Market Roundup
- BoJ expected to forego additional easing at Nov meeting- Kyodo
- USD/JPY -0.5%, EUR/USD +0.15%, GBP/USD +0.1%
- DXY -0.18%, DAX -0.3%, Brent +1.5%, Iron +0.1%
- UK Aug ILO Jobless rate 4.9% vs 4.9% previous, 4.9% expected
- UK Aug Average earnings 3m y/y 2.3% vs revised 2.4% previous, 2.3% expected
- UK Aug Claimant count -7k vs revised 7.1k previous, 3.0k expected
- German officials said to have been told to shun U.K contracts
- Four in ten households expect U.K rates to rise within next 12-months
- USD/CNY at 6-year highs still, last close 6.7418, PBOC fix today 6.7326
- China Q3 GDP +1.8% q/q, +6.7% y/y, as eyed, Q2 revised +1.9% vs pre +1.8%
- China Sept industrial output +6.1% y/y, retail sales +10.7%, +6.4%/+10.6% eyed
- Japan investors in dilemma over US bonds as hedging costs bite
- Bookmakers pay out £800k+ on Hillary Clinton winning US election – Telegraph
- Goldman profits soar almost 60% on bond trading comeback – Financial Times
- NZ Fonterra GDT price index +1.4%, volumes down, supply tighter
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Department of Commerce is likely to report that housing starts rose to 1.175 million-units rate in September from 1.142 million-units in August.
- (0830 ET/1230 GMT) The U.S. building permits are likely to have increased to 1.165 million unit rate in September from 1.152 million units in August.
- (1000 ET/1400 GMT) Bank of Canada will meet to announce its benchmark interest rate, where it is expected to hold interest rates at 0.50 percent and trim its economic forecasts.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending October 14.
- (1030 ET/1430 GMT) The Conference Board releases Australia's Leading Indicator for the month of August. The index stood at 0.4 percent in the prior month.
- N/A The Brazilian central bank will meet to set its benchmark Selic rate and is expected to cut interest rates by 25 basis points to 14.00 percent, for the first time in four years.
- (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 will report foreign bond investment for the week ending October 14.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending October 14.
Key Events Ahead
- (0845 ET/1245 GMT) Federal Reserve Bank of San Francisco President John Williams speaks before the "Improving Diversity in the Financial Services Industry – A Holistic View" conference hosted by the Global Interdependence Center in Newark, New Jersey.
- (1115 ET/1515 GMT) Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference following interest rate decision.
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae max $1.375 bln.
- (1330 ET/1730 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated Q&A before the Mayor's International Luncheon sponsored by the Fort Worth Chamber of Commerce, in Texas.
FX Beat
DXY: The dollar weakened across the board as treasury yields edged lower after U.S. consumer prices implied underlying inflation was moderating. The greenback against a basket of currencies traded 0.1 percent lower at 97.77, having touched a low of 97.63 earlier in the session.
EUR/USD: The euro rose, regaining some of its lost ground from the previous session, as the greenback weakened on fading December U.S. interest rate hike expectations. However, the upside in the major was capped, as investors remained cautious ahead of European Central Bank policy meeting due tomorrow. The European currency trades 0.1 percent up at 1.0986, having touched an early high of 1.1004. The intraday trend is bearish as long as resistance 1.1010 holds and break above will take the pair to next level till 1.1058/1.1075 in the short term. On the lower side, any break below 1.09700 will drag it down till 1.09100/1.08350.
USD/JPY: The Japanese yen rose to a 1-week peak against the dollar after mixed Chinese data triggered a fresh bout of risk-aversion. The selling pressure intensified as declining European equities strengthened the bid tone around the yen. Moreover, diminishing expectations of December U.S. rate hike and the extension of losses in the 2-year treasury yields, weighed on the greenback. The major trades 0.5 percent lower at 103.37, having touched a low of 103.24, it’s lowest since Oct. 11. The major resistance is around 104.65 (trend line joining 104.32 and 104.48) and a break above targets 105.08/106. On the lower side major support is around 103.16 (100- day MA) and any break below 103.30 will drag the pair till 102.80/102.20.
GBP/USD: Sterling rose to an 8-day high after a Britain's government lawyer stated that parliament would have to ratify any Brexit agreement. Investors’ seem to have ignored UK's job growth data, which showed employment creation slowed in the three months to August, however, the numbers showed little indication of June's Brexit vote impact on the labor market. Sterling traded 0.1 up at 1.2322, having touched an early high of 1.2332, its highest since Oct 12. Markets will eye developments surrounding Brexit negotiations ahead of the UK's retail sales data due tomorrow. Cable is facing major resistance at 1.2338 and any violation above confirms minor trend reversal, a jump till 1.2400/1.2480 is possible. On the lower side, any break below 1.2200 will drag the pair down till 1.2150/1.20896 in the short term. Against the euro, the pound trades 0.2 percent down at 89.45 pence.
USD/CHF: The Swiss franc gained, reversing most of its previous session losses, as mixed Chinese data triggered a fresh bout of risk aversion. The dollar trades 0.2 percent lower at 0.9877, hovering towards a low of 0.9866 hit in the previous session. On the higher side, any close above 0.9910 will take the pair till 0.9960/1.000. The short-term weakness can be seen only below 0.9845 (5- day MA) and any break below targets 0.9790/0.9730.
