Market Roundup
- EUR/USD -0.1%, USD/JPY 0.45%, GBP/USD -0.08%, EUR/GBP -0.02%
- DXY 0.16%, DAX 0.5%, FTSE 0.33%, Brent 0.88%, Gold -0.37%
- Low ECB rates an opportunity to reform, Draghi argues
- Britain to impose budget on N.Ireland if no deal by Nov. 6
- Great Britain Sept Claimant Count Unem Chng 1.7k vs -2.8k, forecast 1.0k, revised -0.2k
- Great Britain Aug ILO Unemployment Rate 4.3% vs 4.3%, forecast 4.3%
- Great Britain Aug Avg Wk Earnings 3M YY 2.2% vs 2.1%, forecast 2.1%, revised 2.2%
- Xi says China will continue to open its economy, deepen financial reforms
- China c. bank vows to push forward yuan internationalisation
- BoJ Policy Board Sakurai – Need to stick to current policy
- Japan Inc wants Abe election win albeit with fewer seats
- Khamenei says Iran will "shred" nuclear deal if U.S. quits it
- Spain asks Catalan leader to "act sensibly" as direct rule deadline approaches
Economic Data Preview
- (0830 ET/1230 GMT) The U.S. Department of Commerce is expected to report that housing starts decreased to an annualized rate of 1.175 million units in September from 1.180 million units in August.
- (0830 ET/1230 GMT) The U.S. building permits are likely to have decreased to a 1.245 million-unit pace in September from a 1.272 million-unit pace in August.
- (0830 ET/1230 GMT) Statistics Canada releases manufacturing shipments data for the month of August. Manufacturing sales are likely to have increased 1.0 percent after declining 2.6 percent in July.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending October 13.
- (1400 ET/1800 GMT) The Fed issues its Beige Book, a summary of anecdotes on the health of the economy.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports merchandise trade balance for the month of September. The economy's trade surplus is expected to rise to 559.8 billion yen from 112.6 billion yen in October.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending October 13.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending October 13.
Key Events Ahead
- (1015 ET/1415 GMT) European Central Bank's Executive Board member Benoît Cœuré's speech
- N/A Federal Reserve Vice Chair Stanley Fischer speaks before the Money Marketeers of New York University.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $435 mn)
FX Beat
DXY: The dollar index hit an over 1-week high as markets looked at who will replace Janet Yellen as chair when her term expires in February. The greenback against a basket of currencies traded 0.2 percent up at 93.66, having touched a high of 93.80 earlier in the session, its highest since Oct. 9. FxWirePro's Hourly Dollar Strength Index stood at 128.70 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro slumped to a fresh 1-week low after European Central Bank President Mario Draghi stated that easy monetary policy gives eurozone governments an opportunity to enact the reforms needed to boost growth once interest rates have to rise. The European currency traded 0.2 percent down at 1.1748, having touched a low of 1.1730, its lowest since Oct. 9. FxWirePro's Hourly Euro Strength Index stood at -4.47 (Neutral) by 1000 GMT. On the lower side, the near term support is around 1.1720 and any convincing break below will drag the pair down till 1.1660. On the higher side, near-term resistance is around 1.1825 and any break above will take the pair to next level till 1.1880/1.1900/1.1928 (61.8% retracement of 1.20925 and 1.16621)/1.2000.
USD/JPY: The dollar rallied to a 1-week high against the Japanese yen, as markets awaited further news on the possible appointment of a hawk as Fed chair. The major was trading 0.5 percent up at 112.72, having hit a high of 111.76, its highest since Oct. 10. FxWirePro's Hourly Yen Strength Index stood at -102.51 (Highly Bearish) by 1000 GMT. On the lower side, any close below 111.65 (34- day EMA) confirms minor weakness, a decline till 111.13/110 likely. Any break above 113.45 confirms minor bullishness, a jump till 114/114.50. The near-term resistance is around 112.30 (55- 4H EMA).
GBP/USD: Sterling declined, extending losses for the third straight session after data released showed British pay growth lagging behind inflation again. However, the downside appears limited as the figures are likely to strengthen expectations that the Bank of England will soon raise interest rates to 0.50 percent from an all-time low of 0.25 percent at the end of its next meeting. Sterling traded flat at 1.3186, having hit a low of 1.3140, its lowest since Oct. 12. FxWirePro's Hourly Sterling Strength Index stood at -55.26 (Bearish) by 1000 GMT. The near-term major resistance is around 1.3225 (34- day EMA) and any break above will take the pair to next level till 1.3300/1.3325 (20- day MA)/1.3400. On the lower side, 1.3180 will be acting as major support and any break below will drag it down till 1.3120/1.30750 level. Against the euro, the pound was trading flat at 89.17 pence, having hit a high of 88.55 pence on Monday, its highest since Oct. 4.
