Market Roundup
- Incoming New Zealand govt to review central bank objectives
- Japan to host next round of TPP talks, New Zealand wants changes
- New Zealand populist to become deputy prime minister, foreign minister -media
- Japan Oct Nikkei Mfg PMI Flash 52.5, 52.9 previous, output and new orders slow
- Trump says popular retirement program will be unscathed in tax plan
- Low inflation could slow Fed, but fiscal stimulus unnecessary - Rtrs poll
- Warsh Met With Vice President Pence About Top Fed Job Last Week - WSJ
- Trump to press China on North Korea, trade on Beijing visit
- China Communist Party enshrines Xi in constitution
- North Korea may be building biological weapons - New York Post
- Catalonia warns of civil disobedience as Madrid readies direct rule
Economic Data Ahead
- (0245 ET/0645 GMT) France Oct Business Climate 110.00 eyed, last 110.00
- (0300 ET/0700 GMT) France Oct Markit Serv Flash PMI 56.90 eyed, last 57.00
- (0300 ET/0700 GMT) France Oct Markit Comp Flash PMI 57.00 eyed, last 57.10
- (0300 ET/0700 GMT) France Oct Markit Mfg Flash PMI 56.00 eyed, last 56.10
- (0330 ET/0730 GMT) EZ Oct Markit Mfg Flash PMI 57.8 eyed, last 58.1
- (0330 ET/0730 GMT) EZ Oct Markit Serv Flash PMI 55.6 eyed, last 55.8
- (0330 ET/0730 GMT) EZ Oct Markit Comp Flash PMI 56.5 eyed, last 56.7
- (0330 ET/0730 GMT) Germany Oct Markit Service Flash PMI 55.60 eyed, last 55.60
- (0330 ET/0730 GMT) Germany Oct Markit Mfg Flash PMI 60.20 eyed, last 60.60
- (0330 ET/0730 GMT) Germany Oct Markit Comp Flash PMI 57.50 eyed, last 57.70
Key Events Ahead
- N/A ESM @USD3 bln 5-yr inaugural syndication via Citi, Deutsche Bank and JP Morgan.
- N/A ADB 10yr USD global, IPTs MS+24 area via Citi, Daiwa, HSBC and JP Morgan
FX Beat
DXY: The dollar index steadied after rising to an over 2-week high in the previous session on the back of U.S. tax reform developments, while investors awaited the appointment of a more hawkish candidate as Fed chairperson. The greenback against a basket of currencies traded flat at 93.82, having touched a high of 94.04 the day before, its highest since Oct. 6. FxWirePro's Hourly Dollar Strength Index stood at 107.58 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro rose, reversing most of its previous session losses, as investors awaited the European Central Bank's policy meeting on Thursday, at which policymakers are seen cutting bond purchases but voting for an extension in stimulus. The European currency traded 0.1 percent up at 1.1763, having touched a low of 1.1725 in the previous session, its lowest since Oct. 9. FxWirePro's Hourly Euro Strength Index stood at -0.59 (Neutral) by 0400 GMT. Investors’ attention will remain on series of Markit PMIs from the Eurozone economies, ahead of U.S. manufacturing and service PMI. Immediate resistance is located at 1.1783 (21-DMA), a break above targets 1.1804 (10-DMA). On the downside, support is seen at 1.1736, a break below could drag it near 1.1700.
USD/JPY: The dollar declined, extending previous session losses, as attention turned to who would be the next head of the U.S. central bank after President stated that he is very close to deciding who should chair the Federal Reserve. The major was trading 0.1 percent down at 113.35, having hit a high of 114.10 the day before, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at 28.27 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. manufacturing and service PMI for further momentum. Immediate resistance is located at 114.20, a break above targets 114.50. On the downside, support is seen at 112.91 (5-DMA), a break below could take it near 112.55.
GBP/USD: Sterling steadied above the 1.3200 handle, extending gains for the third straight session, after British PM Theresa May on Monday stated that she was ambitious and positive about the country's future and its negotiations to leave the European Union. The major traded 0.2 percent up at 1.3220, having hit a low of 1.3087 on Friday, its lowest since Oct. 09. FxWirePro's Hourly Sterling Strength Index stood at 105.13 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3255 (21-DMA), a break above could take it near 1.3311. On the downside, support is seen at 1.3157 (Previous Session Low), a break below targets 1.3100. Against the euro, the pound was trading 0.1 percent up at 88.96 pence, having hit a high of 88.86 pence the prior day, its highest since Oct. 17.
