- EUR/USD steady within 1.1335-1.1378 range.
- USD/JPY plays in between 119.76-120.07 levels, EUR/JPY bid 135.98-136.39.
- China stocks end down 3.1% at 3320.68 points.
- Nikkei closes up 1.91% at 18554.28 points.
- UK September PSNB ex-banks bln vs 11.571bln previous, 10.1bln expected.
- UK September PSNB bln vs 10.793bln previous, 9.4bln expected.
- UK September PSNCR bln vs 717mln previous.
- German Forsa poll shows 81% of CDU members want Merkel to stand again.
- Japan September trade deficit Y114.5 bln, Y84.4 bln surplus eyed.
- Japan September crude import volume +1.1% y/y, LNG -5.0%, thermal coal +3.2%.
- Australia September Westpac/MI leading index 97.6, -0.35% vs trend, August 97.48.
- (0800 ET/1200 GMT) MBA Weekly Mortgage Application Activity Indices.
- (0900 ET/1300 GMT) Mexico Retail Sales.
- (1000 ET/1400 GMT) BOC Interest rate decision.
- (1030 ET/1430 GMT) EIA Weekly Petroleum Statistics.
- (1030 ET/1430 GMT) Brazil Capital flow and foreign reserve data.
- (1500 ET/1900 GMT) Argentina Trade balance Data.
Key Events Ahead
- (0830 ET/1230 GMT) US TsySec Lew, CommSec Pritzker, others at Washington, DC conference.
- (1115 ET/1515 GMT) BOC Press Conference.
- (1300 ET/1700 GMT) BOE’s Governor Carney Speech.
- (1330 ET/1730 GMT) Fed Gov Powell in NY Fed conference panel discussion.
FX Recap
The commodity-linked currencies like the Australian and New Zealand dollars dropped on Wednesday as Chinese stocks slid, while Japan’s trade data raised the spectre of a recession. The Australian dollar fell 0.7 percent to $0.7213, while the New Zealand dollar shed 0.6 percent to trade at $0.6700. The Canadian dollar fell 0.3 percent, with focus on the BoC’s policy decision due on Wednesday.EUR/USD: The benchmark bond yield spread gained importance ahead of Thursday’s ECB meeting as the central bank is widely expected to hint at more QE and/or negative interest rates. The spread was hovering around 148 basis points on Monday, before falling to 143 bps today. The drop in the yield spread favours EUR, however, the spot still remains under pressure ahead of tomorrow’s ECB meeting. Moreover, Government indebtedness in the 19-nation bloc came in at 92.1% in the reported period, an increase from 91.1% at the end of 2013, according to Eurostat, the statistical office of the European Union. It made intraday high at 1.1377 and low at 1.1334 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1300 (659M), 1.1325 (1.5BLN), 1.1400 (758M), 1.1475 (2BLN).USD/JPY: Japan’s trade accounts were in deficit for the sixth-consecutive month in September after exports rose at the weakest pace in over a year. The trade shortfall contracted from ¥569.7 billion in August to ¥114.5 billion last month, according to the Ministry of Finance, while analysts expected a trade surplus of around ¥87 billion in September. Pair made intraday high at 120.07 and low at 119.75 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.GBP/USD: Sterling dropped against the euro and dollar, as investors focused on ECB policy meeting on Thursday at which more stimulus could be announced to prop up the euro zone economy. The euro edged up broadly in a subdued market on Tuesday and was 0.2 percent up against sterling at 73.585 pence. On the data front, UK’s Public Sector Net Borrowing have come in at £8.63 billion during September, bettering expectations and down from August’s £10.79 billion. Pair made intraday high at 1.5461 and low at 1.5414 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels. Option expiries are at 1.5300 (255M), 1.5375 (155M).NZD/USD: The New Zealand currency fell on Wednesday after a strong run at Fonterra’s Global Dairy Trade (GDT) auction, with the kiwi seen trading lower against the US dollar. The Global Dairy Trade (GDT) Price index slightly disappointed at Fonterra’s latest regular auction on October 20, showing the first drop since August 4. According to the latest release, dairy prices declined by 3.1% as an average price stood at $2,735.00, following a solid 9.9% pace of growth booked on October 6. Pair made intraday high at 0.6758 and low at 0.6698 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels. Option expiry is at 0.7000 (250M).AUD/USD: The initial rebound of the Aussie after this week’s Chinese data stopped at the $0.73 level and bulls tried to breach this resistance for two days, but failed. This therefore led to frustration in the bullish camp to some profit taking and the pair was sold off on Wednesday. In the previous session the Reserve Bank of Australia (RBA) released its October meeting minutes, which suggest little change for the near term path for monetary policy. While there are clearly concerns over growth prospects in China and East Asia, on the domestic front the tone was quintessentially ‘glass half full’. Pair made intraday high at 0.7275 levels and low around 0.7210 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7145 (548M), 0.7200 (317M), 0.7260 (300M), 0.7350 (300M).
Equities Recap
European stocks slid on negative Q3 earnings reports and the biggest fall in Chinese stocks in over a month.The FTSEuroFirst index of leading 300 European shares fell two thirds of one pct at 1,423 points, Germany’s DAX slid 0.2 percent, France’s CAC 40 went down 0.5 pct and Britain’s FTSE 100 dropped 0.3 pct in early trades.In Japan, the prospect of more stimulus from the BoJ pushed up the Nikkei 225 by almost 2 pct to 18.554 points, MSCI’s broadest index of Asia-Pacific shares outside Japan saw a 0.3 pct fall, China’s CSI300 Index ended down 2.9 pct at 3473.25 points and Shanghai Composite Index closed down 3.1 pct at 3320.68 points.
Commodities Recap
Oil prices dropped on Wednesday following a big build in U.S. crude inventories. Brent crude for December fell 40 cents at $48.31 a barrel. U.S. crude futures for December delivery were down 65 cents to $45.64 a barrel.Gold retained overnight gains on Wednesday, as a softer dollar increased the metal’s appeal as a hedge, with investors waiting for stronger clues on U.S. Fed rates hike. Spot gold was little changed at $1,174.90 an ounce. The metal gained 0.5 pct in the previous session, snapping a 3-day losing streak.
Treasuries Recap
10-year U.S. Treasury yields were seen at 2.059 pct vs U.S. close of 2.071 pct on Tuesday.German 10-year bond yields rose in late trade to 3-week high of 0.637 pct, up 7 bps on day. Portugal 10-year bond yields opened 5 bps higher at 2.47 pct, while most other euro zone yields were slightly lower on the day.JGB prices closed the day mixed, with the 7-yr to 10-yr JGBs modestly firmer (-1bp). The current 20-yr and 30-yr JGBs saw unusually good two-way flows among dealers in the early trades, sending yields down by 0.5bp from their intraday highs of 1.085% (+0.5bp) and 1.36% (+0.5bp), ahead of today’s monthly JPY1.2tn 20-yr JGB auction.UK Gilts opened up 12 ticks, marginally higher than expected, and have managed to push higher and again outperform other European government bond markets.New Zealand government bonds plunged, with yields up to 5.5 ticks higher at the long end the curve. Australian government bond futures eased, with the 3-year bond contract off 4 ticks at 98.170. The 10-year contract shed 4 ticks to 97.3150, while the 20-year contract lost 5 ticks to 96.7550, leading to a bearish steepening of the curve.
The material has been provided by InstaForex Company – www.instaforex.com