Market Roundup
- EUR/USD down to 1.0643, lowest since mid April.
- USD advance leads USD/CHF to new high at 1.0137. Above Mar 1.0128 peak.
- EUR/GBP hits 3 mth low after UK data. PLays 0.7032 to 0.7005.
- UK Oct CPI +0.1% m/m, -0.1% y/y vs previous -0.1%/-0.1%. 0.1%/-0.1% expected.
- UK Oct PPI I/P prices 0.2% m/m, -12.1% y/yvs previous 0.5%/-13.4% revised. 0.2%/-12.0% expected.
- UK Oct PPI O/P prices 0.0% m/m, -1.3% y/y vs previous -0.1%/-1.8%. 0.0%/-1.3% expected.
- UK Oct PPI core O/P -0.1% m/m, 0.3% y/yvs previous 0.1%/0.2%. 0.0%/0.4% expected.
- Germany Nov ZEW Economic sentiment 10.4 vs previous 1.9. 6.0 expected.
- Germany Nov ZEW Current conditions 54.4 vs previous 55.2. 55.0 expected.
- France PM Valls: France to breach EU deficit goal as security spending rises.
- France invokes EU treaty mutual assistance article 42.7, first time article has been activated.
- Norway Q3 GDP 1.8% q/q. 0.2% expected. EUR/NOK drops.
- Copper falls to new 6 year low at USD 4590/tonne.
Economic Data Ahead
- (0830 ET/1330 GMT) U.S. consumer prices probably rose 0.2 percent in October after two straight months of declines, an indication that a recent disinflationary trend has probably run its course. The index dropped 0.2 percent in September. Core CPI is forecast to rise 0.2 percent after a similar gain in September.
- (0915 ET/1415 GMT) The Federal Reserve is expected to show a gain of 0.1 percent in industrial output for October. Output dropped 0.2 pct in September. While the manufacturing output is expected t have risen 0.2 pct after a drop of 0.1 pct in September.
- (1000 ET/1500 GMT) U.S. homebuilder sentiment is likely to stay at its strongest level in more than a decade in November. The NAHB/Wells Fargo Housing Market index is expected to stand at 64, unchanged from October's level, which was the highest since August 2005.
Key Events Ahead
- (0745 ET/1245 GMT) U.S. Treasury Deputy Secretary Sarah Bloom Raskin will also be speaking at the event.
- (1235 ET/1735 GMT) Federal Reserve Board Governor Jerome Powell is scheduled to speak on "Central Clearing in an Interdependent World" before the Clearing House Annual Conference, in New York.
- (1530 ET/2030 GMT) Federal Reserve Board Governor Daniel Tarullo will speak on regulation of the shadow banking sector at an event hosted by the Brookings Institution in Washington.
FX Beat
USD: The dollar touched a 7-month high of $1.0647 in early European trade, up 0.4 percent on the day. It added about 0.1 percent to 123.27 yen, away from the previous session's 1-week low of 122.23, as investor risk aversion faded. The dollar index added 0.2 percent to 99.589, after setting a fresh seven-month high of 99.655.
EUR/USD: The euro dropped to $1.0642, its weakest since mid-April. It has made a low of 1.0642 at the time of writing and slightly recovered after better than expected German ZEW index. Its minor support is around 1.0640 and break below will drag the pair further down till 1.0600/1.0570 level. Major resistance is around 1.0730 and break above targets 1.0770/1.0830. The minor resistance is around 1.0770 and break above targets 1.0800/1.08280.
USD/JPY: The pair has made a high of 123.42 at the time of writing and retreated from that level and was trading at 123.25. Overall trend is still bullish as long as support 122 holds. On the higher side major resistance is around 123.60 and break above targets 124.13/125.