USD/CHF: The Swiss franc fell near a 2-week low as the greenback rallied on expectations that the Federal Reserve would raise interest rates for the third time this year in December. The major trades 0.2 percent up at 0.9807, having touched a high of 0.9817 earlier, it’s highest since Oct. 6. FxWirePro's Hourly Swiss Franc Strength Index stood at 15.12 (Neutral) by 1000 GMT. On the lower side, any break below 0.9705 confirms that jump from 0.9420 ends at 0.98345 and a decline till 0.9580/0.9500 is possible. The near-term resistance is around 0.97780 and any violation above will take it to next level till 0.9835/0.9900.
AUD/USD: The Australian dollar extended losses for the third straight session, as broad-based U.S. dollar buying undermined the bid tone around the major. The Aussie trades 0.3 percent down at 0.7829, having hit a high of 0.7897 on Friday, it’s highest since Sept. 25. FxWirePro's Hourly Aussie Strength Index stood at -9.65 (Neutral) by 1000 GMT. On the lower side, near-term support is around 0.78150 (233- H MA) and any convincing close below will drag the pair till 0.7780/0.7730. The near-term resistance is around 0.7860 (Cloud top) and any break above targets 0.7900/0.7950/0.8000.
Equities Recap
European shares held gains near 4-month highs, while the dollar rallied to a one-week high against a basket of major currencies on talks over the next Federal Reserve Chairperson.
The pan-European STOXX 600 index rallied 0.4 percent to 392.08 points, while the FTSEurofirst 300 index advanced 0.4 percent to 1,540.75 points.
Britain's FTSE 100 trades 0.3 percent up at 7,539.04 points, while mid-cap FTSE 250 gained 0.6 percent to 20,244.81 points.
Germany's DAX rose 0.8 percent at 13,089.68 points; France's CAC 40 trades 0.6 percent up at 5,390.15 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, as a decline in U.S. crude inventories and concerns that tensions in the Middle East could disrupt supplies supported prices. International benchmark Brent crude was trading 0.3 percent up at $58.30 per barrel by 1005 GMT, having hit a high of $58.45 on Monday, its highest since Sept. 28. U.S. West Texas Intermediate was trading 0.2 percent higher at $52.02 a barrel, after rising as high as $52.34 on Tuesday, its highest since Sept. 28.
Gold prices slipped, extending losses for the third straight session, as the dollar strengthened amid speculation that the next U.S. Federal Reserve chief may be a policy hawk. Spot gold declined 0.4 percent at $1,280.46 an ounce at 1009 GMT, having hit a low of $1,279.24 earlier, the lowest since Oct. 10. U.S. gold futures for December delivery were off 0.1 percent at $1,285 per ounce.
Treasuries Recap
The U.S. Treasuries plunged as investors await FOMC members Dudley and Kaplan’s speech, scheduled to be held today by 12:00GMT respectively. The yield on the benchmark 10-year Treasury climbed 3 basis points to 2.33 percent, the super-long 30-year bond yields rose 2-1/2 basis points to 2.82 percent and the yield on short-term 2-year note nearly 2 basis points lower at 1.57 percent.
The UK gilts slumped after the country’s wage growth remained upbeat during the month of August, adding to riskier sentiments among the investors. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.30 percent, the super-long 30-year bond yields also climbed 2-1/2 basis points to 1.87 percent and the yield on the short-term 2-year too traded 2-1/2 basis points higher at 0.43 percent.
The New Zealand bonds jumped at the time of closing after Global dairy prices slumped for the second time in a row at an auction held early on Wednesday, suggesting an earlier rally was running out of steam. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 4 basis points to 2.92 percent, the yield on 15-year note also plunged 4 basis points to 3.26 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.06 percent.
The Japanese government bonds remained range-bound as investors remained cautioned ahead of the country’s trade balance data for the month of September, scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.07 percent, the yield on long-term 30-year also tad up at 0.88 percent and the yield on short-term 2-year traded flat at -0.14 percent.
The Australian bonds gained as investors expect weak employment report in September on October 19. In addition, investors still digest little dovish October Reserve Bank of Australia (RBA) meeting minutes. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4 basis points to 2.734 percent, the yield on the long-term 30-year note also slid nearly 4 basis points to 3.508 percent and the yield on short-term 2-year traded nearly 2 basis points lower at 1.899 percent.
