Market Roundup
- EUR/USD dives over big figure on back of ECB headlines. From 1.0689 to 1.0578.
- EUR/GBP dragged lower by EUR/USD weakness. Plays 0.7080-0.7023.
- ECB discusses two-tiered bank charges, broader bond buys - Officials.
- ECB says faster-than-expected Fed tightening could push euro area yields higher.
- ECB Constancio: Dec rate decision will not significantly change stability outlook.
- Constancio: Developments since June: Meeting inflation target by 2017 more difficult.
- Russian prepared set up joint command to attack IS with France, U.S & Turkey.
- Turkey Erdogan: No intention to escalate incident, only defending own security.
- Turkey PM: Has 'right and duty' to defend aerial border if it is violated.
- UK Oct BBA mortgage approvals 45.437k vs previous 44.825 revised.
- Swiss Oct UBS Consumption indicator 1.60 vs previous 1.56 revised.
- Swedish inflation seen at 1.9% in 12 months vs 2.0% seen in Oct.
- BOJ Minutes: A few members say output gap improvement is slow.
- BOJ Shirai: QQE will be basic framework if more easing were to come.
- Japan's Amari: Hard to lower corp tax rate when cash reserves keep rising.
Economic Data Ahead
- (0830 ET/1330 GMT) U.S. consumer spending in October is likely to have picked up, by rising 0.3 pct after inching higher 0.1 pct in September, suggesting an acceleration in economic growth early in Q4, according to a survey of economists. Personal income probably rose 0.4 pct from 0.1 pct, while core PCE price index mm is expected to remain unchanged at 0.1 pct.
- (0830 ET/1330 GMT) The Commerce Department is expected to show non-defense capital goods orders excluding aircraft bounced back 0.4 percent in October after slipping 0.1 percent in September. Durable goods orders likely rose 1.5 pct after dropping 1.2 pct in September.
- (0830 ET/1330 GMT) The number of Americans filing for jobless benefits is expected to slip by 1,000 to a seasonally adjusted 270,000. While the continued jobless claims likely to have fallen to 2.164 mln from 2.175 mln.
- (0945 ET/1445 GMT) The financial firm Markit is scheduled to release its flash services PMI for Nov which probably rose to 55.0 from 54.8 in October.
- (1000 ET/1500 GMT) The Federal Housing Finance Agency releases House Price Index for September.
- (1000 ET/1500 GMT) The Commerce Department issues new single-family home sales for October, which are expected to have slightly increased to 0.500 mln from 0.468 mln, a gain of 6 pct from a dip of 11.5 pct in September.
- (1000 ET/1500 GMT) The University of Michigan's final index on overall consumer sentiment in November is likely to remain unchanged at 93.1.
- (1000 ET/1500 GMT) Mexico's central bank will release current account deficit data for Q3, the deficit reached $7.98 billion in the second quarter.
- Brazil's central bank is expected to leave its benchmark rate unchanged at 14.25 percent, a nine-year high after inflation climbed past 10 percent in the middle of the worst recession in decades.
Key Events Ahead
No Major Events Scheduled
FX Beat
USD: The dollar eased as geopolitical worries boosted euro, yen and also investors cut crowded long positions in the lead-up to the U.S. Thanksgiving holidays. The dollar index was 0.2 percent down, at 99.429, though most analysts expected weakness to be temporary.
EUR/USD: The euro hit 7-month low of $1.0589, down 0.5 pct on day. Major intraday resistance is around 1.0690 (55 day 4H EMA) and any break above confirms very minor bullishness, a jump till 1.0720 (trend line joining 1.0829 and 1.07628)/1.0760 is possible. On the downside watch out 1.0580(trend line joining 1.06731 and 1.06168) for further weakness and break below targets 1.0500 is possible.
USD/JPY: The yen hit a 1-1/2-week high of 122.26 yen per dollar on Wednesday and was trading around 122.61. Intraday trend is weak as long as resistance 123.60 holds. Any break above 123.60 will take the pair to new level 124.15/125. On the downside major support is at 122.25 and break below targets 121.50/121.
