Market Roundup
- EUR/USD -0.14%, USD/JPY 0.01%, GBP/USD -0.49%, EUR/GBP 0.37%
- DXY 0.21%, DAX 0.73%, FTSE 0.21%, Brent -0.35%, Gold 0.12%
- U.S. economy likely slowed by hurricanes in third quarter
- ECB survey sees higher euro zone inflation in 2022
- Germany Sept Import Prices MM 0.9% vs 0.0%, forecast 0.4%
- Germany Sept Import Prices YY 3.0% vs 2.1%, forecast 2.6%
- Mattis talks diplomacy on N.Korea ahead of Trump's Asia tour
- Spain set to impose direct rule in Catalonia as crisis spirals
- Japan consumer prices rise for 9th straight month; energy key driver
- Gold edges down as dollar gains vs euro on ECB policy
- Brent crude oil approaches $60 as markets tighten
Economic Data Preview
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at an annualized rate of 2.5 percent in the third quarter after surging at a 3.1 percent pace in the previous quarter.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the third quarter. The index is expected to rise 1.2 percent from 0.3 percent in the previous quarter, while core PCE is likely to increase 1.3 percent after gaining 0.9 percent in the second quarter.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index edged down to 100.9 in October after posting a reading of 101.1 the month before.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1430 ET/1830 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.525 bn)
FX Beat
DXY: The dollar index rallied to an over 3-month high on the back of progress over the U.S. President Donald Trump’s tax overhaul plans and increasing hopes for a more hawkish Fed Chair. The greenback against a basket of currencies traded 0.3 percent up at 94.90, having touched a high of 94.92 earlier, its highest since Oct. 6. FxWirePro's Hourly Dollar Strength Index stood at 74.11 (Bullish) by 1000 GMT.
EUR/USD: The euro tumbled to 3-month lows and was on course for its biggest weekly loss of the year after the European Central Bank extended its bond-buying well into next year. The European currency traded 0.2 percent down at 1.1626, having touched a low of 1.1615 earlier in the day, its lowest since Jul. 26. FxWirePro's Hourly Euro Strength Index stood at -43.09 (Neutral) by 1000 GMT. On the lower side, the near term support is around 1.16000 and any convincing break below will drag the pair down till 1.1500/1.1400. On the higher side, near-term resistance is around 1.1660 (Support turned into resistance) and any break above will take the pair to next level till 1.1720/1.17870.
USD/JPY: The dollar advanced to a fresh 3-1/2 month high against the yen as U.S. President Donald Trump's tax cut plans and hawkish Fed Chair speculations boosted the bid tone around the greenback. The major was trading 0.1 percent up at 114.02, having hit a high of 114.31 earlier, its highest since Jul. 11. FxWirePro's Hourly Yen Strength Index stood at 24.75 (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 114.10 confirms minor bullishness, a jump till 114.50/115.
GBP/USD: Sterling slumped to a 3-week low, as investors cautiously awaited the Bank of England policy meeting next week, where it could hike interest rates for the first time in over a decade. The major traded 0.6 percent down at 1.3087, having hit a low of 1.3070 earlier, its lowest since Oct. 6. FxWirePro's Hourly Sterling Strength Index stood at 50.54 (Bullish) by 1000 GMT. The pair is trading well below trend line support at 1.3120 (trend line joining 1.30270 and 1.30878) and this confirms minor weakness, a dip till 1.30270 likely. On the higher side, near-term resistance is around 1.3170 and any break above will take the pair to next level till 1.3230/1.3300. Against the euro, the pound was trading 0.3 percent down at 88.79 pence, having hit a high of 88.50 pence on Thursday, its highest since Oct. 10.
USD/CHF: The Swiss franc fell to a 5-month low, as the greenback rallied to multi-month highs on U.S. President Donald Trump's tax cut plans and hawkish Fed Chair speculation. The major trades 0.4 percent up at 1.0011, having touched a high of 1.0023 earlier, it’s highest since May. 12. FxWirePro's Hourly Swiss Franc Strength Index stood at -71.94 (Bearish) by 1000 GMT. Technically, the pair is trading well above 0.9840 (100- W MA) and near-term psychological resistance is around 1.000 and any break above will take it to next level till 1.00998/1.0174. The near-term major support is around 0.99250 (23.6 retracement of 0.9705 and 0.9993) and any break below will drag it till 0.9880/0.9840.
