Market Roundup
- EUR/USD -0.35%, USD/JPY 0.33%, GBP/USD -0.08%, EUR/GBP -0.2%
- DXY 0.23%, DAX 0.56%, FTSE 0.14%, Brent -0.35%, Gold -0.31%
- Japan's Abe to push pacifist constitution reform after strong election win
- China's home price growth steadies in September as speculative curbs weigh
- GB CBI Trends - Orders Oct -2 vs 7, 9 forecast
- UK households' morale and rate hike expectations rise - IHS Markit
- Big money stays away from booming bitcoin
- Oil keeps gains, supported by Iraq disruptions and drop in U.S. rigs
- Gold hits 2-week low as dollar rallies vs yen
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of September. The index stood at -0.31 in the prior month.
- (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of August. The indicator is likely to have increased by 0.6 percent, after unexpectedly rising 1.6 percent in July.
- (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of October. The index posted a final reading of -1.1 in the prior month.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 30-year Ginnie Mae (max $1.085 bn)
FX Beat
DXY: The dollar index rallied to fresh peaks as the U.S. Senate passed a budget blueprint for the next fiscal year, renewing optimism over the US President Donald Trump's tax overhaul plans. The greenback against a basket of currencies traded 0.3 percent up at 93.96, having touched a high of 94.00 earlier, its highest since Oct. 6. FxWirePro's Hourly Dollar Strength Index stood at 147.47 (Highly Bullish) by1000 GMT.
EUR/USD: The euro tumbled on the back of increasing Spain's constitutional crisis and on speculation that European Central Bank is not in a hurry to taper its easy policy. The European currency traded 0.3 percent down at 1.1743, having touched a low of 1.1735 earlier, its lowest since Oct. 18. FxWirePro's Hourly Euro Strength Index stood at -3.25 (Neutral) by 1000 GMT. On the lower side, the near term support is around 1.1720 and any convincing break below will drag the pair down till 1.1660. Bearish invalidation only below 1.1660. On the higher side, near-term resistance is around 1.1825 and any break above will take it to next level till 1.1880/1.1900/1.1928 (61.8% retracement of 1.20925 and 1.16621)/1.2000.
USD/JPY: The dollar rallied to a three-month high against the yen, as investors speculated that a huge election victory for Japan's ruling party would see a continuation of the ultra-loose Abenomics policy. The major was trading 0.3 percent up at 113.89, having hit a high of 114.10 earlier, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at -121.17 (Neutral) by 1000 GMT. On the lower side, any close below 112.30 (233- day MA) confirms minor weakness, a decline till 111.60 (55- day EMA)/111.13 likely. Any convincing close above 113.45 confirms minor bullishness, a jump till 114.50/115.
GBP/USD: Sterling eased after rebounding from a near 2-week low in the previous session, in the wake of political uncertainty surrounding the UK and EU over the Brexit talks. Sterling traded 0.1 percent down at 1.3171, having hit a low of 1.3087 the prior day, its lowest since Oct. 09. FxWirePro's Hourly Sterling Strength Index stood at 65.88 (Bullish) by 1000 GMT. The near-term major resistance is around 1.3230 and any break above will take the pair to next level till 1.330/1.33374 (Oct 13th, 2017 high). On the lower side, 1.3075 will be acting as major support and any break below will drag the pair down till 1.30270 /1.3000 level. Against the euro, the pound was trading 0.9 percent up at 89.13 pence, having hit a low of 90.19 pence the prior day, its lowest since Oct. 12.
USD/CHF: The Swiss franc slumped to a fresh 5-month low as the greenback rallied across the board following a rise in the U.S. Treasury yields. The major trades 0.4 percent up at 0.9876, having touched a high of 0.9878 earlier, it’s highest since May. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -37.79 (Neutral) by1000 GMT. On the lower side, near-term support is around 0.9770 (55- W EMA) and any break below will drag the pair to next level till 0.9730/0.9705/0.9680. The near-term resistance is around 0.9845 and any violation above will take the pair to next level till 0.9900.
