Market Roundup
- EUR/USD -0.20%, USD/JPY 0.10%, GBP/USD -0.48%, EUR/GBP 0.26%
- DXY 0.08%, DAX -0.46%, FTSE 0.12%, Brent 0.34%, Gold -0.24%
- British PM May tries to sell Brexit deal to ministers
- EZ Q3 GDP Flash Estimate YY, 1.7%, 1.7% f’cast, 1.7% prev
- EZ Sep Industrial Production YY, 0.9%, 0.3% f’cast, 0.9% prev
- DE Q3 GDP Flash YY NSA, 1.1%, 1.3% f’cast, 2.3% prev
- OPEC, partners discuss oil supply cut of up to 1.4 million bpd - sources
- Italy sticks to growth, deficit plans in revamped budget, setting stage for EU showdown
- GB Oct Core CPI YY, 1.9%, 2.0% f’cast, 1.9% prev
- GB Oct CPI YY, 2.4%, 2.5% f’cast, 2.4% prev
- GB Oct RPI YY, 3.3%, 3.4% f’cast, 3.3% prev
- GB Oct RPIX YY, 3.2%, 3.3% prev
- GB Oct PPI Input Prices YY NSA, 10.0%, 9.6% f’cast, 10.3% prev, 10.5% rvsd
- GB Oct PPI Output Prices YY NSA, 3.3%, 3.1% f’cast, 3.1% prev
- GB Oct PPI Core Output YY NSA, 2.4%, 2.4% f’cast, 2.4% prev
Economic Data Ahead
- (0830 ET/1330 GMT) US Oct Core CPI YY, NSA, 2.2% f’cast, 2.2% prev
- (0830 ET/1330 GMT) US Oct Core CPI MM, SA, 0.2% f’cast, 0.1% prev
- (0830 ET/1330 GMT) US Oct CPI MM, SA, 0.3% f’cast, 0.1% prev
- (0830 ET/1330 GMT) US Oct CPI YY, NSA, 2.5% f’cast, 2.3% prev
Key Events Ahead
- (0900 ET/1400 GMT) UK pm May meets cabinet to seek approval for Brexit deal draft
- (1000 ET/1500 GMT) Fed Vice Chair for Supervision Randal Quarles gives seminannual testimony before the House Financial Services Committee in Washington
- (1800 ET/2300 GMT) Fed Chairman Jerome Powell participates in a question-and-answer session in Dallas
FX Beat
DXY: The dollar index, which measures the greenback's strength against six major currencies, was up 0.41 percent at 97.35 at 1040 GMT. Positive signs in the US-China trade wars support USD.
EUR/USD: Euro under pressure as Italy sticks to deficit target in budget. The major edged higher to hit session highs at 1.1320 on hopes of a Brexit deal. But upside lacked traction and the pair has slipped lower to currently trade at 1.1267, down 0.18 percent as we write. Technical studies are largely bearish. In the data space, EMU’s flash GDP matched estimates for Q3, expanding 0.2 percent q/q and 1.7 percent over the last twelve months. Further, Industrial Production in the bloc contracted less than expected 0.3 percent m/m.
USD/JPY: USD/JPY extends range trade below 114 handle. Yen largely muted post mixed Japanese data. Focus on US CPI data along with Powell's speech for further impetus. The pair maintains its positive tone and a decisive break above 114 is likely to see test of 114.55 (Oct 4 high) ahead of 114.74 (Nov 2017 high). We see some overbought pressures on momentum indicators, but with no major signs of reversal we expect the bullish momentum to continue. On the flipside, close below 5-DMA could see weakness till 21-EMA at 113.17.
GBP/USD: Cable tumbles from session highs at 1.30, down 0.32 percent at 1050 GMT. The British pound came under some downside pressure on Brexit jitters and softer-than-expected inflation figures during last month. UK CPI rose 0.1 percent m/m in October and 2.4 percent y/y, while Core prices gained 1.9 percent y/y, matching previous estimates. Focus now on the upcoming meeting between PM Theresa May and her Cabinet on the draft deal withdrawal. Technical studies are bearish. Daily cloud caps upside, decisive break above could see further gains.