AUD/USD: The Australian dollar slipped to a 3-1/2 month low as the PM Turnbull's government lost its majority after the high court ruled that Deputy PM Barnaby Joyce was ineligible to remain in parliament as he was also a citizen of New Zealand when elected. The Aussie trades 0.2 percent down at 0.7645, having hit a low of 0.7625 earlier, it’s lowest since Jul. 11. FxWirePro's Hourly Aussie Strength Index stood at -52.05 (Bearish) by 1000 GMT. On the lower side, the pair has broken near-term support 0.7600 and any convincing close below will drag the pair till 0.75350/0.7480. The near-term resistance is around 0.7700 and any break above targets 0.7756 (7- day MA)/0.7829 (100 – day MA)/0.7860/ 0.7900/ 0.7950/ 0.8000.
Equities Recap
European shares advanced near a five-month peak, underpinned by robust results from companies, while the greenback rallied to an over 3-month high on the back of increasing expectations for a more hawkish Fed Chair.
The pan-European STOXX 600 index advanced 0.5 percent to 393.02 points, while the FTSEurofirst 300 index rallied 0.5 percent to 1,545.30 points.
Britain's FTSE 100 trades 0.2 percent higher at 7,504.61 points, while mid-cap FTSE 250 fell 0.05 percent to 20,156.36 points.
Germany's DAX rose 0.8 percent at 13,237.76 points; France's CAC 40 trades 0.9 percent up at 5,509.66 points.
Commodities Recap
Crude oil prices declined, despite comments from Saudi Arabia's crown prince backing the extension of OPEC-led output cuts. International benchmark Brent crude was trading 0.7 percent down at $59.07 per barrel by 1010 GMT, having hit a high of $59.53 the day before, its highest since Sept. 26. U.S. West Texas Intermediate was trading 0.6 percent lower at $52.50 a barrel, after rising as high as $52.83 on Thursday, its highest since Sept. 28.
Gold prices rose after falling to their lowest in nearly three weeks earlier in the day, while the dollar gained against the euro after the European Central Bank extended its bond-buying programme. Spot gold climbed 0.2 percent to $1,268.09 per ounce by 1013 GMT, after touching its lowest since Oct. 6 at $1264.69 and was poised for a weekly decline of about 1 percent. U.S. gold futures for December delivery shed 0.2 percent to $1,266.70.
Treasuries Recap
The U.S. Treasuries traded flat ahead of the country’s third-quarter gross domestic product (GDP), scheduled to be released today by 12:30GMT. The yield on the benchmark 10-year Treasury hovered around 2.44 percent, the super-long 30-year bond yields slipped 1 basis point to 2.95 percent and the yield on short-term 2-year note traded flat at 1.62 percent.
The German bunds jumped on dovish ECB decisions and comments by central bank President Mario Draghi. The German 10-year bond yields, which move inversely to its price, slumped nearly 3 basis points to 0.41 percent, the yield on 30-year note slid 1/2 basis point to 1.29 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.75 percent.
The New Zealand bonds slumped at the time of closing Friday as investors drifted apart from safe-haven assets despite the country’s ongoing political turmoil surrounding the appointment of ministers after the formation of the coalition government. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 3.05 percent, the yield on 20-year note jumped 2 basis points to 3.60 percent and the yield on short-term 2-year ended 1 basis point higher at 2.08 percent.
The Japanese government bonds remained mixed on the last trading day of the week as investors defied movements amid a muted session that witnessed data of little economic significance.The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose a little above 1/2 basis point to 0.07 percent, the yield on long-term 30-year hovered round 0.87 percent while the yield on short-term 1-year traded tad lower at -0.14 percent by 03:50 GMT.
The Australian government bonds slumped on the last trading day of this week following weakness in the U.S. Treasuries on speculation that the new Federal Reserve Chair will be hawkish. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 2.461 percent, the yield on the long-term 30-year note also jumped 1 basis point to 2.970 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.627 percent.
