Market Roundup
- EUR/USD 0.14%, USD/JPY 0.21%, GBP/USD 0.81, EUR/GBP -0.68%
- DXY 0.06%, DAX 0.05%, FTSE -0.14%, Brent 0.07%, Gold -0.23%
- Great Britain Q3 GDP Prelim QQ 0.4% vs 0.3%, forecast 0.3%
- Great Britain Q3 GDP Prelim YY 1.5% vs 1.5%, forecast 1.4%
- UK aims for outline Brexit transition deal by first quarter of 2018
- German three-way coalition still a way off, Greens say
- Germany Oct IFO Business Climate 116.7 vs 115.2, forecast 115.2, revised 115.3
- Germany Oct IFO Current Conditions 124.8 vs 123.6, forecast 123.5, revised 123.7
- Germany Oct IFO Expectations 109.1 vs 107.4, forecast 107.3, revised 107.5
- Japan Abe's post-election policy targets wages, delays fiscal reform
- China unveils new leadership line-up with no clear successor to Xi
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have increased 1.0 percent in September, after rising 2.0 percent in August, while non-defense capital goods orders excluding aircraft are likely to have risen 0.5 percent after gaining 1.1 percent the prior month.
- (0900 ET/1300 GMT) The Federal Housing Finance Agency is likely to report that Housing Price Index edged up 0.4 percent in the month of September from 0.2 percent in August.
- (0900 ET/1300 GMT) Mexico will release its retail sales data for the month of August. The economy's retail sales are likely to decline 0.1 percent, compared with a 0.3 percent rise in July.
- (1000 ET/1400 GMT) The U.S. new home sales are expected to have decreased 0.9 percent to a seasonally adjusted annual rate of 555,000 units in September, after falling 3.4 percent to 560,000 units in August.
- (1000 ET/1400 GMT) Bank of Canada will meet to announce its benchmark interest rate and is widely expected to hold rates at 1 percent.
- (1000 ET/1400 GMT) Bank of Canada releases its Monetary Policy Report.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Crude Oil Stocks for the week ending October 20.
- (1745 ET/2145 GMT) The Statistics New Zealand releases its trade balance data for the month of September. The economy posted an annual trade deficit of $3.2 billion in August.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending October 20.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending October 20.
Key Events Ahead
- (1115 ET/1515 GMT) Bank of Canada Governor Stephen S. Poloz gives a press conference.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $435 mn)
FX Beat
DXY: The dollar index edged down following a CNBC report citing an aide of Senate leader Mitch McConnell that three GOP Senators may not support the Republican tax bill. The greenback against a basket of currencies traded 0.1 percent down at 93.85, having touched a high of 94.02 on Monday, its highest since Oct. 6. FxWirePro's Hourly Dollar Strength Index stood at 75.98 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro rose, extending previous session gains after the German IFO survey came in above expectations for the month of October. German business expectations came in at 109.1, current assessment at 124.8 and business climate at 116.7, all surpassing both prior surveys and September’s readings. The European currency traded 0.1 percent up at 1.1775, having touched a low of 1.1725 on Monday, its lowest since Oct. 9. FxWirePro's Hourly Euro Strength Index stood at 28.58 (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. 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 fresh 3-month high above the 114.00 handle, underpinned by reports that Republican senators were favoring John Taylor to become the next chief of the U.S. Federal Reserve. The major was trading 0.2 percent up at 114.14, having hit a high of 114.24 earlier, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at -68.27 (Bearish) 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 climbed to a 1-week high against the dollar and the euro after data showed the economy picked up speed unexpectedly in the third quarter. The economy's quarterly gross domestic product growth rose to 0.4 percent, beating expectations and previous 0.3 percent growth in the three months to June 2017. Sterling traded 0.9 percent up at 1.3246 having hit a high of 1.3254 earlier, its highest since Oct. 17. FxWirePro's Hourly Sterling Strength Index stood at 169.14 (Highly 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, 1.3170 (55- day EMA) will be acting as major support and any break below will drag it down till 1.30270 /1.3000 level. Against the euro, the pound was trading 0.6 percent up at 88.94 pence, having hit a high of 88.85 pence earlier, its highest since Oct. 17.
USD/CHF: The Swiss franc slumped to a fresh 5-month low, as the greenback continued to gain following an upsurge in the U.S. Treasury bond yields. The major trades 0.2 percent up at 0.9926, having touched a high of 0.9939 earlier, it’s highest since May. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -85.36 (Slightly Bearish) by 1000 GMT. On the lower side, near-term support is around 0.9880 (hourly Kijun-Sen) and any break below will drag the pair to next level till 0.980.9730/0.9705/0.9680. The near-term resistance is around 0.9865 and any convincing break above will take it to next level till 0.9900/ 0.9950.
