Market Roundup
- EUR/USD lifts to 1.0892 after hitting new low at 1.0834.
- DXY 3mth high at 98.135 not far from Aug's 98.334 peak. -0.02% into NY.
- EUR/GBP makes a new 11 week low at 0.7043.
- Rebound in EUR/CHF from yesterday's1.0782 base to 1.0832. USD/CHF to new 0.9980 high.
- U.S. 2-yr treasury yields rose to highest in 4-1/2 years.
- UK Oct Halifax hse prices +9.7% 3m/yy vs previous 8.6%. 9.5% expected.
- Swiss Oct CPI 0.1% m/m, -1.4% y/y vs prev 0.1%/-1.4%. 0.0%/-1.4% expected.
- Swiss Q4 Consumer confidence -18 vs previous -19 .
- EZ Sept Retail sales -0.1% m/m, 2.9% y/y vs previous 0.0%/2.3%. 0.2%/3.0% expected.
- ECB Draghi: Not constrained in ability to act, have many tools at disposal.
- Norges Bank Rate unchanged as expected. Indicated key policy rate may be reduced further in 2016.
- NOK up after Norges bank decision.
- Norway C/B Chief: Board did not discuss cutting rates at Wed's meeting.
Economic Data Ahead
- (0830 ET/1330 GMT) U.S. nonfarm productivity is expected to have slipped 0.2 percent annual pace in the third quarter, having increased at a 3.3 percent rate in the second quarter, putting modest upward pressure on labor costs. Unit labor costs is estimated to have risen at a 2.3 percent rate in the period, after falling 1.4 pct in the previous quarter.
- (0830 ET/1330 GMT) The number of Americans filing new applications for jobless benefits likely rose 2,000 to a seasonally adjusted 262,000 the previous week. The continued unemployment claims are expected to stay unchanged at 2.144 mln.
- (1000 ET/1500 GMT) The pace of purchasing activity in Canada is expected to have increased in October. The seasonally adjusted Ivey Purchasing Managers Index is expected to have risen to 54.0 from 53.7 in September.
- (1030 ET/1530 GMT) EIA Natural Gas Storage Change (Oct 30), Previous 63B.
- (1400 ET/1900 GMT) Treasury STRIPS data.
- (0730 ET/1230 GMT) FRB NY's Dudley workshop on reforming culture/behavior in financial services industry.
- (0730 ET/1230 GMT) Fed Vice Chair Fischer & IMF MD Lagarde attend above workshop.
- (0730 ET/1230 GMT) FRB Philadelphia's Harker on energy interdependence.
- (1045 ET/1545 GMT) FedTrade 30-yr Fannie Mae/Freddie Mac (max $1.625 bn).
- (1145 ET/1645 GMT) FRB Chicago's Evans introductory remarks at international banking conference.
- (1225 ET/1725 GMT) Fed Governor Tarullo on regulation of international banks.
- (1230 ET/1730 GMT) FRB Atlanta's Lockhart speaks at Joint Central Bank Conference.
- (1500 ET/2000 GMT) Former Fed Chair Bernanke at "Unconventional Monetary/Exchange Rate Policies".
FX Beat
USD: The dollar touched a 3-month high against a basket of major currencies as comments from Federal Reserve officials kept chances of a rate hike in December alive. The dollar index rose 0.15 percent at 98.135, after having gained 0.8 percent on Wednesday. The greenback broke out of its recent 120.00-121.60 range against the yen, to reach a two-month high of 121.85 yen.
EUR/USD: The euro has made a low of 1.08335 at the time of writing and started to recover from that level. It is currently trading around 1.0853, intraday trend is still weak as long as resistance 1.0900 holds. The pair's major support is around 1.0800 and break below targets 1.0780/1.0725. On the higher side minor resistance is around 1.0900 and any break above targets 1.09360/1.0950/1.100. Further bullishness can be seen only above 1.1100. Option expiries are at 1.0800 (1BLN), 1.0850 (319M), 1.0875 (816M).
USD/JPY: The pair has broken a major Potential Reversal Zone (PRZ) 121.75 and is trading around 121.84. Overall trend reversals happened and jump till 123.15/124 is possible. The pair's weakness can be seen only below 120.80 and break below 120.80 will targets 120.25/120. Bullish invalidation is only below 120. Option expiries are at 121.00 (1.5BLN), 122.00 (1BLN), 122.50 (1.5BLN).
