Market Roundup
- EUR/USD 0.33%, USD/JPY -0.32%, GBP/USD -0.32%, EUR/GBP 0.69%
- DXY -0.14%, DAX -0.63%, FTSE -0.35%, Brent 0.43%, Gold -1.12%
- Great Britain Retail Sales YY 1.2% vs 2.4%, 2.1% forecast
- German economy seen growing 2.2% in 2018 - DIHK Chambers of Commerce
- China c. bank warns against "Minsky Moment" due to excessive optimism
- Spain threatens Catalonia with direct rule from Madrid
- Oil slips but holds most recent gains on expected OPEC cuts
- Gold hits over 1-week low as dollar holds firm
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 3,000 to a seasonally adjusted 240,000 for the week ended Oct. 7, while continuing claims for the week ended Oct. 13 is expected to rise to 1.990 million from previous 1.889 million.
- (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business conditions index decreased to 22.0 in October from 23.8 the month before.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending October 13.
- (1745 ET/2145 GMT) The Statistics New Zealand will release visitor arrivals report for the month of September. The indicator posted an annualized gain of 5.8 percent in the prior month.
Key Events Ahead
- N/A U.S. President Donald Trump meets current Federal Reserve Chair Janet Yellen, whose term expires in February.
- (0930 ET/1330 GMT) Kansas City Federal Reserve Bank President Esther George speaks on "The U.S. Economy: Rural and Urban Growth" before the Federal Reserve Bank of Kansas City Economic Forum in Altus, Oklahoma.
- (0945 ET/1345 GMT) Fed Trade operation 30-year Fannie Mae / Freddie Mac (max $985 mn)
FX Beat
DXY: The dollar index eased, extending previous session losses as the yield on the 10-Treasury note declined, while the spread between the 10-yr yield and the 2-yr yield continued to flatten. The greenback against a basket of currencies traded 0.2 percent down at 93.22, having touched a high of 93.80 in the previous session, its highest since Oct. 9. FxWirePro's Hourly Dollar Strength Index stood at -8.27 (Neutral) by 1000 GMT.
EUR/USD: The euro rose to a 6-day high as investors awaited the European Central Bank policy meeting next week, however, political uncertainty around Catalonia limited gains. The European currency traded 0.3 percent up at 1.1824, having touched a low of 1.1730 the day before, its lowest since Oct. 9. FxWirePro's Hourly Euro Strength Index stood at 105.27 (Highly Bullish) 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 it 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 slumped after rising to a near 2-week high above the 113.00 handle as the yield on the 10-Treasury note fell 1.2 basis points. Moreover, Catalan President Puigdemont's decision and Brexit Summit underpinned the bid tone around the safe-haven Japanese yen. The major was trading 0.3 percent down at 112.54, having hit a high of 11314 earlier, its highest since Oct. 6. FxWirePro's Hourly Yen Strength Index stood at -94.85 (Highly Bearish) by 1000 GMT. On the lower side, any close below 111.77 (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.
GBP/USD: Sterling declined to a fresh 1-week low after data showed British retail sales suffered an unexpectedly sharp slowdown in September. The economy’s retail sales volumes fell 0.8 percent in September, while third-quarter growth slowed to a year-on-year rate of 1.5 percent, its lowest since the second quarter of 2013. Sterling traded 0.3 percent down at 1.3172, having hit a low of 1.3125 earlier, its lowest since Oct. 12. FxWirePro's Hourly Sterling Strength Index stood at -72.21 (Bearish) by 1000 GMT. The near term major resistance is around 1.3229 (55-4 H 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, 1.3120 (Oct 12th low) will be acting as major support and any break below will drag it down till 1.30750/1.30270 level. Against the euro, the pound was trading 0.6 percent down at 89.75 pence, having hit a low of 89.89 pence earlier, its lowest since Oct. 12.
