Market Roundup

  • Swiss trade balance 3047 mln SFR in September vs revised 2862 mln SFR in previous month.
  • US Treasury – Further CNY appreciation key to rebalancing China’s economy, Japan must recalibrate fiscal policy, EZ growth too soft, should allow KRW to appreciate, no major trading partner manipulating FX.
  • China’s capital outflows top $500 bln.
  • MACQUARIE – Risks for multiple RBA rate cuts are growing.
  • RBA October minutes -OCR level appropriate, signs economy re-balancing, AUD depreciation helping, concerned over growth in China, East Asia.

Economic Data Ahead

  • (0400 ET/0800 GMT) Euro zone August current account balance; last E33.8 bln nsa and E22.6 bln sa surpluses.
  • (0400 ET/0800 GMT) Euro zone August net investment flow; last E88.2 bln inflow.
  • (0830 ET/1230 GMT) US September housing starts, 1.15 mln AR eyed; last 1.13 mln, -3.0% m/m.
  • (0830 ET/1230 GMT) US September building permits, 1.16 mln AR eyed; last 1.16 mln, +2.7% m/m.
  • (0900 ET/1300 GMT) Belgium October consumer confidence index; last -10.0.

Key Events Ahead

  • N/A ESM E2.5 bln 6-month bill, Spain 3 and 9-month bill auctions.
  • (0340 ET/0740 GMT) BoS Linde speech in Madrid.
  • (0500 ET/0900 GMT) BoE Gov Carney, DepGov Bailey parliamentary testimony.
  • (0530 ET/0930 GMT) ECB 7-day refinance at fixed 0.05%, E69 bln allotment eyed, last bln.
  • (0545 ET/0945 GMT) BoE MPC McCafferty speech at London Bloomberg event.
  • (0915 ET/1315 GMT) Fed Gov Powell speech at NY Fed conference.
  • (1100 ET/1500 GMT) FOMC Chair Yellen speech at Washington, DC event.
  • (1200 ET/1600 GMT) ECB/Austria CB Nowotny speech in Vienna.

FX Recap

EUR/USD: The Euro traded near a 10-day low against the dollar on Tuesday, as investors pay attention to ECB’s meeting later in the week at which further stimulus could be announced to boost inflation in the euro zone. It made intraday high at 1.1339 and low at 1.1322 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.USD/JPY: The Japanese yen continued its narrow range trading on Tuesday, and even though weak Chinese data added to the USD strength in the previous session, the currency pair seemed to lack a clear direction on Tuesday. The currency pair will most likely wait for further direction coming from the Bank of Japan rate decision on October 30. Moreover, the focus remains on the Federal Reserve’s (Fed) rate hike timing, with the next Federal Open Market Committee meeting scheduled for October 29. Pair made intraday high at 119.54 and low at 119.45 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.GBP/USD: Another light European trading session ahead, with BOE policymakers’ speeches expected to remain the main highlight. The US dollar corrected lower versus its major counterpart after enjoying solid gains on Monday following the release of impressive US housing data. Sentiment jumped 3 points in October to 64 on the NAHB/Wells Fargo Housing Market Index, reaching the highest level in a decade. Pair made intraday high at 1.5480 and low at 1.5454 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.NZD/USD: New Zealand’s so-called kiwi bounced back above $0.68 against the US dollar on Tuesday, with fundamentals helping to drive the currency towards its highest level since June. Fonterra’s Global Dairy Trade (GDT) Index has risen sharply at the last four fortnightly auctions, rebounding more than 30% from a trough in August. The next auction due to take place on Wednesday morning (NZ time) is likely to mark the fifth-consecutive rise in prices, which will continue to drive gains in the kiwi. Pair made intraday high at 0.6815 and low at 0.6783 levels. Initial support is seen at 0.6235 and resistance at 0.6721 levels.AUD/USD: Following the release of the Reserve Bank of Australia’s (RBA) minutes from its October 6 meeting, the Aussie rose 0.31% in Tuesday’s early morning session, trading around $0.7270. The Reserve Bank of Australia (RBA) continues to see a period of weak economic activity ahead. The policy meeting minutes suggest the bank is not currently expecting to lower interest rates again, particularly as the economy’s rebalancing evolves. Tuesday’s minutes from the RBA’s October meeting suggested that the bank is continuing to see the necessary economic transition take place, with the help of the lower Australian dollar. Pair made intraday high at 0.7275 levels and low around 0.7242 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels.

Equity Recap

Japan’s benchmark Nikkei 225 index rose 0.27% to 18,179.51 points in morning trade on Tuesday, while Tokyo’s broader Topix gauge gained 0.21% to trade at 1,497.91 points.Hong Kong’s benchmark Hang Seng index dropped 0.45% to 22,970.94 points shortly after the opening bell, and mainland China’s benchmark Shanghai Composite was little down at 3,384.08 points at the same time.Korea’s benchmark Kospi index eased 0.11% to 2,027.95 points this morning in Seoul.The benchmark Australian S&P/ASX 200 index fell 0.42% to 5,247.80 points in Sydney, with resource stocks and banks losing steam early on.New Zealand’s benchmark S&P/NZX 50 index rose 0.83% to 5,883.25 points this afternoon in Wellington.Australia’s S&P/ASX 200 index closes down 0.60 pct at 5,238.30 points.Tokyo’s Nikkei average closes up 0.42 pct at 18,207.15.

Treasury Recap

Thailand 20 bln baht, 182-day central bank bond average accepted yield 1.46269 pct. Thailand 35 bln baht, 91-day central bank bond avg accepted yield 1.43956 pct.Philippines’ 2018 treasury bond fetches average rate of 3.169 percent at auction.Malaysia will sell 3.5 bln RGT Govt bond.

Japan 20-year JGB auction lowest price 101.9000, average price 102.0000, bids accepted at lowest price 66.3038 pct.New Zealand government bonds were little changed.Australian government bond futures dipped, with the three-year bond contract off one tick at 98.210. The 10-year contract slipped 2 ticks to 97.3550, while the 20-year contract also shed 2 ticks to 96.8050.

Commodity Recap

Gold steadied after three days of losses on Tuesday but remained under pressure as the dollar was well bid on expectations the Federal Reserve could still raise U.S. rates this year. Spot gold was little changed at $1,170.06 an ounce by 0029 GMT, after losing about 1.2 percent in the past three sessions.US crude futures edged up on Tuesday, but with gains limited thanks to the ongoing oversupply and fears over the global economic health. Futures for WTI rose 0.43% to trade at $46.48 per barrel, while Brent futures were traded 0.49% higher at $48.85 per barrel, after both benchmarks ended Monday’s session about 3% lower.

The material has been provided by InstaForex Company – www.instaforex.com