Market Roundup
- Eurozone Consumer Confidence Index fell to -7.6 in October from -6.5 in September
- Oil steady as trade concerns vie with drop in inventories
- German exports to shrink for first time since global financial crisis: DIHK
- Dollar bides time ahead of anticipated Fed rate cut
- French growth beats expectations in third quarter after Macron splashes out
- Brent price seen within $60 to $65 next year - IEEJ
- German jobless total rises more than expected in October
Economic Data Ahead
- (0815 ET/1215 GMT) U.S. ADP employment change (Oct) (Forecast 120K, Prior 135K)
- (0830 ET/1230 GMT) U.S. core PCE index Prelim Q/Q (Q3) (Forecast 2.2%, Prior 1.9%)
- (0830 ET/1230 GMT) U.S. GBP prelim Y/Y (Q3) (Forecast 1.7%, Prior 2.0%)
- (0900 ET/1300 GMT) EU HICP Prelim Y/Y (Oct) (Forecast 0.8%, Prior 0.9%)
- (1000 ET/1400 GMT) BoC Interest Rate Decision, Monetary Policy Report
- (1400 ET/1800 GMT) U.S. Federal Reserve Interest Rate decision
Key Events Ahead
- (1115 ET/1515 GMT) BoC Press Conference
- (1330 ET/1730 GMT) ECB's Lautenschläger speech
- (1430 ET/1830 GMT) FOMC Press Conference
FX Beat
DXY: Market’s turn risk-averse before the key central bank meetings and the US Gross Domestic Product (GDP) data. DXY slips lower, trades at 97.65, down 0.03% at 11:35 GMT. Technicals support weakness. Dip till 200-DMA at 97.43 likely.
EUR/USD: EUR/USD was trading at 1.1113 at 11:35 GMT. Eurozone Consumer Confidence Index for the eurozone fell to -7.6 in October from -6.5 in September and came in line with the market expectation. The major is largely muted as markets focus on FOMC interest rate decision. The US central bank is widely expected to issue another interest rate cut. The Greenback might gain if Fed guidance falls short of dovish market expectations. The pair trades with a slightly bullish bias. 200-DMA is major resistance at 1.1198, while 21-EMA is strong support at 1.1073.
USD/CHF: The Swiss Frank gained support as markets turned cautious ahead of key FOMC meeting. USD/CHF slipped lower as a result and was trading at 0.9924, down 0.16% at 11:45 GMT. Price action was rejected at 200-DMA, which is stiff resistance at 0.9955. We see scope for upside only on decisive break above. Price action hovers around 21-EMA at 0.9924. Break below can see dip till 0.99 level.
GBP/USD: Sterling remains bid as the UK readies itself for a December 12 General Election. Markets cautious ahead of Fed interest rate decision. GBP/USD extends marginal gains as we write, trades 0.19% higher at 1.2891 at 11:50 GMT. Major and minor trend remain bullish. Price action above 200-DMA, scope for test of 1.2967 (110W EMA). Weakness only below 200-DMA. On the data side focus remains on German unemployment, inflation readings and Eurozone confidence indicators.
USD/JPY: USD/JPY was trading 0.04% lower at 108.84 at around 11:50 GMT. Price action capped at 200-DMA resistance at 109.045, upside only on breakout there. Focus on FOMC meeting and US Gross Domestic Product (GDP) data for further impetus. Markets have largely priced in an interest rate cut from the Fed. However, the Greenback stands to gain if the policy statement falls short of dovish market expectations.
Equities Recap
European stocks steady on Wednesday as investors await the Federal Reserve’s monetary policy decision later in the day.
At around 10:45 GMT, The Stoxx Europe 600 was largely unchanged at 398.24. The German DAX declined 0.12% to 12923.58.
The French CAC 40 was up 0.30% at 5757.57 and the U.K. FTSE 100 declined 0.05% to 7302.51.
Commodities Recap
Gold prices edge higher on possible US-China trade-talk setbacks. Focus on Federal Reserve’s next monetary policy decision.
Spot Gold was trading at $1493.27 per ounce at 10:45 GMT. Silver was trading 0.43% higher at $17.87 at the time of writing.
WTI crude edges higher despite weaker than previous API stockpiles report. US oil was trading at $55.49 per brl at 11:00 GMT, up 0.05% at the time of writing.
Treasuries Recap
U.S.: The U.S. Treasuries remained steady during Wednesday's afternoon session amid hopes of a further 25bp interest rate cut by the Federal Reserve at its monetary policy meeting later today. Also, the country’s ADP non-farm employment report for the month of October and third-quarter gross domestic product (GDP), all scheduled for release today by 12:15GMT and 12:30GMT, will add direction to the debt market. The yield on the benchmark 10-year Treasury yield slipped nearly 1 basis point to 1.828 percent, the super-long 30-year bond yield suffered nearly 1-1/2 basis points to 2.318 percent while the yield on the short-term 2-year traded flat at 1.641 percent.
UK: The United Kingdom’s gilts gained during European trading hours Wednesday ahead of the country’s manufacturing PMI for the month of October amid ongoing Brexit hassles and extension of divorce deadline to January 31, 2020. The yield on the benchmark 10-year gilts, slipped 1 basis point to 0.698 percent, the 30-year yield suffered nearly 2 basis points to 1.222 percent and the yield on the short-term 2-year also edged nearly 1-1/2 basis points down to 0.530 percent.
EUR: The German bunds remained nearly flat during European session Wednesday after the country’s unemployment change for the month of October disappointed market sentiments, while the jobless rate remained unchanged. Investors will be eyeing Germany’s retail sales for the month of September and eurozone’s consumer price inflation (CPI) for the similar period, both scheduled to be released on October 31 by 10:00GMT for added information in the debt market. The German 10-year bond yield, which moves inversely to its price, slumped 2-1/2 basis points to -0.353 percent, the yield on 30-year note also plummeted 3-1/2 basis points to 0.142 percent and the yield on short-term 2-year suffered 1-1/2 basis points down at -0.661 percent.
JGBs: The Japanese government bonds surged at close Wednesday as investors await the country’s industrial production data for the month of September, scheduled to be released today by 23:50GMT and the Bank of Japan’s (BoJ) monetary policy meeting, due to be held on October 31 for further direction to the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, suffered 6 basis points to -0.117 percent, the yield on the long-term 30-year slumped 2 basis points to 0.404 percent and the yield on short-term 2-year suffered 9 basis points to -0.216 percent.
AUS: The Australian government bonds jumped during Asian session Wednesday after the country’s consumer price inflation (CPI) for the third quarter of this year rose lower than prior reading in Q2, however, meeting market expectations. Further, the Q3 producer price inflation (PPI), due for release on November 1 by 00:30GMGT, will add further direction to the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 4 basis points to 1.140 percent, the yield on the long-term 30-year bond also plummeted 4 basis points to 1.716 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points down at 0.821 percent.
