- Dollar holds higher ground vs euro as Fed/ECB policies diverge.
- EUR/USD plays in between 1.0900/1.0971.
- Euro pressured by ECB easing prospects, hits 6-month low on yen.
- EUR/JPY slides to 131.60 then recovers to 132.60 levels.
- UK October Nationwide house price 0.6% m/m, 3.9% y/y vs previous 0.5%/3.8%. 0.5%/3.8% expected.
- UK September BOE Consumer credit 1.261 bln vs previous 1.263bln revised. 1.100bln expected.
- UK September Mortgage lending 3.595bln vs previous 3.408bln revised. 3.450bln expected.
- UK September Mortgage approvals 68.874bln vs previous 70.664k revised. 72.450k expected.
- UK September M4 Money supply -1.0% vs previous -0.5% revised.
- EZ October Economic sentiment 105.9 vs previous 105.6. 105.2 expected.
- EZ October Consumer confidence final -7.7 vs previous -7.1. -7.7 expected.
- (0830 ET/1230 GMT) US Q3 GDP advance, +1.6% q/q eyed; last +3.9%.
- (0830 ET/1230 GMT) US Q3 PCE advance, +3.2% AR eyed; last +2.2%.
- (0830 ET/1230 GMT) US Q3 core PCE, +1.4% AR eyed; last +1.9%.
- (0830 ET/1230 GMT) US Q3 GDP deflator – advance, +1.5% AR eyed; last +2.1%.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 263k eyed; last 259k.
- (0830 ET/1230 GMT) Canada Producer Price, consensus 0.1, previous 0.3.
- (0900 ET/1300 GMT) Germany Oct HICP – flash, -0.1% m/m, +0.1% y/y eyed; last -0.3%, -0.2%.
- (1000 ET/1400 GMT) US September pending home sales index, 110.5, +1.0% m/m eyed; last -1.4%, 109.4.
- (1500 ET/1900 GMT) Mexico Interest rate decision.
Key Events Ahead
- (0910 ET/1310 GMT) Atlanta Fed Lockhart speech at Washington, DC Fed event.
- (1145 ET/1545 GMT) Fed Trade 30-year Ginnie Mae (max $1.075 bn).
FX Recap
USD: The dollar was firm near 2-1/2 month highs against the euro, after the U.S. Fed signaled it may raise interest rates in December, highlighting the divergent monetary policies of Fed and ECB. While the Fed is preparing the ground for an eventual lift off in interest rates from record lows, the ECB is widely expected to add to its ultra-loose stimulus before the end of the year to boost inflation and growth. Against the dollar, the euro was trading lower at $1.0918, having lost 1.2 percent on Wednesday. The dollar index rose to 97.818, its highest level since Aug. 10, before easing back to 97.62. A break above its Aug. 7 peak of 98.334 would bring the index out of its trading range in the past half year, opening the way for a test of its 12-year peak hit earlier this year at 100.39. It last stood at 97.64. The dollar fell 0.2 percent to 120.75 yen, down 0.2 percent on the day. EUR/USD: The pair is looking to recover from the FOMC hangover, managing at least to bounce off the recent lows near 1.0900 the figure. The number of people out of work in Germany declined by 5,000 in October and the unemployment rate held steady at 6.4%, the lowest level in 25 years. Looking towards the New York session, all eyes will remain on the advance GDP estimate from the US for the third quarter. Further, weekly jobless claims and pending home sales along with Fed member Lockhart’s speech will be also closely eyed. It made intraday high at 1.0976 and low at 1.0902 levels. Initial support is seen around at 1.0854 and resistance at 1.1560 levels. Option expiries are at 1.0950 (456M), 1.1000 (2.85BLN).USD/JPY: Combined production from Japan’s mines, manufacturers and utilities rose at the strongest pace since June last month, coming in stronger than markets had forecast. Industrial production rose 1.0% month-on-month in September, according to preliminary data from the Ministry of Economy, Trade, and Industry (METI) on Thursday, following a 1.2% decline in August. Pair made intraday high at 121.17 and low at 120.58 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (3.5BLN), 120.50-65 (550M), 121.00 (1.6BLN).GBP/USD: Sterling continues its sideways trading this week, stuck in a narrow range the day after the Federal Reserve (Fed)’s statement revived