- Aussie firms after better-than-expected Chinese data. Trading from 0.7238 to 0.7307 levels.
- Euro offered in Europe ahead of ECB meeting Thursday, plays in between 1.1378/1.1309.
- Sterling firmer, awaits BOE Carney’s speech for further clues.
- GBP/USD up to 1.5481 from 1.5428. EUR/GBP sold to 0.7312 from 0.7370 levels.
- DAX up 0.7%. German shares out perform rising European market.
- FTEU3 up 0.4%. Ibex up 0.8%. CAC 40 up 0.35%.
- ECB Nowotny – May be a need for fiscal policy to become expansive, seen neutral now.
- Only a big China slowdown would significantly affect German growth.
- Mission chiefs of Greece’s lenders to visit Athens from October 20 for reform update.
- Greek 2-year bond yields fall 77 basis points to 8.3%.
- SSEC closes down 0.1% at 3,386.70 points.
- Many Japan firms want stable FX after hit from China rout.
- BoJ Kuroda – Annual core inflation likely to hover around zero pct for time being.
- (0900 ET/1300 GMT) Russian Retail Sales, consensus 9.3%, previous 9.1%.
- (1000 ET/1400 GMT) US October NAHB housing market index, 62 eyed; last 62.
Key Events Ahead
- (1000 ET/1400 GMT) Joint Fed, OCC, FDIC meeting in Chicago.
- (1200 ET/1600 GMT) Richmond Fed Lacker speech in Richmond.
FX Recap
EUR/USD: The Euro traded near a 10-day low against the dollar, 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 inched down to $1.1340, close to Friday’s low of $1.1335, the currency’s weakest since October 9. The North American session has a couple of Fed Speaks in store for the American traders, while the only 2nd tier data in the form of NAHB Housing Market Index will be reported. It made intraday high at 1.1378 and low at 1.1308 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1335 (408M), 1.1410 (801M), 1.1420 (371M).USD/JPY has been trading choppy over the previous days and Monday will unlikely be any different, especially with no macro events in the calendar. Chinese macro figures were released during the Asian session, which prompted some volatility, mainly on commodities and their currencies. The pair remained calm and was oscillating around ¥119.30 levels on Monday, practically flat on the day. Pair made intraday high at 119.60 and low at 119.13 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 119.00 (210M), 120.30-50 (350M).
GBP/USD: Sterling inched higher on Monday as investors trimmed bets on the dollar on expectations the US Fed will not raise interest rates soon and the likelihood of a dovish European Central Bank weighed on the euro. Against the dollar, sterling was up 0.3 percent at $1.5481 while the euro was down 0.2 percent at 73.40 pence. The pound received a major boost in the previous week following the UK labour data release that showed the unemployment rate in the country fell to the lowest level in seven years. Pair made intraday high at 1.5481 and low at 1.5427 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels. Option expiry is at 1.5350-60 (640M).NZD/USD: After showing healthy gains for a number of weeks the kiwi dollar remained flat on Monday, moving around the $0.68 handle after Chinese GDP data and extending the losses from Friday. China is New Zealand’s biggest export destination for its goods and subsequently any doubts surrounding Chinese growth can impact the commodity linked kiwi. Pair made intraday high at 0.6817 and low at 0.6783 levels. Initial support is seen at 0.6235 and resistance at 0.6721 levels.AUD/USD: The Australian dollar rose sharply against its US counterpart on Monday after Chinese economic growth figures beat estimates, painting a slightly better picture of the outlook for Australia. China has for a long time been Australia’s top export destination, and the slowdown in China has had a huge impact on the Australian economy, particularly in the resource sector where investment has declined sharply over the last two years. Pair made intraday high at 0.7307 levels and low around 0.7238 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7200 (345M), 0.7360 (222M).
Equities Recap
European stocks rose on Monday after Chinese economic growth data came in slightly better than expected, allaying months of concerns over the slowdown in the world’s second-largest economy.The FTSE Eurofirst index of leading European shares rose 0.4 pct, Britain’s FTSE 100 down 0.1 pct, Germany’s DAX earned almost 0.8 percent and France’s CAC 40 was down 0.2 pct.Asian markets were mixed. Japan’s Nikkei slipped almost 1 percent and Shanghai was marginally in the red at closing. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.3 pct at close to 2-month highs. China’s CSI300 index closed flat at 3,534.18 points and HK’s Hang Seng index closed steady at 23,075.61 points.
Commodities Recap
Oil prices dropped on Monday on concerns about the pace of economic growth in China and signs that global oversupply is curbing Saudi crude exports. Brent for December delivery fell 38 cents at $50.08 a barrel by noon. U.S. crude for November delivery slipped 35 cents at $46.91 a barrel, extending last week’s steepest losses in eight weeks.Gold lost to a third straight session on Monday, as strong data on U.S. consumer sentiment prompted investors to pare bets the Federal Reserve will wait until next year to raise interest rates. Spot gold fell 0.5 percent to $1,171.66 an ounce, while U.S. gold futures slid nearly 1 percent. Other precious metals also tracked gold lower.
Treasuries Recap
US 10-year Treasury yield stood at 2.0422, up 0.019 pct.German bond yields rose 3 bps to 0.57 pct. Most other euro zone yields were 1-3 bps higher, including Spain’s after it missed out on an expected ratings upgrade.JGB prices closed the day slightly lower in very thin trading, pushing yields up by 0.5bp to 1bp from last Friday’s afternoon close in the 7-yr to 30-yr zone. In the 5-yr to 10-yr zone, the offer-to-cover ratio was up from 3.89x last time (Oct 13) to 4.96x, the record high since the BoJ started this program in April 2013, while the accepted yield spreads from last Friday’s final close ranged from +0.8bp to +0.9bp.UK Gilts opened 18 ticks lower than the settlement of 118.95, as predicted, as the eurozone eased taking the positives out of mixed China data.New Zealand government bonds were up with yields 2.5 basis points lower at the long end of the curve. Australian government bond futures had a firm tone, with the 3-year bond contract up one tick at 98.230. The 10-year contract also added one tick to 97.3850, while the 20-year contract was up half a tick at 96.8450.
The material has been provided by InstaForex Company – www.instaforex.com