EUR/CHF: EUR/CHF edges lower from session highs at 1.1392, bias bearish. Recovery attempts lack traction and are capped at daily cloud. Euro under pressure as Italy sticks to deficit target in budget. The German economy contracted for the first time since 2015 in Q3 raising concerns that a near-decade-long expansion is faltering. Momentum studies are biased lower. Upside was rejected at stiff resistance at 110-EMA. The pair has slipped below major moving averages and dipped into daily cloud. Break below cloud will see test of 1.1271 (Aug 15 low).
AUD/USD: Aussie extends weakness after a weaker-than-expected China retail sales release. AUD/USD down 0.31 percent at the time of writing. The pair largely ignored uptick in Aussie wage growth. Australia wage-price inflation ticked higher to 0.6 percent q/q in Q3 from the previous quarter's print of 0.5 percent. Meanwhile, the annualized figure rose to 2.3 percent, in line with the expectations. Immediate resistance lies at 20W SMA at 0.7248 ahead of 23.6% Fib at 0.7584. 1H 55 EMA is immediate support at 0.7214, break below to see weakness till 21-EMA at 0.7178. Focus on US CPI data due later today along with Australia jobs data for direction.
Equities Recap
European markets trade lower on growth fears. The pan-European STOXX 600 index was down 0.60 percent at 362.26 points, while the FTSEurofirst 300 index was down 0.68 percent at 1,424.85 points.
Britain's FTSE 100 was up 0.01 percent at 7,054.75 points, while mid-cap FTSE 250 was up 0.06 percent at 18,997.13 points.
Germany's DAX was down 0.46 percent at 11,419.42 points; France's CAC 40 was down 0.39 percent at 5,081.79 points.
Commodities Recap
WTI bounced on reports that the OPEC and its allies are reportedly discussing oil supply cut of 1.4 million barrel per day (bpd). Also, positive signs in the US-China trade wars support oil prices.
WTI crude oil spot prices edged higher from 12-month lows to trade 1.80 percent higher at $56.23 at 1000 GMT. International benchmark Brent crude oil futures were down 9 cents at $65.38 per barrel.
Gold prices inched higher on weaker USD, but have failed to hold gains. The yellow metal was trading at 1198.54 at 1000 GMT, down 0.30 percent. While silver was down 0.60 percent at 13.89.
Treasuries Recap
U.S.: The U.S. Treasuries remained narrowly mixed Wednesday ahead of today’s October consumer price inflation (CPI), scheduled to be released by 13:30GMT. Also, Fed Chair Jerome Powell’s speech, due for today at 23:00GMT will add further direction to the debt market, besides, speeches from FOMC members Quarles and Daly, due today at 15:00GMT and 22:00GMT respectively. The yield on the benchmark 10-year Treasuries hovered around 3.142 percent, the super-long 30-year bond yields slipped 1 basis point to 3.358 percent and the yield on the short-term 2-year traded flat at 2.895 percent.
UK: The UK gilts surged during Wednesday’s afternoon session after the country’s consumer price inflation for the month of October impressed market participants, albeit remaining unchanged from that in September. Also, investors will keep a close eye on Britain’s retail sales data for the month of October, scheduled to be released on November 15 by 09:30GMT for further direction in the debt market. The yield on the benchmark 10-year gilts, slumped 3-1/2 basis points to 1.488 percent, the super-long 30-year bond yields plunged nearly 3-1/2 basis points to 1.952 percent and the yield on the short-term 2-year traded 1 basis point lower at 0.787 percent.
EUR: The German bunds gained during European session Wednesday following a fall in the country’s gross domestic product (GDP) for the third quarter of this year, released today, albeit better than market expectations. The German 10-year bond yields, which move inversely to its price, fell 2 basis points to 0.388 percent, the yield on 30-year note also slipped nearly 2 basis points to 1.037 percent and the yield on short-term 2-year lost nearly 1-1/2 basis points to -0.643 percent.
AUD: Australian bonds rallied during Asian session Wednesday amid a muted trading session that witnessed data of little economic significance. However, investors will keep a close eye on the country’s employment report for the month of October, scheduled to be released on November 15 for further direction in the debt market. Also, the Reserve Bank of Australia’s (RBA) Assistant Governor Guy Debelle is scheduled to deliver a speech on the same day at 07:00GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.714 percent, the yield on the long-term 30-year bond fell 1-1/2 basis points to 3.226 percent, and the yield on short-term 2-year traded 1 basis point lower at 2.067 percent.
