Market Roundup
- EUR/USD -0.41%, USD/JPY 0.72%, GBP/USD 0.087, EUR/GBP -0.46%
- DXY 0.24%, DAX 0.26%, FTSE 0.22%, Brent -0.58%, Gold -0.69%
- ECB should decide next week to take foot off gas on QE -Nowotny
- Merkel sends positive signal to May on Brexit talks
- EU's Tusk says 27 leaders open internal work on Brexit phase two
- Great Britain Sept PSNB Ex Banks GBP 5.902B vs 5.669B, forecast 6.500B, revised 4.71B
- EZ Aug Current Account SA, EUR 33.3B vs 25.1B, revised 31.5B
- EZ Aug Current Account NSA, EUR 29.6B vs 32.5B, revised 37.1B
- Germany Sept Producer Price YY 3.1% vs 2.6%, forecast 2.9%
- BOJ's Kuroda says households more willing to accept price hikes
- Japan FinMin Aso – Japan Inc piling up of reserves has gone too far
- Japan EconMin Motegi – Voters appreciate government’s economic policies
- Nikkei from red to black following news of GOP draft passage
Economic Data Ahead
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that annual inflation rate rose 1.6 percent in September from 1.4 percent in August, bringing it closer to the Bank of Canada’s 2 percent target. While core-consumer price index is expected to rise at 0.3 percent.
- (0830 ET/1230 GMT) Canadian retail sales for August are likely to have increased 0.5 percent after rising 0.4 percent in the prior month.
- (0900 ET/1300 GMT) Mexican unemployment rate is expected to remain unchanged in the month of September after Augusts’ 3.3 percent.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales declined 1.0 percent to an annual rate of 530,000 million units in September from August's 5.35 million-unit rate.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1400 ET/1800 GMT) Federal Reserve Bank of Cleveland President Loretta Mester participates in global regulatory structure panel before a conference on "The Future of Global Finance: Populism, Technology and Regulation" in New York.
- (1930 ET/2330 GMT) Federal Reserve chair Janet Yellen speaks on "Monetary Policy Since the Financial Crisis" before the National Economists Club Herbert Stein Memorial Lecture and Annual Dinner.
FX Beat
DXY: The dollar index gained and was on track for its first weekly rise in two after the U.S. Senate approved a budget plan for the 2018 fiscal year that would allow them to advance with the tax overhaul without the support of Democrats. The greenback against a basket of currencies traded 0.4 percent up at 93.50, having touched a low of 93.06 in the previous session, its lowest since Oct. 16. FxWirePro's Hourly Dollar Strength Index stood at 87.80 (Slightly Bullish) by 0900 GMT.
EUR/USD: The euro slumped, giving up most of previous session losses in response to a strong pick up in the sentiment around the greenback coupled with rising concerns and uncertainty around Catalonia. The European currency traded 0.4 percent down at 1.1803, having touched a low of 1.1730 on Wednesday, its lowest since Oct. 9. FxWirePro's Hourly Euro Strength Index stood at 109.75 (Highly Bullish) by 0900 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 1.1880 and any break above will take it to next level till 1.1900/1.1928 (61.8% retracement of 1.20925 and 1.16621)/1.2000.
USD/JPY: The dollar advanced to a 2-week high after the U.S. Senate approved a budget plan for the 2018 fiscal year that will ease passage for Republicans to pursue a tax-cut package without Democratic support. The major was trading 0.7 percent up at 113.36, having hit a high of 113.46 earlier, its highest since Oct. 6. FxWirePro's Hourly Yen Strength Index stood at -64.91 (Bearish) by 0900 GMT. On the lower side, any close below 111.77 (34- day EMA) confirms minor weakness, a decline till 111.13/110 likely. Any convincing break above 113.45 confirms minor bullishness, a jump till 114/114.50.