AUD/USD: The Australian dollar tumbled to its lowest since mid-July after the economy's consumer price index rose 1.8 percent for the year to September, below market forecasts of 2.0 percent, which lead investors to further pare back the chance of an interest rate hike in near term. The Aussie trades 0.9 percent down at 0.7709, having hit a low of 0.7699 earlier, it’s lowest since Jul. 17. FxWirePro's Hourly Aussie Strength Index stood at -118.35 (Highly Bearish) by 1000 GMT. On the lower side, the pair has broken near-term support 0.7730 and any convincing close below will drag the pair till 0.7680/0.7600. The near-term resistance is around 0.7825 (100 day MA) and any break above targets 0.7860 /0.7900 /0.7950/ 0.8000.
Equities Recap
European shares rose, underpinned by upbeat earnings reports from companies, while the dollar rallied to a fresh 3-month high against the yen on reports that Republican senators were favoring John Taylor to become the next head of the Federal Reserve.
The pan-European STOXX 600 index advanced 0.2 percent to 389.93 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,535.01 points.
Britain's FTSE 100 trades 0.1 percent higher at 7,522.54 points, while mid-cap FTSE 250 gained 0.1 percent to 20,125.53 points.
Germany's DAX rose 0.02 percent at 13,015.26 points; France's CAC 40 trades 0.2 percent up at 5,407.08 points.
Commodities Recap
Crude oil prices declined, reversing some of its previous session gains, despite top exporter Saudi Arabia stating that it was determined to end a supply glut. International benchmark Brent crude was trading 0.2 percent down at $58.33 per barrel by 1023 GMT, having hit a high of $58.46 the day before, its highest since Sept. 18. U.S. West Texas Intermediate was trading 0.4 percent lower at $52.30 a barrel, after rising as high as $52.59 on Tuesday, its highest since Sept. 28.
Gold prices edged lower to near 3-week lows, weighed down by stronger equities and a firmer dollar amid speculation over who will be the next U.S. Federal Reserve chief. Spot gold was 0.3 percent down at $1,271.90 an ounce by 1025 GMT, having hit its lowest since Oct. 6 at $1,271.18 earlier. U.S. gold futures for December delivery were 0.2 percent lower at $1,275.20 per ounce.
Treasuries Recap
The U.S. 10-year Treasury yield hit a 7-month high as markets prepare to experience a more hawkish Federal Reserve Chair to replace Janet Yellen after she retires from the position in early February. The yield on the benchmark 10-year Treasury jumped 4-1/2 basis points to 2.45 percent, the super-long 30-year bond yields surged 3-1/2 basis points to 2.90 percent and the yield on short-term 2-year note climbed nearly 4 basis points to 1.61 percent.
The UK gilts plunged after the country’s gross domestic product (GDP) for the third quarter of this year, surpassed expectations, coming in at 1.5 percent y/y and 0.4 percent q/q, compared to consensus estimates of 1.4 percent y/y and 0.3 percent q/q, from 1.5 percent y/y and 0.3 percent q/q respectively. The yield on the benchmark 10-year gilts, jumped 4 basis points to 1.39 percent, the super-long 30-year bond yields surged 2-1/2 basis points to 1.94 percent and the yield on the short-term 2-year traded nearly 2-1/2 basis points higher at 0.49 percent.
The German bunds sank after the country’s business climate index during the month of October unexpectedly rose to a record high in October after falling for two months in a row. The German 10-year bond yields, which move inversely to its price, jumped nearly 2 basis points to 0.48 percent, the yield on the 30-year note climbed 1-1/2 basis points to 1.28 percent and the yield on short-term 2-year traded flat at -0.70 percent.
The New Zealand bonds closed on the downside as investors remained focus on the country’s trade balance data for the month of September, scheduled to be released later today by 21:45GMT. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 3.03 percent, the yield on 20-year note also climbed 1-1/2 basis points to 3.57 percent and the yield on short-term 2-year ended 1 basis point lower at 2.04 percent.
The Japanese government bonds slumped following weakness in the U.S. Treasuries, but daily bond operation from the Bank of Japan limited the losses. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis points to 0.072 percent, the yield on long-term 30-year climbed 1/2 basis points to 0.875 percent and the yield on short-term 2-year too remained steady at -0.13 percent.
The Australian short-term government bonds gained after third-quarter consumer price inflation missed expectations, remaining below the Reserve Bank of Australia’s target band of 2-3 percent. The yield on short-term 2-year fell 3 basis points to 1.901 percent, 3-year bond yields also slid 3 basis points to 2.062 percent and 1-year note yield declined 2-1/2 basis points to 1.804. On the other hand, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained steady at 2.778 percent, the yield on the long-term 30-year note held steady at 3.538 percent.