GBP/USD: Sterling touched a 1-week low against the dollar after the Bank of England hints no sign that it was in any hurry to raise interest rates next year, predicting near-zero inflation would pick up only slowly even if rates stay on hold until 2017. Sterling fell to $1.5270, down more than a full U.S. cent from where it was trading before the data. Technically it has broken the major support 1.5350 and declined till 1.5280, overall trend is weak as long as resistance 1.5360 holds. On the downside any break below 1.5280 confirms further weakness, decline till 1.5200 is possible bullishness is only above 1.5400. Against the euro, the pound weakened to 71.11 pence from 70.65 pence beforehand.
AUD/USD: The Australian dollar dropped to $0.7137, having shed around one full cent from a peak touched on Wednesday. The pair has retreated after making a high of 0.7224 and is facing strong resistance around 0.7200. Further bullishness can be seen only above that level. It is currently trading at 0.7135, overall bullishness can be seen only above 0.7300 and break above targets 0.7360/0.7380. On the lower side minor support is around 0.7120 and break below targets0.7065/0.7000. Option expiries are at 0.7160 (1BLN), 0.7200 (2BLN).
USD/CHF: The pair broken trend line resistance around 0.9960 and confirms bullishness, a target till 1.00/1.0135 is possible. On the downside minor support is around 0.9930 and break below targets 0.9900/0.9880. Overall weakness is only below 0.9820.
NZD/USD: The New Zealand dollar suffered the most, having hit a 1-month low of $0.6574 overnight to be last at $0.6583. The kiwi dropped 2.6 percent this week and, if sustained, it would be the biggest weekly loss since early September.
Equities Recap
European and Asian stock markets dropped on Thursday and US dollar climbed to a 3-month high as U.S. first interest rate hike bets for next month are hardened, which comes after almost a 10 years.
Europe's FTSEurofirst 300 rose 0.4 pct, France's CAC 40 climbed 0.9 pct, Germany's DAX up 0.8 pct, while Britain's FTSE 100 slipped 0.3 pct in early trades.
Tokyo's Nikkei average ended up 1.00 pct at 19,116, China's CSI300 Index edged up 2.1 pct at 3,705.97 points, Shanghai Composite Index volume surged on rally and ended at highest level since July, while HK's Hang Seng Index remained steady at 23,051.04 points.
Commodities Recap
Oil prices edged higher balancing some of the losses incurred a day earlier after data showed U.S. inventory levels had risen for a sixth week and mounting evidence of weakness spreading through the
physical market. Brent crude futures went up 24 cents to $48.82 a barrel, although remained nearly 4 pct below 4-week highs above $50.00 hit on Tuesday. U.S. crude futures surged 18 cents to $46.50 a barrel.
Gold was near a 1-month low on Thursday and looked likely to slip below the $1,100-an-ounce level after Fed's Yellen bolstered market expectations on a U.S. interest rate hike in December. Spot gold went up 0.2 pct to $1,109.10 an ounce, staying close to the previous session's low of $1,106.
Treasuries Recap
US 10-year Treasury yield stood at 2.226 pct vs US close of 2.230 pct on Wednesday.
The gap between U.S. and German 2-year bond yields increased to reach the highest level in 9 years, focusing the diverging outlook for policy on either side of the Atlantic. U.S. 2-year notes yields edged up to their highest in 4.5 years.
JGBs opened softer, pushing yields 0.5bp up to 1bp from yesterday's afternoon close in the 5-yr and longer zone, on the back of weaker mid-term US TSY notes overnight after hawkish remarks by Fed's Yellen. JGB prices closed the day mostly unchanged from yesterday's afternoon close in the 20-yr and shorter zone.
UK Gilts opened lower due to a decent Asian equity session overnight, as always forecasted, but the house price data has added to the early pressure. Sellers have so far respected yesterday's high on 10-year cash yields at 2.011% with buyers looking to pick up dips ahead of the MPC.
A hike in U.S. Treasury yields sent Australian government bond futures to multi-week lows, with the 3-year bond contract dropping 4 ticks at 98.090. The 10-year contract slipped 4.5 ticks to 97.1950, while the 20-year contract lost 3.5 ticks to 96.6450. New Zealand government bonds also eased, with yields 2 bps higher along the curve.