AUD/USD: The Australian dollar rose after falling for two consecutive sessions, as investors awaited the inflation report for the third quarter, which is expected to show that the consumer price index rose 0.8 percent in the quarter, nudging the annual pace up to 2.0 percent and back into the Reserve Bank of Australia's 2-3 percent target range. The Aussie trades 0.1 percent up at 0.7810, having hit a low of 0.7796 the day before, it’s lowest since Oct. 12. FxWirePro's Hourly Aussie Strength Index stood at -82.27 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7796 (Previous Session Low), a break below targets 0.7770. On the upside, resistance is located at 0.7837 (5-DMA), a break above could take it near 0.7880.
NZD/USD: The New Zealand dollar fell to multi-month lows after the country's incoming Labour government outlined its left-leaning priorities, including a clamp-down on foreign buyers of local housing. The Kiwi trades 0.5 percent down at 0.6927, having touched a low of 0.6926 earlier, its lowest level since May 22. FxWirePro's Hourly Kiwi Strength Index was at -126.92 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7054 (5-DMA), a break above could take it near 0.7089. On the downside, support is seen at 0.6926 (Session Low), a break below could drag it till 0.6900.
Equities Recap
Asian shares traded near recent decade highs, while the New Zealand dollar slumped to fresh 5-month lows after the country's incoming Labour government laid out its left-leaning priorities.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.
Tokyo's Nikkei rallied 0.3 percent to 21,770.37 points, Australia's S&P/ASX 200 index climbed 0.1 percent to 5,897.60 points and South Korea's KOSPI advanced 0.1 percent to 2,493.69 points.
Shanghai composite index rose 0.1 percent to 3,382.62 points, while CSI300 index was trading 0.5 percent up at 3,952.60 points.
Hong Kong’s Hang Seng was trading 0.1 percent lower at 28,264.92 points. Taiwan shares added 0.1 percent to 10,743.78 points.
Commodities Recap
Crude oil prices edged up, reversing some of its previous session losses, supported by a decline in oil exports from Iraq and a projected extended fall in U.S. commercial oil stocks. International benchmark Brent crude was trading 0.2 percent up at $57.44 per barrel by 0433 GMT, having hit a high of $58.51 on Wednesday, its highest since Sept. 28. U.S. West Texas Intermediate was trading 0.2 percent higher at $51.95 a barrel, after rising as high as $52.31 on Wednesday, its highest since Sept. 28.
Gold prices edged up, having recovered from a more than two-week low touched in the previous session, on the back of a slightly weaker dollar. Spot gold was 0.2 percent up at $1,282.69 an ounce by 0436 GMT, having hit its lowest since Oct. 6 at $1,272.42 in the previous session. U.S. gold futures for December delivery rose 0.3 percent to $1,284.80 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.370 percent lower by 0.005 bps, while 5-year yield was 0.005 bps down at 2.001 percent.
The Japanese government bonds traded narrowly mixed as investors remained sidelined in any major deal in a silent trading session. However, the markets will remain focused on the upcoming September consumer inflation data releasing on Friday and development in the U.S. Treasuries. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.068 percent, the yield on long-term 30-year hovered around 0.88 percent and the yield on short-term 2-year too remained steady at -0.13 percent.
The Australian government bonds jumped tracking a solid development in the U.S. counterpart after hawkish bets cropped up among market participants over the plausible appointment of next Federal Reserve Chair after serving Chair Janet Yellen’s term expires in early February 2018. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3 basis points to 2.77 percent, the yield on the long-term 30-year note plunged nearly 3-1/2 basis points to 3.54 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points lower at 1.92 percent.
The Canadian government bond prices were mostly higher across the maturity curve, with the two-year price down 1 Canadian cent to yield 1.478 and the benchmark 10-year up 5 Canadian cents to yield 2.025 percent. The Canada-U.S. two-year bond spread was -8.6 basis points, while the 10-year spread was -34.5 basis points.