GBP/USD: Sterling climbed towards 3-months highs against the euro and posted losses against the dollar, after the data showed core British inflation rising at a slightly faster pace than expected in October. It rose to $1.5196 after the data from around $1.5173 beforehand, still down 0.1 percent on the day. The euro fell to 70.16 pence, not far from a 3-month low of 70.11 pence hit earlier in the day. Technically Cable is facing minor resistance around 1.5200 and any break above targets 1.5235/1.5260. Bearish invalidation is only above 1.5260 and break above will take the pair till 1.5300/1.5350 level. On the downside minor support is around 1.5150 and break below will drag the pair further down till 1.5080/1.5050.
USD/CHF: The pair has broken a major resistance at 1.0125 and this confirms short term bullishness, a jump till 1.0240/1.0300 is possible. On the downside minor support is around 1.00750 and break below targets 1.0040/1.0000. The major support is around 0.9980 and break below will drag the pair till 0.9950/0.9930.
AUD/USD: The Australian dollar sidelined on Tuesday, with the market searching for inspiration after it repeatedly failed to break strong chart resistance. It held at $0.7096, having been kept in a narrow band since Monday. It recovered after making a low of 0.7072 level and was trading around 0.7107. The pair is facing major resistance around 0.7170 and any slight trend reversal only above that level. Any break above that level will take the pair till 0.7225/0.7250. On the lower side minor support is around 0.7050 and break below targets 0.7020/0.6935. The New Zealand dollar edged down to $0.6471, having broken key support around 65 cents.
Equities Recap
Global shares climbed, reversing previous day's losses as investors bet that Friday's attacks on Paris would have little lasting impact on the economy. European shares were encouraged by updates from companies such as Randstad and Germany's United Internet.
The FTSEurofirst 300 index rose 1.8 percent at 1,486.45 points by 0901 GMT after closing 0.2 percent higher in the previous session. French shares were up 1.7 percent, after falling 0.1 percent on Monday. Germany's DAX inched up 0.9 pct.
Japan's Nikkei added 1.6 percent, brushing a 3-month peak. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.7 percent, taking its cue from a surge on Wall Street and bouncing from a six-week low struck the previous day on risk aversion. Shanghai stocks climbed 1.4 percent.
Commodities Recap
Brent oil prices recorded gains at a more modest pace than the previous day, as the risk premium stemming from the Paris attacks faded, and the focus returned to the global oversupply in crude and petroleum products. Brent crude futures rose 7 cents at $44.63 a barrel by 0853 GMT, having closed up 2 percent on Monday. Front-month U.S. crude futures were down 10 cents at $41.64 a barrel.
Gold fell back towards 5-year lows as the downward impact of a firmer U.S. dollar and weaker demand in major gold buyers weighed on prices. Spot gold edged down $3.95 or 0.4 percent to $1,078.46 an ounce by 0608 GMT. U.S. gold slipped by 0.6 percent to $1,077.50.
Treasuries Recap
10-year U.S. Treasury yield stood at 2.276 percent vs U.S. close of 2.273 percent on Monday.
JGB prices closed the day marginally mixed, with the 10s/30s curve steepening modestly by 1.5bp on the day. In the AM session, one megabank sold the current 5-yr JGBs short to buy them back in today's monthly JPY2.5tn 5-yr auction. The MoF re-opened the current issue (#125), as widely expected.
Germany 10-year bund yield was at 0.53 percent as of 10:30 a.m. London time, after touching 0.52 percent, the lowest level since Nov. 2. French 10-year yields were at 0.85 percent, after being at 0.84 percent, the lowest since Oct. 30.
UK Gilts opened 4 ticks higher than the settlement of 116.51. Bond futures edged lower after the inflation data to reach a session low of 117.34, down 17 ticks on the day.
Greek 10-year yields dropped to 7.11 percent, their lowest since October 2014. 2-year yields were down 36 bps at 6.24 percent, having reached almost 60 percent in July.
New Zealand government bonds eased, sending yields 2 bps higher at the long end of the curve. Australian government bond futures pulled closer to recent lows, with the 3-year bond contract off 4 ticks at 97.860. The 10-year contract eased 2 ticks to 97.0500, while the 20-year contract shed 3 ticks to 96.5100.
