- EUR/USD off 1.1072 lows, recovers to 1.1139 levels.
- Sterling steadies after biggest daily rise vs euro since 2009.
- EUR/GBP drops to 0.7200, recovers to 0.7231 in Europe session.
- Yen at 1-month low as risk appetite boosted by ECB.
- Japan October flash manufacturing PMI 52.5 vs 51 previous, 50.5 expected.
- BoJ likely to cut core CPI, GDP forecasts next week.
- Debt ceiling debate could put money funds into uncharted waters.
- Miners see FX tailwinds offsetting commodity weakness.
- EUR/NOK squeezed to 9.27 from 9.1870 on Olsen remarks.
- Norway Oslen - Room for acting in monetary policy.
- Euro zone October Markit flash Manufacturing PMI 52.0 vs previous 52.0. 51.7 expected.
- Euro zone October Markit flash Composite PMI 54.0 vs previous 53.6. 53.4 expected.
- Euro zone inflation now seen at 0.1% in 2015 vs 0.2% in July survey.
- Euro zone inflation seen at 1.0% in 2016 vs 1.3% in July survey.
- PM Abe Advisor Honda - No need for additional BoJ easing for now.
- Japan Aso voices caution over further BOJ easing.
- (0945 ET/1345 GMT) US October Markit manufacturing PMI - flash, 52.8 eyed; last 53.1.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 15-yr Fannie Mae/Freddie Mac (max $525 mn).
FX Recap
EUR/USD: The single currency is hovering just above two-month lows on Friday, but is on the verge of breaking out of range in past 2 months. The euro fell as low as $1.1072 at one point in Asian trade, but has recovered slightly since to last trade at $1.1101 as of 1018 GMT. Mixed results from flash PMIs in Euroland have failed to impress, pair remains indifferent. The flash manufacturing PMI for the euro zone remained unchanged at 52 points against 51.8 expectations. While EU services PMI report rose slightly to 54.2 points, up from 53.7 a month ago and above 53.5 estimates. The flash manufacturing PMI for Germany came in at 51.6 in October, worse than the final reading of 52.3 seen in September. However, the services sector surprised on the upside, posting a seven-month high, beating expectations and the previous months figure when it came at 55.2 in October. The benchmark 10-year yield on the German bunds rallies nearly 2% to 0.513%, recovering from a dip to 0.482 seen in late-Asia. It made intraday high at 1.1119 and low at 1.1072 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1000 (1.6BLN), 1.1100 (1.2BLN), 1.1250 (600M).
EUR/GBP: The euro slid almost 2 percent against the Sterling on Thursday, its biggest daily drop since January 2009. In early trade in Asia the pound rose to a one-month high against the euro at 0.7200, before easing a little to trade at 0.7216. Sterling had also been helped by bumper retail sales data earlier on Thursday, which showed sales volumes surged by 1.9 percent last month, the fastest pace in almost two years.
USD/JPY: Japanese manufacturing activity improved at the sharpest rate in over 18 months in October, according to an early industry gauge, after orders increased due to higher international demand. The Nikkei Flash Japan manufacturing PMI rose from 51.0 in September to a preliminary 52.5 in October, where a reading above 50 signals an expansion in activity. Pair made intraday high at 120.98 and low at 120.21 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 119.50 (467M), 120.00-05 (1.8BLN).
GBP/USD: The pound was trading sideways in the European session on Friday around the $1.54 level. In the previous session it saw a sharp rally to near the $1.55 handle in the post UK retail sales euphoria, before sliding back down. However, the greenback received powerful support in the form of solid US data, especially existing home sales in September. Data wise in the UK economy, the next risk event will be the release of the preliminary GDP figures during the third quarter. Pair made intraday high at 1.5415 and low at 1.5375 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.
NZD/USD: The New Zealand dollar continued to build gains on Friday, supported by the belief that the Reserve Bank of New Zealand is unlikely to cuts rates at next week's meeting, while the Fed is unlikely to start its policy normalization this year as Europe's central bank talks of upping its stimulus. Pair made intraday high at 0.6864 and low at 0.6774 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels.
AUD/USD: Commodity and risk currencies outperformed on Friday, following comments from the ECB's Draghi that further easing could occur in December. However, the gains were capped by emerging markets and Asian growth concerns. Recovery in the commodity sector also added to the Aussie's gains, which traded at session highs early Friday morning, up 0.89% to $0.7270. Pair made intraday high at 0.7289 levels and low around 0.7197 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7180 (290M), 0.7200 (367M), 0.7300 (300M).
Equity Recap
European shares and bonds were on upward trend on Friday after soaring on Thursday's message from ECB chief Mario Draghi on QE program.
The pan-European FTSEurofirst 300 index inched up 1 percent, building on a 2.1 percent gain in the previous session, while the euro zone's blue-chip Euro index advanced by 1.2 percent.
Japan's Nikkei average unofficially closes up 2.11 pct at 18,825.30, MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.7 percent.
China's CSI300 index ended up 1.3 pct at 3,571.24 points.
Commodity Recap
Gold recorded higher from its lowest in over a week on Friday as the dollar gave back some of its overnight gains, but the metal turn down its two straight weekly gains on a boost to expectations for a U.S. rate rise this year. Spot gold increased 0.6 percent to $1,173.16 an ounce by 0702 GMT. It fell as low as $1,162.50 in the previous session, the lowest level since Oct. 13. U.S. gold futures slipped about 1 percent for the week, the biggest loss in six weeks.
Oil prices inched up on Friday, after getting positive indication like brighter economic data and a global stock market rally after the ECB signalled more stimulus. Benchmark Brent crude oil recorded 20 cents up at $48.28 a barrel by 0905 GMT after settling up 23 cents in the previous session. U.S. crude for December was unchanged at $45.38 a barrel, having risen 18 cents on Thursday.
Treasury Recap
U.S. 10-year treasuries yield at 2.028 percent vs U.S. close of 2.025 percent on Thursday U.S.10yt.
Spanish two-year government bond yields turned negative for the first time ever, last down 2 bps at -0.018 pct. Greece's bond 'curve' was also close to normalizing, having been distorted for months in the wake of a political crisis.
JGB prices remain slightly higher in very quiet mid-afternoon trading. The yields on the current 5-yr JGBs remained stable at 0.05%, while the 10s fell down by 0.5bp to 0.30% vs 0.305% earlier. In the super long zone, yields on the current 20s are down 0.5bp from yesterday's final close at 1.065%, vs 1.07% earlier, while the 30s slipped down 1bp to 1.355%. The current 40s are down 1.5bp at 1.49% ahead of next Tuesday's 40-yr auction to re-open the current issue.
Slight change of 1.80 pct in 10-year U.K. Gilt yields was noticed, after touching a six-day low of 1.785.