GBP/USD: Sterling was slightly down against the dollar at $1.5080 as investors await more fiscal tightening from Osborne. It has recovered till 1.5114 after making a low of 1.50535. Overall trend is bearish as long as resistance 1.5160. On the higher minor resistance is around 1.5160 and break above targets 1.5190/1.5220 (support turned into resistance). The pair's minor support is around 1.5090 and break below targets 1.5050/1.5029. It was trading near a 2-week low against the euro, was down 0.25 percent at 70.715 pence per euro, having hit a low of 71.80 pence.
USD/CHF: The pair has recovered after making a low of 1.01440 and was trading at 1.02260. Intraday support is around 1.01440 and break below 1.0140 will drag the pair till 1.0120. Major resistance is around 1.0230 and break above targets 1.0280.
AUD/USD: The Australian dollar hit a one-month high of $0.7276, after Reserve Bank of Australia Governor Glenn Stevens, in a speech late on Tuesday, dampened expectations for further rate cuts. It popped higher to $0.7259, having climbed to a one-month peak of $0.7276 after a key level around $0.7250 finally gave way. Resistance was found near the 73 cents mark, a level that could prove difficult to breach on the first attempt, dealers said. On the lower side minor support is around 0.7225 and break below targets 0.7180/0.7150. Short term bullish invalidation is only below 0.7150. The euro and pound dropped to 5-month lows against the Aussie which also climbed to its highest since August against the yen and Canadian dollar.
NZD/USD: The New Zealand dollar rose to $0.6562, from a low of $0.6505 on Tuesday, tracking the Australian dollar.
Equities Recap
European stocks inched higher and oil prices fell 1 percent as investors' concerns eased over the potential fallout of Turkey's shooting down of a Russian fighter jet.
At 0930 GMT the FTSEuroFirst 300 index was up 0.8 percent at 1,493 points, Germany's DAX rose 0.7 percent at 11,015 points and Britain's FTSE 100 climbed 0.8 percent at 6,329 points. France's CAC 40 rose by 0.2 pct in early trades.
Tokyo's Nikkei average ended down 0.39 pct at 19,847.58, MSCI's index of Asia-Pacific stocks outside of Japan shed 0.1 pct, while MSCI's global index fell into negative territory. China's CSI300 Index ended up 0.7 pct at 3,781.61 points, HK's Hang Seng Index lost 0.4 pct at 22,498.00 points and Shanghai Composite Index closed up 0.9 pct at 3,647.93 points.
Commodities Recap
Crude oil futures dropped as investors' focus shifted from the threat of escalating violence in the Middle East back to a deep global supply glut and away, which pushed prices to 2-week highs the previous day. Brent inched down 76 cents at $45.36 a barrel, reversing brief gains earlier in the session. WTI futures slipped 61 cents to $42.26 a barrel.
Gold earned further on overnight gains on a softer USD and heightened tensions after Turkey shot down a Russian warplane, but the rally was capped on U.S. rate hike expectations next month. Spot gold rose 0.3 pct to $1,078.61 an ounce, following a 0.6 pct gain on Tuesday. U.S. gold climbed 0.5 pct, after a near 1 pct gain in the previous session.
Treasuries Recap
The benchmark 10-year U.S. note yield stood at 2.23 pct after touching a 3-week low of 2.206 pct overnight.
Benchmark euro zone bond yields were down around 1-2 bps, kept under pressure by the prospect of further ECB easing. The 10-year German Bund yield rose 1.5 basis points to 0.52 percent, while 2-year yields rose 1.1 bps to minus 0.36 percent and away from Tuesday's record low of 0.40 percent hit after news broke that Turkey had downed a Russian warplane.
JGB prices closed the day higher, with the 20-yr tenor outperforming the rest of the curve. The current 20-yr JGBs extended their earlier profits, after the MoF published solid results of today's monthly JPY1.2tn 20-yr JGB auction.
UK Gilts started 6 ticks lower than the settlement of 118.29, as expected, as Gilts tracked some modest eurozone weakness as traders prepared for sovereign supply. 10-year cash yields are now holding above support from 50% of October lows and November highs at 1.868%.
New Zealand government bonds dropped, pushing yields up around 1.5 bps at the longer end of the curve. Australian government bond futures were a touch firmer, with the 3-year bond contract flat at 97.860. The 10-year contract earned 1 tick to 97.0600, while the 20-year contract climbed 1.5 ticks to 96.5400.
