Market Roundup
- FAA - Two Air France US-Paris flights diverted following bomb threats.
- US Treasury - Foreigners buy long-term US assets in Sept but net overall capital flow -$175.1 bln, Aug -$8.5 bln, foreign holdings of US Treasuries +$17.4 bln, China holdings $1.258 trln, Japan $1.177 trln.
- Fed Gov Tarullo - Shadow banks need activity-by-activity regulation.
- Atlanta Fed Altig - Economy headed for above-trend growth despite USD - MNI.
- China SAFE -Banks sold net $20.1 bln FX in Oct, $321.6 bln Jan-Oct.
- Australia Q3 wage price index total hourly pay +0.6% q/q, +2.3% y/y, as expected, y/y rise slowest on record.
- Australia Oct Westpac/MI leading index 97.74, 6-mo trend deviation -0.08, Sept 97.62, -0.30.
- NZ Fonterra GDT price index -7.9%, volumes also down.
Economic Data Ahead (GMT)
- 10:00 Swiss Nov ZEW investor sentiment index; last 18.3.
- 13:30 US Oct housing starts, 1.16 mln AR expected; last 1.21 mln, +6.5% m/m.
- 13:30 US Oct building permits, 1.15 mln AR expected; last 1.11 mln, -4.8% m/m.
Key Events, Auctions Ahead (GMT)
- N/A Manila APEC Summit (till tomorrow).
- N/A BoJ Policy Board begins two-day meeting.
- N/A ECB Governing Council meeting, no rate announcements scheduled.
- N/A Frankfurt EuroFinance Week - ECB Mersch/Buba Thiele/Lautenschlager speak.
- N/A Sweden SEK15 bln 3-mo, Portugal E1-1.25 bln 6/12-mo t-bill auctions.
- 08:10 Riksbank DepGov Floden speaks at Stockholm forum.
- 09:30 Germany E5 bln zero% 2017 Schatz auction.
- 10:30 UK DMO bln 2% 2025 Gilt auction.
- 13:00 NY Fed Dudley/Cleveland Mester/Atlanta Lockhart, et al at NY conference.
- 14:00 US TsySec Lew speech in Washington, DC/Tsy Lago speech.
- 14:15 US Tsy Raskin speech at Washington, DC symposium.
- 16:30 NY Fed Dudley, ex-Fed Bernanke at Economic Club of New York luncheon.
- 17:00 Dallas Fed Kaplan lecture at University of Houston.
- 19:00 FOMC October meeting minutes.
FX Beat
USD: The greenback inched higher, close to 7-month highs against a basket of currencies as U.S. economic data also supported the case that the U.S. Fed is poised to hike rates next month for the first time in nearly a decade. The dollar index was up 0.1 percent at 99.693, after hitting a high of 99.745 on Tuesday. Against the yen, it was nearly flat at 123.43 yen, within sight of a 2-1/2-month high of 123.60 yen hit on Nov. 9.
USD/JPY: The pair was trading in 123.27-48 range, offers were still heavy pre-123.50. 123.60+ stops, bids trailed down, stops were sub-123.00. Option expiries are USD940 mln at 123.00, smaller 123.40-50, 124.10-20. Japan retail and exporter offered up top weigh, crosses were also mostly off. EUR/JPY dropped from 131.28 to 131.15, GBP/JPY to 187.47, NZD/JPY to 79.71 from 79.96.
EUR/USD: The Euro opened in Asia at 1.0643 after 1.0630-80 range in New York. Asian session was extremely quiet, USD maintained gentle bid tone with in the range of 1.0632-48. Trend was down, sentiment remained extremely bearish. Diverging central banks expectations to remain focus near-term.
GBP/USD: Cable was heavy, off modestly from 1.5220 to 1.5196, EUR/GBP was steady on short-covering, offers were at 0.7010.
