Market Roundup
- French jobless total falls to the lowest level in 5-1/2 years in the third quarter
- German economy to grow in fourth-quarter as business morale steadies: Ifo
- ECB, PBOC extend currency swap agreement by three years
Economic Data Ahead
- (1000 ET/1400 GMT) The University of Michigan is likely to report that the U.S. consumer sentiment index remained steady at 96 in October.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- 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.
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index eased after yesterday's data showed new orders for key U.S.-made capital goods fell more than expected in September and shipments also declined, a sign that business investment remains soft amid the fallout from the U.S.-China trade war. The greenback against a basket of currencies traded flat at 97.66, having touched a high of 97.78 on Thursday, its highest since October 17.
EUR/USD: The euro steadied after Ifo data showed German business sentiment held steady in October, and the economy should grow moderately in the final quarter after contracting earlier in the year. The European currency traded 0.1 percent up at 1.1115, having touched a low of 1.1093 on Thursday, its lowest since October 17. Immediate resistance is located at 1.1135 (5-DMA), a break above targets 1.1190. On the downside, support is seen at 1.1075, a break below could drag it below 1.1046..
USD/JPY: The dollar consolidated within narrow ranges as investors were reluctant to take big positions ahead of key central bank policy meetings in the United States and Japan next week against the backdrop of slowing global growth. The Fed is expected to cut interest rates for a third time this year, while the BOJ is leaning toward keeping policy on hold next week. The major was trading flat at 108.60, having hit a low of 108.24 on Wednesday, its lowest since October 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Michigan consumer sentiment index. 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 108.03 (October 14), a break below could take it near at 107.65.
GBP/USD: Sterling declined after the UK Prime Minister conceded for the first time that he could not meet his October 31 Brexit deadline and called for a general election. Investors now eye the European Union’s response to a British request to delay Brexit again. The major traded 0.2 percent lower at 1.2831, having hit a low of 1.2788 the day before, it’s lowest since October 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2913 (5-DMA), a break above could take it near 1.2977. On the downside, support is seen at 1.2800, a break below targets 1.2748. Against the euro, the pound was trading 0.3 percent down at 86.46 pence, having hit a low of 86.76 in the previous session, it’s lowest since Oct. 17.
USD/CHF: The Swiss franc retreated from a 1-week low as investors cautiously awaited a summit in Chile where U.S. President Donald Trump hopes to finalise a partial trade deal with his Chinese counterpart Xi Jinping. The major trades 0.1 percent down at 0.9916, having touched a high of 0.9930 earlier, it’s highest since October 17. On the higher side, near-term resistance is around 0.9946 and any break above will take the pair to the next level till 0.9965. The near-term support is around 0.9890, and any close below that level will drag it till 0.9865.
Equities Recap
European shares declined for the first time this week, weighed down by losses in the food and beverage sector.
The pan-European STOXX 600 index eased 0.4 percent at 395.83 points, while the FTSEurofirst 300 plunged 0.3 percent to 1,553.96 points.
Britain's FTSE 100 trades 0.6 percent down at 7,284.85 points, while mid-cap FTSE 250 declined 0.7 to 20,011.29 points.
Germany's DAX fell 0.2 percent at 12,841.30 points; France's CAC 40 trades 0.5 percent lower at 5,681.27 points.
Commodities Recap
Crude oil prices surged and were on track for weekly gains amid support from a surprise draw in U.S. inventories and possible action from OPEC and its allies to extend output cuts. International benchmark Brent crude was trading 0.4 percent up at $61.69 per barrel by 1039 GMT, having hit a high of $61.88 the day before, its highest since September 30. U.S. West Texas Intermediate was trading 0.2 percent higher at $56.18 a barrel, after rising as high as $56.47 on Thursday, its highest since September 27.
Gold prices rallied to a 2-week high as weak U.S. economic data spurred expectations for another interest rate cut by the Federal Reserve. Spot gold was trading 0.1 percent up at $1,505.25 per ounce by 1041 GMT, having hit a high of $1,506.95 earlier, its highest since Oct. 10 and has gained 1.1 percent this week, heading for its best week in five. U.S. gold futures were up 0.2 percent at $1,508.20 per ounce.
Treasuries Recap
The U.S. Treasuries traded nearly flat during early muted session on Friday as investors await next week’s FOMC monetary policy decision where the Federal Reserve is widely expected to lower its fed funds rate to 1.50-1.75 percent – its third cut this year. A 25 basis points rate cut is currently priced in with more than 90 percent probability. The yield on the benchmark 10-year Treasury yield remained flat at 1.771 percent, the super-long 30-year bond yield hovered around 2.268 percent and the yield on the short-term 2-year too remained stuck range-bound at 1.586 percent.
The United Kingdom’s gilts slumped during European trading hours on hopes that the political uncertainty would resolve with a Brexit deal being approved. The yield on the benchmark 10-year gilts, rose 2-1/2 basis points to 0.649 percent, the 30-year yield also jumped 2 basis points to 1.137 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.485 percent.
The German bunds slipped during European session as investors cashed in profits after debt prices rose a week high. Also, higher than expected October business expectations pushed out traders from safe-haven buying. The German 10-year bond yield, which move inversely to its price, surged 2 basis points to -0.389 percent, the yield on 30-year note also gained 2 basis points to 0.100 percent while the yield on short-term 2-year traded nearly flat at -0.662 percent.