GBP/USD: Sterling retreated after falling to a near 2-week low earlier in the session, as the economy posted its smallest budget deficit for any September in the last 10 years. However, doubts over the outlook for Bank of England interest rate moves and concerns over Brexit continued to weigh on the major. Sterling traded flat at 1.3155, having hit a low of 1.3087 earlier, its lowest since Oct. 09. FxWirePro's Hourly Sterling Strength Index stood at -27.35 (Neutral) by 0900 GMT. The near term major resistance is around 1.3148 (233-6 H MA) and any break above will take the pair to next level till 1.3180/1.3230. On the lower side, 1.3075 will be acting as major support and any break below will drag it down till 1.30270 /1.3000 level. Against the euro, the pound was trading 0.4 percent up at 89.69 pence, having hit a low of 90.22 pence earlier, its lowest since Oct. 12.
USD/CHF: The Swiss franc fell to a 5-month low as the greenback rallied across the board as progress of the U.S. tax plan through the Senate raised hopes of a fiscal boost to the economy. The major trades 0.6 percent up at 0.9827, having touched a high of 0.9847 earlier, it’s highest since May. 17. FxWirePro's Hourly Swiss Franc Strength Index stood at 56.03 (Bearish) by 0900 GMT. On the lower side, near term support is around 0.9720 (100- 6H MA) and any break below will drag the pair to next level till 0.9705/0.9680/09640. The near term resistance is around 0.9845 and any violation above will take it to next level till 0.9900.
AUD/USD: The Australian dollar declined, reversing almost all of its previous session gains as the greenback rose on speculation that the U.S. Federal Reserve would raise interest rates more than what markets have expected. The Aussie trades 0.4 percent down at 0.7845, having hit a high of 0.7897 on Friday, it’s highest since Sept. 25. FxWirePro's Hourly Aussie Strength Index stood at -64.84 (Bearish) by 0900 GMT. On the lower side, near term support is around 0.78220 (233- H MA) and any convincing close below will drag the pair till 0.7780/0.7730. The near term resistance is around 0.7900 snd any break above targets 0.7950/0.8000.
Equities Recap
European shares gained boosted by cyclical stocks, while the greenback rallied across the board as the Senate's approval for a budget blueprint for the 2018 fiscal year, revived expectations that tax cuts may be on the way.
The pan-European STOXX 600 index advanced 0.2 percent to 389.66 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,532.85 points.
Britain's FTSE 100 trades 0.3 percent higher at 7,543.55 points, while mid-cap FTSE 250 gained 0.2 percent to 20,164.39 points.
Germany's DAX rose 0.2 percent at 13,017.35 points; France's CAC 40 trades 0.1 percent up at 5,371.50 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, despite signs of tightening supply and demand fundamentals. International benchmark Brent crude was trading 0.9 percent down at $56.72 per barrel by 0937 GMT, having hit a high of $58.51 on Wednesday, its highest since Sept. 28. U.S. West Texas Intermediate was trading 0.9 percent lower at $50.91 a barrel, after rising as high as $52.31 on Wednesday, its highest since Sept. 28.
Gold prices slumped, reversing almost all of its previous session gains as the dollar regained ground after the U.S. Senate approved a budget plan for the 2018 fiscal year. Spot gold declined 0.6 percent to $1,280.93 an ounce by 0940 GMT, having hit a low of $1,276.57 in the previous session, its lowest since Oct. 9. U.S. gold futures for December delivery were down 0.3 percent at $1,285.50 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.368 percent higher by 0.047 bps, while 5-year yield was 0.03 bps up at 2.005 percent.
The Euro zone government bond yields rose 2-4 basis points across the board after lawmakers in the United States approved a budget measure. The German 10-year government bond yields, the benchmark for the region, was up 3 bps to a one week high of 0.42 percent.
The Australian government bond futures rose, with the three-year bond contract and the 10-year contract up 1 tick each at 97.870 and 97.2200.
The New Zealand government bonds were a tad softer with yields up about half a basis point on the long end of the curve.