speculations of a December rate hike. The UK’s pound fell from above $1.53, unable to fight back against the stronger dollar. Earlier today, the Nationwide reported that house prices in the UK rose slightly increased 0.6% month-on-month in October. This was modestly up on increases of 0.5% in September and 0.4% in both August and July. Pair made intraday high at 1.5274 and low at 1.5272 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.NZD/USD: Pair is trading around $0.6695 levels, having plunged as low as $0.6621 immediately after the Official Cash Rate (OCR) was left on hold at 2.75%. RBNZ Governor Graeme Wheeler said on Thursday that the exchange rate had been moving higher since September, “which could, if sustained, dampen tradable sector activity and medium-term inflation.” He said that some further easing in the OCR “seems likely,” adding that “this will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait.” It made intraday high at 0.6713 and low at 0.6648 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels.AUD/USD: Newly-built home sales fell last month in Australia, undoing a solid rise in August, adding to signs that the housing market may be running out of steam. Sales fell 4.0% month-on-month in September, according to the Housing Industry Association (HIA), after climbing 2.3% in August. Demand for housing has been bolstered by Australia’s record-low interest rates in recent years, while strong house-price inflation – particularly in Sydney and Melbourne – have increased the incentive to build new homes. Pair made intraday high at 0.7119 levels and low around 0.7083 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7120-25 (320M), 0.7150 (314M).
Equities Recap
European shares climbed after the U.S. Fed kept the door open for rate hikes by year-end.The pan-European FTSEurofirst 300 index inched higher 0.3 pct at 1,489.45 points, Britain’s FTSE 100 slid 0.4 pct, Germany’s DAX climbed 0.3 pct, CAC 40 rose 0.2 pct in early trades.Japan’s Nikkei share average gained 0.2 pct to close at 18,935.71, Shanghai Composite Index ended up 0.4 pct at 3,387.32 points and HK’S Hang Seng Index closed down 0.6 pct at 22,819.94 points.
Commodities Recap
Crude futures fell on Thursday after US Fed kept rates unchanged and a weekly government report on oil stockpiles showed an inventory build that was within expectations. U.S. crude futures slid 38 cents at $45.56 a barrel. Brent crude dropped down 39 cents at $48.66 a barrel, after rising nearly 5 pct in the previous session.Gold edged up on Thursday but stayed near its lowest level in two weeks after US Fed hinted at a possible rate hike in December. Spot gold surged 0.4 pct to $1,160.76 an ounce, following a 1 pct slide in the previous session. U.S. gold futures slipped over 1 pct on Thursday.
Treasuries Recap
U.S. 10-year Treasuries yeild stood at 2.087 pct vs U.S. close of 2.092 pct on Wednesday.German 10-year yields climbed 3 bps to 0.47 pct, as did most other euro zone equivalents.UK Gilts opened 43 ticks lower than the settlement of 118.93 as the markets reacted to the possibility of a December lift off after hawkish FOMC comment.JGBs opened softer, sending yields up by 1bp to 2bp from yesterday’s afternoon close in the 5-yr and longer zone, on the back of a relatively sharp rebound in US TSY yields in the belly of the curve overnight (2s +8bp, 5s +10bp, 10s +7bp), after the FOMC’s post-meeting statement fueled concerns about a rate-hike by the end of this year. JGB prices closed the day mostly unchanged from yesterday’s afternoon close, except for the 20-yr tenor (-0.5bp).Australian government bond futures were mixed, with the 3-year bond contract down 1 tick to 98.240. The 10-year contract added half a tick to 97.4000, while the 20-year contract eased 3 ticks to 96.8150. New Zealand government bonds eased, with yields 1.5 to 2 bps higher along the curve.
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