- Germany August trade balance decrease to 19.6 bln Euro (forecast 22.5 bln euro) vs previous 22.8 bln euro.
- Japan August core machinery orders -5.7% m/m, -3.5% y/y, +3.2% and +4.2% eyed, Cabinet Office cuts assessment of sector, orders stalling-falling.
- Japan August current account in surplus for 14th straight month, trln, much larger than the trln eyed too, better trade, tourism cited.
- MoF September flow data – Japanese buy net trln foreign stocks, trln bonds, sell Y31.5 bln bills; foreign investors sell net trln Japanese stocks, Y149.6 bln bonds, buy trln bills.
- MoF flow data wk-ended Oct 3 – Japanese buy net Y612.2 bln foreign stocks, sell trln bonds, Y70.8 bln bills; foreign investors sell net trln Japanese stocks, buy Y30.3 bln bonds, sell trln bills.
- Huge inflow on way: Norway’s oil fund to invest in Japan real estate.
- RBA Chief Econ Simon – Low rates entirely appropriate.
- (0230 ET/0630 GMT) France Sep BdF business sentiment index, 100 eyed; last 98.
- (0830 ET/1230 GMT) US w/e initial jobless claims, 274k eyed; last 277k.
Key Events Ahead
- N/A ECB September meeting minutes.
- N/A Riksbank Gov Skingsley, Lithuania CB Jurgilas speak at Vilnius conference.
- N/A Ireland E1 bln 2.4% 2030 IGB auction, Italy 2032 linker bond syndication.
- N/A Sweden inflation-linked government bond auction.
- (0600 ET/1000 GMT) Riksbank DepGov Ohlsson presentation in Gothenburg, Sweden.
- (0700 ET/1100 GMT) BoE MPC announcement, no change in 0.5% bank rate, QQE, 8-1 vote eyed.
- (0710 ET/1110 GMT) ECB Praet speech in Mannheim, Germany.
- (0930 ET/1330 GMT) St Louis Fed Bullard speech at St Louis Fed conference.
- N/A IMF/World Bank meetings in Lima, Peru, World Bank Kim presser 15:00.
- (1300 ET/1700 GMT) Minny Fed Kocherlakota speech in Minnesota.
- (1400 ET/1800 GMT) FOMC September meeting minutes.
- (1530 ET/1930 GMT) SF Fed Williams speech in Spokane, Washington.
FX Recap
EUR/USD: Euro recovered early losses in the Asian hours and trading around $1.1256 levels. The euro area’s largest economy booked a lower trade surplus in August compared with the previous month, fresh data showed on Thursday. Germany’s foreign trade, one of the components of the country’s current account, generated a non-seasonally adjusted surplus of €15.3 billion in the reported period, up from the €25.0 billion registered in the previous month. A busy day for the EUR, GBP traders as the session ahead is packed with lots of action expected from the BOE’s Super Thursday and the ECB minutes, especially after the Fed left rates on hold. It made intraday high at 1.1261 and low at 1.1234 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.USD/JPY: Pair remains little affected by the poor datasets from Japan released earlier on the day. Core machine orders dropped 3.5%, below expectations for an increase of 3.5%. Trade balance came in at a deficit of 326.1 billion yen, following the 108.0 billion yen shortfall in the previous month. Pair made intraday high at 120.10 and low at 119.82 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.GBP/USD: Sterling hit its highest in more than two weeks against the dollar after data showed industrial output had recovered better-than-expected from a July drop, pushing the pound back above $1.53 for the first time since September 23. Today key event will be BOE interest rate decision. The BOE Monetary Policy Committee (MPC) is expected to leave its key interest rate at a record-low 0.5%. It’s widely expected that no changes are expected in the bank’s policy decision; hence the main focus will be on the MPC voting record for any member’s shift in view towards a rate-hike. Pair made intraday high at 1.5319 and low at 1.5297 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.NZD/USD: Antipodeans slipped on profit-taking after recording fresh multi-week highs on Wednesday. Kiwi consolidates after the recent bullish streak and might be gathering pace for further upside. Pair is trading -0.22% at 0.6595, off six-week highs. It made intraday high at 0.6629 and low at 0.6585 levels. In addition, risk-on appetite flourished as traders believed in a postponed interest rate hike by the Federal Reserve (Fed), following a mediocre non-farm payrolls update in September. Initial support is seen at 0.6195 and resistance at 0.6605 levels.AUD/USD: The Australian dollar declined on lower oil prices and investors cashing in profits, after the AUD/USD nearly hit a one-month high in the previous session. US dollar weakness and better-than-expected Chinese data were the two main drivers of the rally this week, both of which were net positive for commodities. The Aussie dollar and kiwi dollar have risen 1.6% and 1.4%, respectively, this week. Pair made intraday high at 0.7215 levels and low around 0.7165 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels.
Equity Recap
Japan’s Nikkei turned lower after a positive start and npw trades -0.88% lower at 18,168.Australia’s S&P ASX index pares gains to 5,207, up 0.18%.While the Chinese markets keep their upbeat momentum intact after re-opening on a firmer note and rallies 3.80% to 3,168.Hong Kong’s Hang Seng drops -0.74% to 22,349.Australia’s S&P/ASX 200 index closes up 0.27 pct at 5,212.10 points.Tokyo’s Nikkei average closes down 0.99 pct at 18,141.17.
Treasury Recap
BOJ offers to lend Y400 bln of JGBs on spot basis through 10/9 as a secondary source of JGBs.New Zealand government bonds eased, sending yields as much as 6.5 basis points higher at the long end of the curve.Australian government bond futures fell deeper in the red, with the three-year bond contract off 3 ticks at 98.150. The 10-year contract slipped 4.5 ticks to 97.2950, leading to a bearish flattening of the curve.
Commodity Recap
Oil was traded higher on Thursday but with gains limited as investors digest a larger-than-expected build up in US crude stockpiles that knocked prices down yesterday. Futures for WTI added 0.31% to trade at $47.96 per barrel, while Brent futures were traded 0.23% up at $51.89 per barrel.Gold fell from near-two-week highs and silver slumped 3 percent on Thursday, as Chinese investors sold the precious metals to take profits on return from a week-long holiday. Spot gold eased 0.2 percent to $1,143 an ounce by 0315 GMT. The metal had climbed to $1,153.30 in the previous session; it’s highest since Sept. 24, before closing 0.1 percent lower as the dollar gained.
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