Market Roundup
- EUR/USD lower to neutral ground, plays 1.0687/1.0778.
- EUR/CHF softer in risk averse markets. 1.0830 to 1.0784.
- EUR/JPY rebounds from Asia 130.66 low to 132.06 in Europe.
- Copper falls to new 6-year low at USD 4763/tonne.
- ECB Constancio: No signs of general overvaluations in euro area.
- Constancio: Further monetary policy options available if needed.
- EZ Oct inflation revised to 0.1% y/y from previous flash estimiate of zero.
- Norway Oct trade surplus grows to NOK20.6bln vs NOK 15.5bln previous.
- Swiss domestic sight deposits fall to 401.896bln w/e Nov 13 vs previous 402.590bln.
- Finnish parliament to debate euro zone exit next year.
Economic Data Ahead
- (0830 ET/1330 GMT) Federal Reserve Bank of New York releases its manufacturing index for the month of Nov, which probably fell to 6.0 after dropping to 11.36 in the previous month.
- (0830 ET/1330 GMT) Statistics Canada is scheduled to release manufacturing sales data for September. Factory sales are expected to have risen 0.1 percent in September. Separately, the agency will also be releasing the figures for foreign investment in Canadian securities in September.
- (1400 ET/1900 GMT) Argentina is set to release its Q3 unemployment data, after it rose 6.6 pct in the previous quarter.
Key Events Ahead
- (1045 ET/1545 GMT) FedTrade Operation 30-Year Ginnie Mae (max $1.025 bn).
- (1330 ET/1830 GMT) FedTrade Operation 15-Year Fannie Mae / Freddie Mac (max $475 mn).
FX Beat
EUR/USD: The euro hit its weakest in more than six months against the yen as investors preferred safety in gold and low-risk government debt after attacks in Paris on Friday. The single currency fell 0.3 percent to $1.0740, not far from last week's 6 1/2-month low of $1.0674, having retreated almost 7 percent from its Oct. 15 peak of $1.1495. It also fell to as low as 130.66 yen, its lowest since late April. It last stood at 132 yen, slightly lower on the day. The one-month euro/dollar implied volatility jumped nearly 5 percent to trade at around 12 percent. The pair has made a high of 1.08290 on Thursday and retreated from that level. Overall trend is still weak as long as resistance 1.0830 holds, its major support is around 1.0660 and break below targets 1.0600. On the higher side major resistance is around 1.0830 and any break above targets 1.0900/1.100. Overall bullishness can be seen only above 1.0900. The minor resistance is around 1.0770 and break above targets 1.0800/1.08280.
USD/JPY: The pair has broken a minor support at 122.49 and declined till 122.22. Short term trend is bullish as long as support 122.48 holds. Any break below 122.18 will drag the pair till 121.99/121.50 in short term. On the higher side minor resistance is around 123.20 and break above targets 123.60/124.13. Overall bullish invalidation is only below 121.50.
GBP/USD: Sterling dropped against a stronger dollar, slightly moved by Friday's attacks in Paris. It fell 0.3 percent to $1.5198, holding in the middle of the past week's ranges. Against the euro, it traded 0.1 percent stronger at 70.54 pence, having touched a 3-month high of 70.245 pence in Asian trade. Cable is consolidating between narrow range between 1.5265 and 1.51740. Short term trend is bullish as long as support 1.5170 holds. Any break below 1.5170 will drag the pair further down till 1.5130/1.5080. On the higher side major resistance is around 1.5262 and break above will take the pair to new level till 1.5300/1.5360 level.
USD/CHF: The pair has retreated after making a high of 1.00947 on Friday and recovered from that level. It was trading around 1.0060 and its major resistance is around 1.0125 and any break above will take the pair to new level 1.0160/1.0240 in short term. On the downside major support is around 0.9980 and break below targets 0.9950/0.9930, minor support is around 1.0040. The overall weakness can be seen only below 0.9930 levels. The Swiss franc gained 0.3 percent against the euro.
AUD/USD: The Australian dollar traded in a subdued tone as investors showed caution following the Paris attacks. It eased to $0.7110, from a peak of $0.7160 on Friday. It has been weighed down by a slide in commodity prices, speculation of a Federal Reserve interest rate hike next month and weakness in stock markets. Support was foundat the one-month low $0.7016 touched last week.
NZD/USD: The New Zealand dollar fell 0.8 pct on day to hit 6-week low of $0.6483 from $0.6545 late on Friday. It briefly climbed to a peak of $0.6580 after Fonterra said it had increased its earnings forecast, while a rise of 1.6 percent in national retail sales also helped.
Equities Recap
European shares posted a modest losses as markets reopened after the attacks in Paris killed more than 130 people. Asian shares also plunged to their lowest in six weeks.
The pan-European FTSEurofirst 300 index opened 0.45 pct lower, dragged down by travel and leisure stocks. The index turned positive, up 0.1 pct helped by rise in energy shares. UK's FTSE was up 0.5 pct, Germany's DAX slipped 0.1 pct, France's CAC turned positive, was up 0.1 pct.
Japan's Nikkei stock index which dropped nearly 1.1 pct, nearly erasing out last week's gains as data showed the economy slipped back into recession in the July to September quarter.
Emerging market stocks lost 0.9 percent. The CSI300 index rose 0.5 percent while the Shanghai Composite Index gained 0.7 percent. MSCI's broadest index of Asia-Pacific shares outside Japan fell nearly 1.5 percent at one stage, its biggest daily fall since Sept. 29, and was last down 1.3 percent.
Treasuries Recap
U.S. Treasury yields slipped. 10-year yields were last down 2.1 bps at 2.59 percent, having hit 2.41 percent in Asian trade.
JGB prices ended the day steady to slightly higher in quiet trading, with 5-yr to 20-yr yields mostly unchanged from last Friday's afternoon close. JGB prices trimmed part or most of their earlier gains, with yields ending at their intraday highs after falling modestly in early morning trading (5s at 0.035%, 10s at 0.295%, 20s at1.06%, and 30s at1.53%).
Yields on safe-haven 2-year German bonds hit a new record low of -0.382 percent before edging up to -0.37 percent. 10-year German yields fell 1.2 basis points to 0.55 percent.
UK Gilts opened 27 ticks higher than the settlement of 116.17, as predicted, as core fixed income markets embraced a flight to quality after the Paris attacks. Dealers reported little appetite for fresh risk and buyers respected support on 10-year cash yields from former lows at 1.945%.
New Zealand government bonds gained, sending yields around 5 basis points lower. Australian government bond futures pulled further away from recent lows, with the 3-year bond contract up 6 ticks at 97.910. The 10-year contract jumped 7 ticks at 97.0800, while the 20-year contract powered up 6 ticks to 96.5400.
Commodities Recap
Oil prices inched higher as France launched large-scale air strikes against Islamic State in Syria, but analysts expect commodities to remain under pressure as oversupply weighs on prices. Front-month U.S. crude futures was at $40.87 per barrel at 0744 GMT, up 13 cents from their last close. Internationally traded Brent was at $44.64 a barrel, up 17 cents after failing to break resistance at $45 a barrel.
Gold rose 1 percent, moving away from a near 6-year low, as investors preferred safety in the metal following Friday's deadly attacks in Paris. Spot gold rose 1.2 percent to $1,095.77 an ounce by 0645 GMT, after earlier hitting a session high of $1,097.01. U.S. gold futures rose more than 1 percent to a session high of $1,097.