USD/CHF: The Swiss franc rallied, retreating from near 2-week lows, as the greenback eased following a decline in the U.S. Treasury yields. The major trades 0.5 percent down at 0.9761, having touched a high of 0.9836 the day before, it’s highest since Oct. 6. FxWirePro's Hourly Swiss Franc Strength Index stood at 24.21 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.9780 and any break below will drag the pair to next level till 0.9750/0.9705. The near term resistance is around 0.9835 and any violation above will take it to next level till 0.9900.
AUD/USD: The Australian dollar advanced after data showed domestic unemployment rate declined to 5.5 percent, while employment rose a seasonally adjusted 19,800 in September, beating forecasts for a 15,000 rise. The Aussie trades 0.2 percent up at 0.7865, having hit a high of 0.7897 on Friday, it’s highest since Sept. 25. FxWirePro's Hourly Aussie Strength Index stood at 81.79 (Highly Bullish) 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 0.7900sndany break above targets 0.7950/0.8000.
Equities Recap
European shares slumped as Spain's political showdown with Catalonia deepened, while the euro rose to a 6-day high as investors eagerly awaited the European Central Bank policy meeting next week.
The pan-European STOXX 600 index tumbled 0.7 percent to 388.69 points, while the FTSEurofirst 300 index declined 0.7 percent to 1,528.69 points.
Britain's FTSE 100 trades 0.3 percent lower at 7,518.52 points, while mid-cap FTSE 250 eased 0.7 percent to 20,116.39 points.
Germany's DAX fell 0.6 percent at 12,959.91 points; France's CAC 40 trades 0.6 percent down at 5,354.69 points.
Commodities Recap
Crude oil prices declined, after rising to multi-week highs in the previous session, despite OPEC-led supply cuts, tension in the Middle East and lower U.S. production. International benchmark Brent crude was trading 1.4 percent down at $57.38 per barrel by 1020 GMT, having hit a high of $58.51 on Wednesday, its highest since Sept. 28. U.S. West Texas Intermediate was trading 1.4 percent lower at $51.26 a barrel, after rising as high as $52.31 the day before, its highest since Sept. 28.
Gold prices steadied after hitting its lowest in more than one week earlier in the day, as the dollar slumped with investors focusing on who would replace Janet Yellen as the next chair of the Federal Reserve. Spot gold rose 0.5 percent to $1,285.08 an ounce by 1027 GMT, , having hit a low of $1,276.57, its lowest since Oct. 9. U.S. gold futures for December delivery were down 0.1 percent at $1,281.40 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.319 percent lower by 0.019 bps, while 5-year yield was 0.024 bps up at 1.963 percent.
The German bunds gained as investors poured into safe-haven assets while moving away from the riskier assets, including equities and crude oil. Also, the rising tensions between the United States and Iran amid Iraq and the Kurds fight over the city of Kirkuk are pushing investors to buy safe-haven assets. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell more than 2 basis points to 0.386 percent, the yield on the long-term 30-year note also dipped nearly 2 basis points to 1.181 percent and the yield on short-term 2-year traded nearly 1/2 basis point lower at -0.722 percent.
The Japanese bonds traded narrowly mixed following weak results from the Bank of Japan’s bond buying operation and rising U.S. Treasury yields. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.06 percent, the yield on long-term 30-year tad lower at 0.89 percent and the yield on short-term 2-year traded flat at -0.13 percent.
The Australian bonds slumped on better-than-expected September employment report, sending the benchmark 10-year bond yields over four basis points. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose more than 4 basis points to 2.779 percent, the yield on the long-term 30-year note also climbed nearly 4 basis points to 3.548 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points higher at 1.952 percent.
The New Zealand government bonds closed lower following weakness in the U.S. Treasuries; however, investors still remain cautious as the country waited for the outcome of government coalition negotiations. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, gained 3-1/2 basis points to 2.955 percent, the yield on 15-year note also jumped 3 basis points to 3.29 percent and the yield on short-term 2-year ended 2-1/2 basis points higher at 2.09 percent.