AUD/USD: The Australian dollar rose to a 2-week high, largely on the back of rising crude oil prices and upbeat Aus Westpac Leading Index data amid board based greenback weakness. However, the upside remained to be capped after a series of Chinese macro releases, weighed on market sentiment. The Aussie trades 0.2 percent higher at 0.7679, extending gains for the sixth straight session. On the higher side, major resistance is around 0.7700 and any break above will take the pair till 0.7730/0.7760. The major support is around 0.76400 and break below will drag it till 0.7580/0.7530.
NZD/USD: The New Zealand dollar advanced, extending gains for the third consecutive session after Tuesday's upbeat New Zealand CPI data reduced the prospects of a further rate cut by RBNZ at its meeting in November. The major was also supported by GDT auction, which rose 1.4 percent as compared to 3 percent decline in the previous auction; however, mixed Chinese data capped gains. The Kiwi trades 0.2 percent higher at 0.7207, having touched a 2-week high of 0.7234 earlier in the session. Investors seem to have digested Chinese economic data and now shift attention towards U.S. housing data and EIA crude oil inventory report. Immediate resistance is located at 0.7250, break above targets 0.7290/ 0.7310. On the downside, support is seen at 0.71645, a break below could drag it lower 0.7150.
Equities Recap
European shares declined as a slew of weak earnings weighed on British companies, while markets remained cautious ahead of European Central Bank policy meeting.
The pan-European STOXX 600 index decreased 0.21 percent at 341.87 points, while the FTSEurofirst 300 index lost 0.21 percent at 1,348.07 points.
Britain's FTSE 100 trades 0.23 percent down at 6,983.92 points, while mid-cap FTSE 250 shed 0.46 percent at 17,910.01 points.
Germany's DAX dropped 0.33 percent at 10,596.84 points; France's CAC 40 trades 0.20 percent lower at 4,499.98 points.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent on the day.
Tokyo's Nikkei rose 0.21 percent at 16,998.91 points, Australia's S&P/ASX 200 index climbed 0.38 percent to 5,431.30 points and South Korea's KOSPI ended flat at 2,040.94 points.
Shanghai composite index ended flat at 3,084.72 points, while CSI300 index fell 0.2 percent at 3,316.24 points. Hong Kong’s Hang Seng declined 0.4 percent to 23,304.97 points.
Commodities Recap
Crude oil prices rose, extending gains for the second straight day, boosted by an upbeat OPEC statement on its planned output cut and a fall in U.S. crude inventories. Global benchmark Brent crude was trading 0.6 percent higher at $52.40 per barrel at 0922 GMT, hovering towards a high of 52.85 hit last week. U.S. West Texas Intermediate crude rose 0.5 percent at $51.01 a barrel.
Gold prices rose to near 2-week highs, as the dollar weakened on rising uncertainties around the timing of a rate hike by the Federal Reserve and upcoming U.S. presidential election. Spot gold gained 0.4 percent at $1,266.50 an ounce at 0928 GMT, having touched a high of 1,267.47, its highest since Oct 6. U.S. gold futures were broadly unchanged at $1,262.8 an ounce.
Treasuries Recap
The US Treasuries saw further gains across much of the curve, managing to gain ground despite upward pressure seen from equities. The yield on the benchmark 10-year Treasury note fell 1/2 basis point to 1.743 percent and the yield on short-term 2-year note also dipped 1/2 basis point to 0.807 percent.
The UK gilts traded marginally lower as investors awaited the auction of the 10-year bond. The yield on the benchmark 10-year gilts rose nearly 1 basis point to 1.092 percent, the super-long 40-year bond yield climbed 1 basis point to 1.615 percent and the yield on short-term 2-year bond jumped 1-1/2 basis points to 0.223 percent.
The German bunds traded narrowly mixed as investors await the European Central Bank’s monetary policy decision for future market directions, which is scheduled to be released on October 20. The yield on the benchmark 10-year bond hovered around 0.03 percent mark, the yield on long-term 30-year note fell 1 basis point to 0.65 percent and the yield on short-term 3-year bond climbed 1/2 basis point to -0.66 percent.
The Japanese government bonds traded nearly flat, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield remained steady at -0.05 percent, the yield on long-term 30-year Treasury rose nearly ½ basis point to 0.50 percent and the yield on short-term 2-year note hovered around -0.26 percent.
The New Zealand 10-year bond yields closed a tad lower after international dairy prices improved slightly at the Global Dairy Trade (GDT) auction. The yield on the benchmark 10-year bond rose 1 basis point to 2.645 percent, the yield on 7-year note ended 1/2 basis point higher at 2.308 percent and the yield on short-term 2-year note remained steady at 1.980 percent.
The Australian government bonds gained for the first time in four days as investors remained cautious ahead of the September unemployment data. The yield on the benchmark 10-year Treasury note fell 5-1/2 basis points to 2.310 percent, the yield on 15-year note dipped nearly 5 basis points to 2.681 percent and the yield on short-term 2-year slid 3 basis points to 1.721 percent.
