Market Roundup
- EUR/USD -0.49%, USD/JPY -0.14%, GBP/USD -0.62%, EUR/GBP 0.07%
- DXY 0.41%, DAX -0.86%, FTSE -0.57%, Brent -0.61%, Gold 0.35%
- Euro slides after Italian lawmaker talks up national currency
- Italy's league lawmaker Borghi says leaving the euro is not in the government's programme and it has no plans to do so
- Italy says won't change deficit goal despite EU "threats"
- EZ Producer Prices (y/y), 4.2%, 3.9% forecast, 4.0% previous
- Great Britain Nationwide house price (y/y), 2.0%, 1.9% forecast, 2.0% previous
- Great Britain Markit/CIPS Construction PMI, 52.1, 52.5 forecast, 52.9 previous
- Sterling at 3-week low as government Brexit divisions on show
- U.S. oil hits 4-year peak ahead of sanctions on Iran
Economic Data Ahead
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of September. The index stood at 76.5 in the previous month.
- (1530 ET/1930 GMT) Autodata Corp is expected to report that U.S. auto sales figures rose to 16.78 million units in September from 16.72 million units in August.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1000 ET/1400 GMT) Federal Reserve Vice Chair for Supervision Randal Quarles testifies on "Implementation of the Economic Growth, Regulatory Relief and Consumer Protection Act" before the Senate Banking Committee.
- (1030 ET/1430 GMT) ECB Policymaker Francois Villeroy de Galhau to speak at a conference in Paris about "Ten years after: Is financial stability today better assured?" – Paris
- (1200 ET/1600 GMT) Federal Reserve Bank of Richmond President Thomas Barkin gives opening remarks before the "Reinventing Our Communities: Investing in Opportunity" conference co-sponsored by the Federal Reserve Banks of Richmond and Philadelphia, in Baltimore.
- (1245 ET/1645 GMT) Federal Reserve Chairman Jerome Powell speaks on "The Outlook for Employment and Inflation" before the National Association for Business Economics 60th Annual Meeting - Boston
- (1400ET/1800 GMT) Reserve Bank of Dallas President Robert Kaplan participates in a moderated question-and-answer session - El Paso, Texas.
- N/A ECB Vice-President Luis de Guindos participates in ECOFIN meeting – Luxembourg
FX Beat
DXY: The dollar index rallied to a near 1-month peak on the back of a new U.S.-Mexico-Canada agreement and Federal Reserve’s plans to steadily tighten monetary policy. The greenback against a basket of currencies trades 0.3 percent up at 95.62, having touched a high of 95.74 earlier, its highest since September 4. FxWirePro's Hourly Dollar Strength Index stood at 103.31 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro slumped to a 6-week low after a senior official from Italy's ruling party said most of the country's problems would be resolved if it scrapped the euro for a national currency. Investors seem to have ignored better-than-expected Eurozone's producer prices in August, amid Italian political developments. The European currency traded 0.6 percent down at 1.1513 having touched a low of 1.1505 earlier, its lowest since August 21. FxWirePro's Hourly Euro Strength Index stood at -88.14 (Slightly Bearish) by 1000 GMT. Immediate resistance is located at 1.1616 (September 10 High), a break above targets 1.1659 (September 6 High). On the downside, support is seen at 1.1480 (August 21 Low), a break below could drag it till 1.1455.
USD/JPY: The dollar eased after rising to an 11-month peak in the previous session amid renewed Italian political uncertainty after Italy's ruling party proposed a budget with a higher-than-expected deficit target. The major was trading 0.1 percent down at 113.74, having hit a high of 114.06 on Monday, its highest since Nov. 8. FxWirePro's Hourly Yen Strength Index stood at -8.07 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ISM - NY business conditions, total vehicles, and speeches from Fed's Quarles and Powell. Immediate resistance is located at 114.28 (Nov 1 High), a break above targets 114.73 (Nov 6 High). On the downside, support is seen at 113.32 (5-DMA), a break below could take it lower 112.63 (September 26 Low).
GBP/USD: Sterling plunged to a 3-week trough after data showed Britain's construction sector grew at the slowest pace in six months in September and companies turned less confident as Brexit neared. Moreover, increasing concerns about a conflict over UK Prime Minister Theresa May's Brexit plan continued to dent British pound bulls' sentiment. The major traded 0.7 percent down at 1.2952, having hit a low of 1.2941 earlier; it’s lowest since September 10. FxWirePro's Hourly Sterling Strength Index stood at -103.94 (Highly Bearish) 1000 GMT. Immediate resistance is located at 1.3124 (10-DMA), a break above could take it near 1.3193 (September 25 High). On the downside, support is seen at 1.2940, a break below targets 1.2896 (September 10 Low). Against the euro, the pound was trading 0.2 percent down at 88.97 pence, having hit a high of 88.59 on Monday, it’s highest since September 20.
USD/CHF: The Swiss franc extended losses for the seventh straight session, as the greenback surged after the United States-Mexico-Canada announced a trade deal on Monday. The major trades 0.1 percent up at 0.9844, having touched a high of 0.9855 on Monday, it’s highest since August 24. FxWirePro's Hourly Swiss Franc Strength Index stood at -46.50 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9865 (August 24 Low) and any break above will take the pair to next level till 0.9900. The near-term support is around 0.9787 (August 27 Low) and any close below that level will drag it till 0.9745 (August 28 Low).
Equities Recap
European shares tumbled after the head of the Italian lower house's budget committee said that the country would be better off out of the eurozone.
The pan-European STOXX 600 index plunged 0.7 percent at 381.37 points, while the FTSEurofirst 300 index slumped 0.8 percent to 1,495.03 points.
Britain's FTSE 100 trades 0.6 percent lower at 7,454.26 points, while mid-cap FTSE 250 declined 0.7 percent to 20,266.62 points.
Germany's DAX fell 0.7 percent at 12,254.50 points; France's CAC 40 trades 0.9 percent lower at 5,456.76 points.
Commodities Recap
Crude oil prices traded to near a 4-year peak reached in the previous session, with markets preparing for tighter supply once U.S. sanctions against Iran comes in effect next month. International benchmark Brent crude was trading 0.3 percent down at $75.25 per barrel by 1027 GMT, having hit a high of $85.43 on Monday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.3 percent down at $75.21 a barrel, after rising as high as $75.88, its highest since Nov 2014.
Gold prices surged as risk appetite faded after getting a boost from an agreement between the United States and Canada to save a North American free trade deal. Spot gold was up 0.2 percent at $1,190.58 by 1032GMT, having hit a low of $1180.64 on Friday, its lowest since August 17. U.S. gold futures were 0.5 percent higher at $1,197.60 an ounce.
Treasuries Recap
Italian government bonds were sold off after an Italian lawmaker stated that most of the country's problems would be solved if it ditched the euro. The Italian 10-year government bond rose 14 basis points to a 4-1/2 year high of 3.44 percent. The 2-year bond yield was up 20 bps at 1.57 percent, the 5-year yield jumped 21 bps to 2.77 percent, both hitting their highest in about four months
The Japanese government bond prices were slightly firmer, with the 10-year JGB futures gaining 0.06 point to 150.14. The benchmark 10-year JGB yield stood flat at 0.125 percent, while the 20-year yield fell half a basis point to 0.655 percent. The 30-year JGB yield dropped 0.5 basis point to 0.915 percent, while the 40-year yield was unchanged at 1.085 percent.
The Australian government bond futures eased in line with global risk, with the three-year bond contract off 1 tick at 97.900, while the 10-year contract dipped 2 ticks to 97.2850. The New Zealand government bonds traded flat.
