveland President Loretta Mester participates in a moderated Q&A at Cornell Club in New York
- (1400 ET/1800 GMT) Fed issues the Beige Book of economic condition in Washington D.C.
- (1900 ET/2300 GMT) Fed's Board Governor Lael Brainard participates in a session at New York
FX Beat
DXY: The dollar index grinds higher, up 0.40% on the day at the time of writing. The Greenback is likely to remain underpinned by risk-off mood and rising jitters over Italy and Brexit.
EUR/USD: The single currency slumps after disappointing PMI data. EMU, German flash PMIs came in below expectations in October suggesting a weakening of momentum at the start of the fourth quarter. EUR/USD was down 0.55% on the day at 1.1405 at the time of writing. Technical studies are bearish and we see scope for further weakness. Drag till 1.13800/1.1305 now likely. The near term major resistance is around 1.1550 and any violation above targets 1.1600/1.16200.
USD/JPY: USD/JPY edges higher as European equities get off to a positive start. The pair was trading 0.17% higher on the day at 112.62 at the time of writing. The combination of market risk in equities, political risk in Europe (Brexit and Italy) and economic risk around the globe will keep safe havens in demand. Focus now on the forthcoming Bank of Japan (BoJ) policy meeting scheduled for October 31 along with U.S. Q3 GDP. We see strong support at 112, break below will see resumption of weakness. 20-DMA is strong resistance at 112.93, breakout required for further upside.
GBP/USD: Cable hits new monthly lows as Brexit uncertainties continue to dent sentiment surrounding the British Pound. GBPUSD continuing its weakness after a minor jump above 1.3000 level. On the lower side, near term major support is around 1.29200amnd any break below confirms minor weakness, a decline till 1.28900/1.2850/1.2780 is possible. The minor jump can be seen only above 1.3050 and any break above targets 1.3070 (55-day EMA)/1.3125.
EUR/CHF: EUR/CHF slips below 55-EMA support to trade 0.34% lower on the day at the time of writing. Euro dented after dismal PMI data released earlier today. We evidence 'bearish divergence' on Stochs which keeps scope for downside. Technical studies are highly bearish. MACD is also on verge of a bearish crossover on signal line, which if completed will add to the bearish bias. Break below 55-EMA raises scope for test of lower Bollinger Band at 1.1343 ahead of 1.1255 (Sept 21 low).
AUD/USD: AUD/USD largely muted around 5-DMA. Upside finds stiff resistance at 21-EMA and any further gains only on decisive break above. Rising Metal ore prices could provide some support to the Aussie. But, major trend remains bearish. Any further upside only on decisive break above 21-EMA at 0.7127. Continued geopolitical tensions constrain overall market sentiment and keep downward pressure on the major.
Equities Recap
European shares opened higher, but fears about global economic growth likely to keep market sentiment fragile. The pan-European STOXX 600 index was up 0.56 percent at 356.04 points, while the FTSEurofirst 300 index was up 0.42 percent at 1,407.30 points.
Britain's FTSE 100 was up 0.74 percent at 7,006.95 points, while mid-cap FTSE 250 was up 0.74 percent at 18,488.31 points.
Germany's DAX was up 0.32 percent at 11,310.27 points; France's CAC 40 was up 0.64 percent at 4,999.66 points.
Commodities Recap
Oil markets extend weakness on concerns about weakening demand. Brent crude, the global benchmark, was down $1.28 to $75.16 a barrel at 0855 GMT. U.S. crude dropped 30 cents to $66.13.
Gold prices held previous session's gains, trades marginally up on Wednesday. Spot gold was up 0.1 percent at $1,230.96 an ounce at 0751 GMT. U.S. gold futures were down 0.2 percent at $1,233.90 an ounce.
Meanwhile, palladium was up 0.1 percent at $1,141.10 per ounce, silver was up 0.2 percent at $14.75 per ounce, while platinum was flat at $830.50.
Treasuries Recap
U.S.: The U.S. Treasuries jumped Wednesday ahead of the country’s manufacturing PMI for the month of October and the 5-year auction, both scheduled for today at 19:15GMT and 22:30GMT. Also, FOMC members Bullard, Bostic and Mester are scheduled to deliver their speeches today by 21:00GMT, 22:30GMT and 22:40GMT respectively. The yield on the benchmark 10-year Treasuries plunged 3-1/2 basis points to 3.132 percent, the super-long 30-year bond yields slumped 2-1/2 basis points to 3.339 percent and the yield on the short-term 2-year too traded 2-1/2 basis points lower at 2.867 percent.
UK: The UK gilts gained Wednesday amid a muted trading session that witnessed data of little economic significance. After yesterday’s CBI industrial trends survey reported a deterioration in business optimism in the manufacturing sector in October at the steepest pace since the referendum, with the lowest reading in two years for order books and confidence about export prospects at the lowest since the height of the euro area crisis, Theresa May’s cabinet discussed contingency plans to ship in emergency supplies of food and medicine in the event of a ‘no-deal’ Brexit. The yield on the benchmark 10-year gilts, slumped 2 basis points to 1.452 percent, the super-long 30-year bond yields slid 1-1/2 basis points to 1.859 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.721 percent.
EUR: The German bunds jumped during European session Wednesday after the country’s manufacturing PMI for the month of October missed market expectations, and eurozone’s manufacturing counterpart also fell short of market estimates. Investors will now eye the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on October 25 by 17:15GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, fell 1 basis point to 0.407 percent, the yield on 30-year note remained tad lower at 1.032 percent and the yield on short-term 3-year too remained nearly 1/2 basis point lower at 1.032 percent.
AUD: Australian government bonds gained across the curve during Asian session on Wednesday as investors’ moved into safe-haven buying as stocks prices tumbled globally amid Italy worries. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1 basis point to 2.678 percent, the yield on the long-term 30-year bond dipped 1-1/2 basis points to 3.150 percent and the yield on short-term 2-year traded nearly flat at 2.022 percent.
