Market Roundup
- US third-quarter GDP growth revised up to 2.1 percent.
- Nine US Fed banks called for discount rate hike, one Fed bank voted for cut at Oct 26 meeting.
- US Nov Consumer Confidence 90.4 v 99.1 last; 99.5 expected.
- Yen, Swiss franc up strengthen as Middle East fears trump US GDP data; Oil at 2-week highs.
- Turkey downs Russian warplane near Syria border, Putin warns of “serious consequences”, Turkish and Russian assets fall on escalation fears.
- Sterling slips to two-week low as Carney says rates to stay low.
- Russia’s Putin calls Turkey’s downing of Russian jet ‘stab in the back’.
- BOE’s Carney: Rate hike timing still a question, BOE intends to hold considerably less than GBP 375b of gilts.
- BOE’s Haldane: if UK monetary policy was very accommodative would expect above trend growth & big pick up in prices.
- Mexico inflation cools to record low in early November, Dec hike sentiment fades.
Looking Ahead – Economic Data (GMT)
- 00:30 Australia Construction Work Done *Q3 forecast -2.1%, 1.6%-previous
Looking Ahead – Events, Other Releases (GMT)
- 01:00 Japan BOJ board member Shiraishi will give a speech to local business leaders
- 23:50 Japan BOJ Monetary Policy Meeting Minutes (Oct 30 meeting)
Currency SummariesEUR/USD is likely to find support at 1.0605 levels and currently trading at 1.0645 levels. The pair has made session high at 1.0655 and hit lows at 1.0664 levels. The U.S. dollar edged down against euro on Tuesday as investors switched their assets to safe-haven currencies as the geopolitical tension between Russia and Turkey in the Eurozone after Turkey shot down a Russian fighter aircraft, shrugging off positive US GDP data. The U.S. gross domestic edged up to 2.1 percent in the third quarter, a positive reading than initially thought. The upward revision for GDP, one of the most important indicators of growth, could give the U.S. Federal Reserve the confidence to raise interest rates next month. In addition to the GDP data, the U.S. housing sector showed further strength in the third quarter as U.S. single-family home prices rose in September at a faster pace than in August and above market expectations. The euro added 0.25 percent against the greenback to $1.0661. The dollar hit a session low against the Japanese yen after the GDP release. To the upside, immediate resistance can be seen at 1.0658. To the downside, immediate support level is located at 1.0630 levels.GBP/USD is supported in the range of 1.5029 and currently trading at 1.5084 levels. It reached session high at 1.5093 and hit low at 1.5051 levels. Sterling slipped to hit two-week low against a dollar on Tuesday, after the head of the Bank of England said UK interest rates were likely to stay low for some time. Governor Mark Carney said although there would be no need for negative interest rates like those in the euro zone, the British economy was in a prolonged low interest rate environment. Investors pushed back rate hike expectations from BoE to the end of 2016 after the bank’s latest Inflation Report this month, which saw it cut growth forecasts and warn of the deflationary impact of a strong pound. Sterling declined sharply towards as low as $1.5055 after the policymakers comments, sterling slipped to its weakest since Nov. 9 and only just above a 7-month low of $1.5027. To the upside, immediate resistance can be seen at 1.5090. To the downside, immediate support level is located at 1.5055 levels.AUD/USD is supported around 0.7220 levels and currently trading at 0.7243 levels. It hit session high at 0.7249 and made session lows at 0.7234 levels. The Australian dollars edged higher against US dollar on Tuesday as falling commodity prices, Geopolitical tension between Russia and Turkey raised concern for investor to switch their investment to safe heaven currencies Australian dollar inched up to $0.7249, from $0.7187 in late US session. It has gained around two cents in the past two weeks but met heavy resistance near $0.7250, a level tested four times since late October. Spot iron ore lost more than 5 percent last week and came close to its lowest level since July amid a global glut and faltering Chinese demand. The Aussie came off multi-month highs versus the yen, euro, Swiss franc and kiwi on Tuesday. Meanwhile, Reserve Bank of Australia (RBA) Governor Glenn Stevens gives a speech to economists at 0905 GMT and is likely to reaffirm that rates are on hold for now. To the upside, immediate resistance can be seen at 0.7300. To the downside, immediate support level is located at 0.7260 levels. USD/CAD is supported at 1.3280 levels and is trading at 1.3303 levels. It has made session high at 1.3355 and lows at 1.3283 levels. The Canadian dollar edged higher against the U.S. dollar on Tuesday, supported by a rally in crude oil on increased geopolitical tensions after Turkey shot down a Russian fighter aircraft near the Syrian border. Oil prices jumped almost 3 percent to hit a two-week high, while the loonie advanced against US dollar to trade around 1.3300 level touching its highest level in almost 4 days. Meanwhile, the U.S. economy grew at a rate in the third quarter than initially thought, suggesting the positive date from US could give the Federal Reserve much needed confidence to raise interest rates next month, although efforts by businesses to reduce an inventory bloat had not been as aggressive as previously believed. To the upside, immediate resistance can be seen at 1.3315. To the downside, immediate support level is located at 1.3280 levels.Equities RecapEuropean shares dropped to 1-week lows on Tuesday as geopolitical tensions following the downing of a Russian warplane near the Syrian border pushed investors out of risky assets like equities.UK’s benchmark FTSE 100 closed down by 0.45 percent, the pan-European FTSEurofirst 300 ended the day down by 1.34 percent, Germany’s Dax ended down by 1.58 percent, France’s CAC finished the day down by 1.51 percent.U.S. shares were up slightly in afternoon trading, driven by a rise in the S&P energy sector as oil prices rose, as investors focused on global politics after Turkey shot down a Russian warplane near the Syrian border.Dow Jones closed up by 0.13 percent, S&P 500 ended up by 0.13 percent, Nasdaq finished the day up by 0.01 percent.Treasuries RecapU.S. Treasuries prices rose on Tuesday, with the 30-year yield hovering near 3 percent after Turkey’s downing of a Russian warplane stoked safe-haven demand for low-risk government debt.The benchmark 10-year Treasuries notes were up 3/32 in price to yield 2.239 percent, down 1 basis point from late on Monday.Commodities RecapGold rose 1 percent on Tuesday, recovering from near six-year lows as news that Turkish fighter jets had shot down a Russian warplane near the Syrian border sparked a rush to safety among investors, weighing on the dollar.Spot gold rose as much as 1.1 percent to $1,080.51 and was up 0.5 percent at $1,074.61 an ounce at 3:13 p.m. EST (2013 GMT). U.S. gold futures for December delivery settled up 0.7 percent at $1,073.80.Oil prices hit two-week highs on Tuesday, rising about 3 percent, after a spike in Middle East tensions from Turkey’s downing of a Russian warplane and a rally in U.S. gasoline futures.Brent settled up $1.29, or 2.9 percent, at $46.12 a barrel, after hitting a two-week high at $46.50.U.S. crude’s West Texas Intermediate (WTI) futures finished the session up $1.12, or 2.7 percent, at $42.87. It hit $43.46 earlier, its highest since Nov. 11.
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