Market Roundup
- CHF hit new lows on expectations SNB will follow ECB in Dec.
- USD/CHF at 5 year high – 1.0328 from 1.0227. EUR/CHF rises to 1.0924 fm 1.0851.
- New low for GBP/USD bear run, edging closer to 1.5027 base. 1.5110/1.5032.
- EUR/USD softer on dollar pick up into month end. 1.0638/1.0574.
- EZ Nov Business Climate 0.36 vs previous 0.44. 0.45 expected.
- EZ Nov Economic Sentiment 106.1 vs previous 106.1 revised. 105.9 expected.
- EZ Nov Industrial Sentiment -3.2 vs previous -2.0. -2.1 expected. Services Sentiment 12.8 vs previous 12.3 revised. 12.0 expected.
- EZ Nov Consumer Confidence final -5.9 vs previous -7.5 revised. -7.7 expected.
- EZ Nov Consumer Inflation Expectations -0.7 vs previous -2.3 revised.
- UK Nov GfK Consumer Confidence +1 vs previous 2. 2 expected.
- UK Nov Nationwide House Prices +0.1% m/m, +3.7% y/yvs pev 0.5% revised/3.9%. 0.5%/4.2% expected.
- UK Q3 GDP 2nd release 0.5% q/q, 2.3% y/y vs prev 0.5%/2.3%. 0.5%/2.3% expected.
- UK Q3 Business Investment 2.2% q/q, 6.6% y/y vs previous 1.0%/3.1%.
Economic Data Ahead
- (0730 ET/1230 GMT) Brazil’s Treasury releases its monthly report on the central government budget, a leading indicator of consolidated budget data.
- (0830 ET/1330 GMT) Statistics Canada releases its industrial product price index for the month of October, which is expected to have fallen 0.1 pct after dropping 0.3 pct in September. Raw material price index for October is also scheduled for release.
- (0900 ET/1400 GMT) Mexico’s statistics agency releases trade balance data for October. In non-seasonally adjusted terms, Mexico is expected to record a $1.785 billion trade deficit for the month. Mexico’s unemployment rate is also likely to have dropped 4.3 percent in October.
- Chile central bank publishes the minutes from its last monetary policy meeting, when it held the rate at 3.25 percent.
Key Events AheadNo Major Events Scheduled FX BeatUSD: The dollar index was steady at 99.818, not far from an 8-1/2 month peak of 100.170 touched on Wednesday. Against the yen, the dollar slipped 0.2 percent at 122.41, pulling back from a 3-month high of 123.77 hit on Nov. 18, and only just above this week’s low of 122.26.EUR/USD: The euro was again trading below $1.06, resisting pressure ahead of expected further cuts in euro zone interest rates next week. It dropped below $1.06 per dollar twice this week. The single currency slightly recovered till 1.06375 and declined from that level and was last trading at 1.05900. Major intraday resistance is around 1.0640 (34 day 4 H EMA) and any break above confirms very minor bullishness, a jump till 1.0685 (trend line joining 1.0829 and 1.07628)/1.0720) is possible. On the downside watch out 1.0556 (trend line joining 1.06731 and 1.06168) for further weakness and break below targets 1.0500 is possible.USD/JPY: The pair has recovered till 122.64 today after making a low of 122.30 and was trading around 122.58. Short term trend is weak as long as resistance 123.20 holds. Any break above 123.20 will take the pair to new level 123.60/124.15. On the downside major support is at 122.25 and break below targets 121.50/121.GBP/USD: Sterling slipped on Friday, heading back towards a 7-month low against the dollar, after data confirmed the UK economy was being hit by a global slowdown and which is likely to prompt the BoE to keep rates lower for longer. It fell to $1.5032, its lowest in three weeks and down from around $1.5057 before the data was released. It ticked up immediately after the data, but quickly gave up those gains, to drop through support at $1.5050. The euro was up 0.2 percent at 70.40 pence, broadly unchanged from before the release of the data. Overall trend is bearish as long as resistance 1.5120 holds. On the higher side major resistance is around 1.5130 and break above targets 1.5160/1.5220. The minor resistance is around 1.5105 and major support is around 1.5050 and break below targets 1.5029/1.4980.USD/CHF: The Swiss franc fell to its lowest against the dollar since August 2010 on Friday, hurt by speculation the Swiss National Bank would be forced to respond in kind if the European Central Bank as expected