Market Roundup
- UK industry outlook weakest since 2009 on Brexit
- German budget surplus at 1.7% of GDP in the second quarter
- Gold firms on Brexit concerns
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada is expected to report that retail sales gained 0.4 percent in August after posting similar gains in September. While excluding autos, retail sales are likely to have risen 0.1 percent, after falling 0.1 percent in the previous month.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales declined 0.7 percent to an annual rate of 545,000 million units in September.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish its Manufacturing Index for October. The index posted a decline of 9 in the prior month.
- (1030 ET/1430 GMT) The Bank of Canada releases Business Outlook Survey.
- N/A U.S. reports its monthly budget statement for the month of September. The government posted a deficit of $200 billion in the previous month
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index held firm after China's Vice Foreign Minister Le Yucheng stated that China and the United States have achieved some progress in their trade talks, adding that as long as both sides respected each other no problem could not be resolved. The greenback against a basket of currencies traded 0.05 percent up at 97.38, having touched a low of 97.14 on Friday, its lowest since August 9.
EUR/USD: The euro declined, extending previous session losses, after data showed German seasonally adjusted budget surplus was 1.7 percent of the country’s GDP in the second quarter, down from 2.0 percent in the previous three months. The European currency traded down at 1.1142, having touched a high of 1.1179 on Monday, its highest since August 14. Immediate resistance is located at 1.1190, a break above targets 1.1230. On the downside, support is seen at 1.1114 a break below could drag it below 1.1094.
USD/JPY: The dollar eased, reversing some of its previous session gains after senior Chinese diplomat Wang Yi said that the United States has forced an unwanted trade war on China and Beijing must take the necessary countermeasures to protect its interests. The major was trading down at 108.57, having hit a low of 108.29 on Monday, its lowest since October 15. Investors’ will continue to track the broad-based market sentiment, ahead of Fed officials' speeches. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.25 (10-DMA), a break below could take it near at 108.03 (October 14).
GBP/USD: Sterling steadied near a 5-month peak ahead of a vote in British parliament crucial to determining whether the UK can leave the European Union in an orderly way at the end of the month. British lawmakers will first vote on the Withdrawal Agreement Bill and then vote on the government’s tight timetable for approving the legislation. The major traded 0.1 percent high at 1.2966, having hit a high of 1.3012 on Monday, it’s highest since May 13. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3047, a break above could take it near 1.3102. On the downside, support is seen at 1.2886 (5-DMA), a break below targets 1.2826. Against the euro, the pound was trading 0.1 percent up at 85.93 pence, having hit a high of 85.74 on Thursday, it’s highest since May 8.
USD/CHF: The Swiss franc eased, extending losses from the prior session, amid hopes the United States and China were making progress to resolve their trade dispute. The major trades 0.3 percent up at 0.9854, having touched a low of 0.9839 on Friday, it’s lowest since September 5. On the higher side, near-term resistance is around 0.9914 and any break above will take the pair to the next level till 0.9946. The near-term support is around 0.9828, and any close below that level will drag it till 0.9799.
Equities Recap
European shares gained, boosted by signs of progress in U.S.-China trade talks.
The pan-European STOXX 600 index advanced 0.05 percent at 394.39 points, while the FTSEurofirst 300 rallied 0.05 percent to 1,545.38 points.
Britain's FTSE 100 trades 0.4 percent up at 7,193.26 points, while mid-cap FTSE 250 declined 0.05 to 20,30.73 points.
Germany's DAX rose 0.2 percent at 12,776.08 points; France's CAC 40 trades 0.05 percent lower at 5,648.11 points.
Commodities Recap
Crude oil prices steadied as bearish forecasts of a buildup in U.S. crude stockpiles offset signs of progress in U.S.-China trade talks. International benchmark Brent crude was trading 0.5 percent up at $59.37 per barrel by 1037 GMT, having hit a high of $60.26 last week, its highest since October 14. U.S. West Texas Intermediate was trading 0.6 percent higher at $53.80 a barrel, after rising as high as $54.60 last week, its highest since October 14.
Gold prices retreated from a 1-week low ahead of a crucial vote by British lawmakers on the Brexit withdrawal agreement, although prospects for a U.S.-China trade deal capped gains. Spot gold was trading 0.2 percent up at $1,487.75 per ounce by 1041 GMT, having touched a low of $1,480.73 earlier in the session, its lowest since October 16. U.S. gold futures rose 0.2 percent to $1,491.10.
Treasuries Recap
The U.S. Treasuries edged higher during the afternoon session ahead of the country’s 2-year auction, scheduled to be held today by 17:00GMT and Federal Open Market Committee (FOMC) member Kaplan’s speech, also due to be delivered today. The yield on the benchmark 10-year Treasury yield slipped 1 basis point to 1.780 percent, the super-long 30-year bond yield also fell 1 basis point to 2.275 percent and the yield on the short-term 2-year traded 1-1/2 basis points down at 1.601 percent.
The United Kingdom’s gilts gained during European trading hours as investors remained optimistic over the Brexit deal, deadlined for October 31 amid an otherwise muted session that barely witnessed any data of major economic significance. The yield on the benchmark 10-year gilts, slumped 2-1/2 basis points to 0.726 percent, the 30-year yield slipped 1 basis point to 1.241 percent and the yield on the short-term 2-year suffered 2 basis points at 0.546 percent.
The German bunds jumped during the European session as investors await the country’s 10-year auction and the manufacturing PMI for the month of October, scheduled for October 23 by 09:40GMT and October 24 by 08:30GMT respectively amid ongoing worries concerning Brexit deal ahead of the October 31 deadline. The German 10-year bond yield, which moves inversely to its price, slumped 2-1/2 basis points to -0.369 percent, the yield on 30-year note plunged 4 basis points to 0.134 percent and the yield on short-term 2-year traded nearly 2 basis points lower at -0.667 percent.
The Australian government bonds suffered during the Asian session of the second trading day of the week tracking a similar movement in the U.S. Treasuries after a slew of solid corporate earnings pushed Wall Street higher overnight. Also, slight relief from U.S.-China trade talks, after President Donald Trump indicated that China has “started the buying” of US agricultural goods, weighed on debt prices. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 1.176 percent, the yield on the long-term 30-year bond surged 2 basis points to 1.763 percent while the yield on short-term 2-year traded flat at 0.802 percent.