USD/CHF: The pair was better bid and buoyant, and trading between 1.0142-70 in Asia, some offers were at 1.0170. EUR/CHF was trading in between 1.0790-
1.0813 in Asia, ascending 100-DMA below at 1.0775.
AUD/USD: The Aussie opened in Asia at 0.7110, It was steady at $0.7107, having proved resilient to another slide in prices of iron ore, Australia's top export
earner. Resistance was found around the 38.2 percent retracement of the October-November fall at $0.7158, a level tested four times this month. Support was seen
at a recent low of $0.7016. The Aussie hovered near 3-month highs against the euro after it broke a key barrier on expectations the ECB will ease in December. The common currency dropped to A$1.4956, having lost a full cent since Tuesday. Dealers said the selling accelerated after the euro broke the psychological level ofA$1.5000. The next support is found at the Aug. 11 low of A$1.4821.
NZD/USD: The kiwi dollar was trading in a tight 0.6460-84 range, NY close was 0.6469, lowest in 6+ weeks. Fonterra GDT auction results bolstered RBNZ
December ease expectations. AUD/NZD was off on heavy base metals, from 1.0997 to 1.0950. Investors will be watching for the minutes of the FederalReserve's Open Market Committee October meeting later on Wednesday for direction.
USD/CNY: China's yuan softened against the dollar after the PBoC set a weaker guidance rate, continuing the Chinese currency's weakening trend in November. China's central bank set Wednesday's yuan midpoint rate at 6.3796 per dollar prior to market open, 0.09 percent weaker than the previous fix 6.3740. The spot market opened at 6.3830 per dollar and was changing hands at 6.3848 at midday, 0.1 percent weaker than the previous close. The Chinese currency has overall slowly weakened since Nov. 3.
Equities Recap
Asian share Index slid as copper prices plunged and another bomb scare in Europe hurt risk appetites, while bets that the US Fed remains on track for a rate hike bolstered the dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped about 0.2 percent. Shanghai shares dropped 0.4 percent early but then changed course and were slightly up after data showing Chinese home prices rose for first time in over a year in October on an annual basis.
Japan's Nikkei added about 0.8 percent as the yen shrugged off its traditional status as a safe-haven currency and edged down against a backdrop of divergent monetary policy expectations.
Commodities Recap
Oil prices rose following reports of falling stockpiles and rising refinery activity, but analysts said the market would remain under pressure for the rest of the year and into 2016. Industry group American Petroleum Institute (API) said that U.S. crude stockpiles fell last week by 482,000 barrels due partly to higher refinery runs. Front-month U.S. crude futures were up 29 cents from their last settlement to $40.96 a barrel at 0552 GMT. The gain followed an over $1 fall the previous session. Brent crude futures were up 35 cents at $43.92 per barrel.
Gold prices touched their lowest in nearly six years as the dollar rose and investors braced for the first U.S. interest rate rise in nearly a decade next month. Spot gold was down 0.20 percent at $1,068.6 an ounce at 0353 GMT, after falling to $1,064.95 earlier in the day, the lowest since February 2010.U.S. gold futures for December delivery were down 0.12 percent at $1,067.3.
Copper continued to suffer, dropping 1.5 percent to $4,612.50 a tonne after hitting a 6-1/2-year low of $4,590 overnight, amid fears of waning demand from China.
Treasuries Recap
U.S. Treasuries bounced back on safety bids overnight, with the 10-year yield slipping from day's high of 2.313 percent. It stood at 2.274 percent in Asian trade, compared with its U.S. close of 2.261 percent.
New Zealand government bonds gained slightly, sending yields 4 basis points lower at the short end of the curve and 2 basis points lower at the long end. Australian government bond futures were a touch firmer, with the 3-year bond contract steady at 97.870. The 10-year contract added 1 tick to 97.0600, while the 20-year contract was half a tick higher at 96.5250.
The 2-year Canadian Treasury price was down 1.5 Canadian cents to yield 0.622 percent and the benchmark 10-year slipped 8 Canadian cents to yield 1.658 percent.