eases euro deposit rates next week. The franc plunged almost 1 percent to 1.0328 francs per dollar and was also more than half a percent weaker against the euro at 1.0922 francs. The pair made a high of 1.03280 and slightly declined from that level. Intraday support is around 1.02600 and break below will drag the pair till 1.0200/1.0140. Overall bullish invalidation is only below 1.0140. Major resistance is around 1.03280 and break above targets 1.03500/1.0400.AUD/USD: The Australian dollar was set to post its largest monthly gain versus the euro since 2012, but was little changed against its U.S. counterpart in thin trade due to the Thanksgiving holiday. Against the U.S. dollar, the Aussie has made a high of 0.7239, having touched a one-month peak of $0.7283 on Wednesday. It has gained 1.3 percent in November in a second consecutive month of gains, partly due to expectations the RBA is in no rush to cut interest rates again. Major support is around 0.7150 and break below targets 0.7100/0.7070. Any intraday bullishness can be seen only above 0.7240 and break above targets 0.7280/0.7300. Short term bullish invalidation is only below 0.7150.NZD/USD: The New Zealand dollar was subdued at $0.6563, from a peak of $0.6598 on Thursday. It touched a 2-week high of $0.6606 this week, but was down nearly 3 percent in November.Equities RecapShanghai Composite Index and the China’s CSI300 both posted their biggest one-day drops in more than 3 months and ensured European stocks opened in a nervy mood.Britain’s FTSE 100 slipped 0.5 pct, France’s CAC40 inched down 0.4 pct and Germany’s DAX fell 0.2 pct too, leaving the pan-regional FTSEurofirst 300 down 0.4 pct and clinging on for token weekly gains.Japan’s Nikkei reversed its gains and inched down 0.3 pct though it ended the week marginally highly to extend a winning streak that started in October’s second half. The falls in Shanghai brought a 25 pct rebound rally since late August to a halt and contributed huge share of a 1.1 weekly drop in the broadest index of Asia-Pacific shares outside of Japan.Chinese shares declined 5 pct on Friday, which were hit by regulatory and industrial sector worries, though it wasn’t enough to derail the first weekly rise for metals like copper and zinc since early October. Commodities RecapCrude oil futures dropped on Friday with losses this month standing at around 9 pct, which are hurt by disappointing Chinese economic data and oversupply worries and geopolitical concerns. Brent crude dropped by 60 cents to $44.86 per barrel. WTI futures slipped by $1 to $42.04 per barrel.Gold declined towards its 6-year low levels on Friday and was on track for a sixth straight weekly decline, weakened by a USD and US rate hike expectations. Spot gold fell 0.4 pct to $1,067.35 an ounce.Treasuries RecapEuro zone government bond yields saw a continuous fall, led by a perception that the central bank is set to ease in next week’s meeting. The 2-year German bonds yield was hovering near this week’s record low of -0.42 pct, indicating markets have priced in a sizeable reduction in the ECB’s -0.2 pct deposit rate. 10-year yields in France, and Germany both inched down 1.5 bps each to their lowest levels in about a month with Bund yields at 0.46 pct.JGB prices started softer in the 2-yr to 20-yr zone, with yields up 0.5bp from yesterday. 2-year JGBs recovered most of their earlier losses after the MoF published the solid results of today’s monthly JPY2.4tn 2-yr JGB auction. JGB prices closed the day narrowly mixed, with 30-yr to 40-yr JGBs turning slightly stronger into the afternoon close.UK Gilts started 6 ticks lower than the settlement of 117.66, but soon posed a test of yesterday’s high of 117.68 to reach a day high of 117.70. New Zealand government bonds benefited slightly, pushing yields down half a basis point at the short end and down 1 bps at the long end. Australian government bond futures had a soft tone, with the 3-year bond contract fell 2 ticks at 97.910. The 10-year contract shed 1.5 tick to 97.1250, while the 20-year contract lost 1 tick to 96.6250.
The material has been provided by InstaForex Company – www.instaforex.com