AUD/USD: The Australian dollar declined to 1-1/2 week lows as the greenback gained on renewed optimism over the US President Donald Trump's tax overhaul plans. The Aussie trades down at 0.7810, having hit a low of 0.7802 earlier, it’s lowest since Oct. 12. FxWirePro's Hourly Aussie Strength Index stood at -19.22 (Neutral) by 0500 GMT. On the lower side, near-term support is around 0.78000 and any convincing close below will drag the pair till 0.7780/0.7730. The near-term resistance is around 0.7900 and any break above targets 0.7950/0.8000.
Equities Recap
European shares rose, despite an escalation of Spain's constitutional crisis, while the greenback rallied to an over 2-week high on fresh optimism about tax cuts in the United States.
The pan-European STOXX 600 index advanced 0.4 percent to 391.48 points, while the FTSEurofirst 300 index rallied 0.3 percent to 1,538.54 points.
Britain's FTSE 100 trades 0.1 percent higher at 7,532.48 points, while mid-cap FTSE 250 fell 0.1 percent to 20,133.44 points.
Germany's DAX rose 0.5 percent at 13,054.68 points; France's CAC 40 trades 0.6 percent up at 5,404.67 points.
Commodities Recap
Crude oil prices declined, as analysts warned that the United States market may not be tightening by as much as expected, however, the downside was limited, supported by supply concerns in the Middle East and declining U.S. drilling activity. International benchmark Brent crude was trading 0.4 percent down at $57.61 per barrel by 1022 GMT, having hit a high of $58.51 on Wednesday, its highest since Sept. 28. U.S. West Texas Intermediate was trading 0.3 percent lower at $51.85 a barrel, after rising as high as $52.31 on Wednesday, its highest since Sept. 28.
Gold prices hit its lowest in over two weeks, as the dollar rallied to a three-month high versus the yen after Japan's ruling party secured a big win in Sunday's election. Spot gold was down 0.4 percent at $1,275.14 an ounce by 1026 GMT, after hitting its lowest since Oct. 6 at $1,273.84 earlier in the session. U.S. gold futures for December delivery fell 0.3 percent to $1,277.30 per ounce.
Treasuries Recap
The U.S. Treasuries slid after the country’s Senate approved the budget blueprint, adding to hopes among the investors for investment in riskier assets ahead of the 2-year and 5-year auctions scheduled through this week. The yield on the benchmark 10-year Treasury climbed nearly 1-1/2 basis points to 2.39 percent, the super-long 30-year bond yields also rose close to 1-1/2 basis points to 2.90 percent and the yield on short-term 2-year note 1 basis point higher at 1.58 percent.
The UK gilts remained tad lower as investors remained cautioned ahead of the release of the country’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released on October 25 by 08:30GMT. The yield on the benchmark 10-year gilts, hovered around 1.33 percent, the super-long 30-year bond yields also flat at 1.90 percent and the yield on the short-term 2-year too traded nearly 1 basis point higher at 0.45 percent.
The German bunds surged as investors wait to watch the country’s manufacturing PMI for the month of October, scheduled to be released on October 24 by 07:30GMT. The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to 0.43 percent, the yield on 30-year note slid nearly 1-1/2 basis points to 1.24 percent and the yield on short-term 2-year traded 1 basis point lower at -0.72 percent
The Japanese government bonds remained little changed at the start of the trading week even as the country’s snap elections held over the weekend yielded results as per market expectations, with Prime Minister Shinzo Abe retaining his outright majority to form a government in the Lower House. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.07 percent, the yield on long-term 30-year hovered around 0.89 percent and the yield on short-term 2-year too remained steady at -0.13 percent.
The Australian government bonds plunged following weakness in the U.S. Treasuries as investors reduced bond holdings on worries about more inflation and federal borrowing after the U.S. Senate passed a budget blueprint. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose more than 2 basis points to 2.809 percent, the yield on the long-term 30-year note also climbed 2-1/2 basis points to 3.573 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.950 percent.
