- Safe haven yen gains on cautious mood ahead of Fed.
- USD/JPY off Monday’s 2 month 121.60 high, plays from 121.10 to 120.34 levels.
- EUR/USD recovery limited to 1.1072 before fresh sell off.
- Asian equities dropped as Chinese shares tumble.
- European shares lower. FTSE100 down 0.3%, DAX down 0.1%. CAC down 0.2%.
- Oil prices extend losses as glut worries persist.
- Euro zone September Money-M3 annual growth 4.9% vs previous 4.8%. 5.0% expected.
- Euro zone September Money-M3 3M Moving Average 5.0% vs previous 5.0%.
- Euro zone September Money-Private loans 0.6% vs previous 1.0%. 1.1% expected.
- Euro zone September Loans to households 1.1% vs previous 1.0%.
- UK Q3 GDP prelim 0.5% q/q, 2.3% y/y vs previous 0.7%/2.4$. 0.6%/2.4% expected.
- Switzerland September UBS consumption indicator 1.65 vs previous 1.64 revised from 1.63.
- (0830 ET/1230 GMT) US September durable goods orders, -1.2% m/m eyed; last -2.3%.
- (0830 ET/1230 GMT) US September – ex-transport, unchanged m/m eyed; last -0.2%.
- (0830 ET/1230 GMT) US September non-def cap goods ex-air, unchanged m/m eyed; last -0.8%.
- (0900 ET/1300 GMT) US August CaseShiller 20, +0.3% m/m nsa, +5.1% y/y eyed; last +0.6%, +5.0%.
- (0945 ET/1345 GMT) US October Markit services PMI flash, 55.1 eyed; last 55.1.
- (0945 ET/1345 GMT) US October Markit composite PMI flash; last 55.0.
- (1000 ET/1400 GMT) US October consumer confidence index, 103.0 eyed; last 103.0.
- (1000 ET/1400 GMT) US October Rich Fed mfg shipments, services, comp indices; last -3, +10, -5.
- (1030 ET/1430 GMT) US October Dallas Fed services revenues, outlook indices; last +12.8, +3.6.
- (1030 ET/1430 GMT) Texas service sector outlook for October, Previous 3.6.
Key Events Ahead
- N/A FOMC, Riksbank begin two-day policy meetings.
- (1200 ET/1600 GMT) BoE DepGov Shakik speech in London.
FX Recap
EUR/USD: Pair trades -0.09% lower at 1.1048, recovering slightly from fresh daily lows reached at 1.1036 in last hours. Loans to the private sector in the euro area rose less than expected in September, while the closely watched M3 money supply gauge also swelled slightly less than thought, ECB said on Tuesday. Euro Zone M3 money supply rose to 4.9%, from 4.8% in the preceding month, missing expectations of a 5.0% rise. It made intraday high at 1.1072 and low at 1.1036 levels. Initial support is seen around at 1.0972 and resistance at 1.1560 levels. Option expiry is at 1.1000 (415M), 1.1250 (1.1BLN).USD/JPY: The dollar fell 0.6 percent to 120.43 yen, having hit 121.60 on Friday. The safe-haven yen hit a 7-week high against the euro, as investors turned risk-averse before the start of a two-day meeting of the U.S. Federal Reserve. The euro fell 0.6 percent to 133.03 yen; it’s weakest since early September. This week could be the week the Bank of Japan (BoJ) announces an extention to its massive quantitative easing program – at least that’s what roughly 50% of economists think. If so, the USD/JPY could be in for a shock on Friday. Pair made intraday high at 121.09 and low at 120.33 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (374M), 120.20-25 (330M), 120.60-65 (450M).GBP/USD: Sterling slipped $1.5309 against the dollar after the data showed UK economic growth slowed more-than-expected in the three months to September, raising the chances that a period of rapid economic growth is coming to an end. It was trading at $1.5333 beforehand and then recovered to $1.5325, still down 0.2 percent on the day. Against the euro, the pound weakened to turn flat on the day at 72.055 pence per euro. Britain’s economy grew 0.5% on a quarter-to-quarter basis during Q3, missing estimates of 0.6% and after last quarter’s 0.7%. Investor’s attention will now shift to the US and Wednesday’s Federal Open Market Committee meeting. Pair made intraday high at 1.5358 and low at 1.5301 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels. Option expiry is at 1.5400 (175M).NZD/USD: New Zealand’s merchandise trade balance recorded a larger deficit in September than August, even as beef exports surged and imports fell due to the strong comparison base from September 2014, with dairy exports continuing to reduce New Zealand’s trade income. The trade gap grew from a revised $1.08 billion in August to $1.22 billion last month, according to Statistics New Zealand, coming in weaker than analysts’ median estimate of $825 million deficit. Pair made intraday high at 0.6788 and low at 0.6738 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels.AUD/USD: The riskier/higher yielding currencies such as the Antipodean were on the losing end as a result of the widespread risk-aversion. Pair dropped -0.20% to trade around 0.7246, reversing yesterday’s gains as falling oil and gold prices adds to the persisting bearish pressures on the Aussie. While the news surrounding Nippon-NAB deal failed to boost the AUD bulls. Pair made intraday high at 0.7258 levels and low around 0.7227 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7225 (393M), 0.7250 (1.46BLN).
Equities Recap
World shares slipped on Tuesday, as investors locked the gains and await for the Federal Reserve’s policy meeting and results from Apple.European shares opened down 0.5 percent, Europe’s FTSEurofirst 300 fell 0.2 pct, Germany’s DAX was down 0.4 pct, UK’s FTSE plunged 0.1 pct and France’s CAC slipped 0.2 pct in early trades.
Tokyo’s Nikkei average closed down 0.90 pct at 18,777.04, China’s CSI300 index edged up 0.1 pct at 3,592.88 points, HK’s Hang Seng index rose 0.1 pct at 23,142.73 points and Shanghai Composite Index closed up 0.1 pct at 3,434.34 points.
Commodities Recap
Oil prices dropped on Tuesday, extending losses into a third week, on worries over a supply glut and with U.S. inventory data expected to show another increase in crude stocks. Brent for December delivery dropped 38 cents to $47.16 a barrel, after settling the previous session down 45 cents. U.S. crude for December delivery slid 53 cents to $43.45 a barrel, having ended the day before down 62 cents.Gold steadied above $1,160 an ounce on Tuesday as investors were in sidelines ahead of a Federal Reserve policy meeting that kicks off later in the session, waiting for clues on U.S. rate hike timing. Spot gold was steady at $1,164.31 an ounce.
Treasuries Recap
The yield on benchmark US 10-year Treasuries notes stood at 2.040 pct in Asian trading, down from its U.S. close of 2.058 pct. The yield scaled a 2-week peak of 2.099 percent on Friday.German bund futures opened 2 ticks lower at 157.44.JGB prices ended the day steady to slightly higher, pushing yields down 1bp from yesterday’s afternoon close in the 7-yr and longer zone. In early morning trading, a few commercial banks bought 10-yr JGBs maturing in around 9 years amid growing expectations in Japan’s mainstream media that the BoJ will decide to take further easing steps at Friday’s 1-day policy board meeting. But several domestic pension funds sold super-long JGBs into the afternoon close without waiting for tomorrow’s massive purchase of super-long JGBs by the BoJ.European bond markets opened up with a slight risk-off bias and hence yields are around 1bp lower. Dec gilt opened up 0-10 ticks higher than yesterday’s 118.68 settlement price. Furthermore, 10yr Gilts traded almost their widest spread relative to 10yr Bunds for the last three months at 134bp.New Zealand government bonds were little changed. Australian government bond futures had a firm tone, with the 3-year bond contract up a tick at 98.180. The 10-year contract added 3 ticks to 97.3400, while the 20-year contract rose 2.5 ticks to 96.7900. New Zealand bonds were very attractive by comparison. The 2-year bonds yield stood at 2.5 pct, while the 10-year offered 3.4 pct yeild, even though they are historically very low.
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