Market Roundup
- EUR/USD recovery stalled at 1.0774, pulled back to 1.0722 in Europe.
- UK Average weekly earnings +3.0% y/y in 3 mths through Sept. 3.2% expected.
- UK Average weekly earnings ex bonuses +2.5% y/y in 3 mths through Sept. 2.7% expected.
- UK ILO jobless rate 5.3%. lowest rate since 3 moths to Apr 2008. 5.4% expected.
- UK employment rate of 73.7% is highest since records began in 1971.
- BoE’s Haldane: Have Seen ‘Pretty Solid Growth,’ Not Spectacular – CNBC.
- Copper hits its lowest since mid-2009 at $4,885 a tonne.
- European shares rise, DAX up 1% targeting 200 DMA tech resistance.
- Portuguese yields rose towards 4mth highs after austerity-minded centre-right defeated.
- German experts warn on ECB low rate policy.
- Chinese Oct retail sales +11% vs +10.9% expected, but industrial output disappoints at 5.6% vs 5.8% expected.
- BoJ Gov Kuroda emphasizes shift in household-company price expectations.
Economic Data Ahead
- (0900 ET/1400 GMT) Mexico’s industrial output is expected to have expanded in September for the fourth month in a row. Industrial output in September is expected to have risen 0.3 percent from August and 1.33 percent from a year earlier.
- (0930 ET/1430 GMT) Brazilian Central Bank is set to release its weekly Foreign Exchange Flows data.
- US Veterans Day/Canada Remembrance Day holidays.
Key Events Ahead
- (0700 ET/1200 GMT) ECB VP Constancio at EU-LATAM central bank dialogue in Madrid.
- (0815 ET/1315 GMT) ECB President Draghi’s Speech.
- (1100 ET/1600 GMT) BoS Gov Linde, ECB Constancio press conference.
- (1400 ET/1900 GMT) BoI Visco speech at London business economists’ dinner.
FX BeatUSD: The dollar index moved away from a 7-month peak to slip 0.4 percent to 98.883. The greenback slipped 0.3 pct against the yen to 122.86 on a little profit-taking, from an early 123.15.EUR/USD: The euro traded back above $1.07, recovering from the previous session in a thin trade on account of the U.S. Veterans Day holiday. ECB’s Draghi is expected to speak at around 1315 GMT in London, analysts eye for fresh cues on market direction in coming days. The single currency stood at $1.0741, recovering after dipping below $1.0700 for the first time in over six months overnight. The pair has made a low of 1.0674 and slightly recovered till 1.0773. The itraday trend is still weak as long as resistance 1.0830 holds, major support is around 1.0700 and break below targets 1.0660/1.0600. On the higher side minor resistance is around 1.0830 and any break above targets 1.0850/1.0900.
USD/JPY: The pair has retreated till 122.71 after making a high of 123.60. Short term trend is bullish as long as support 122.48 holds. Any break below 122.48 will drag the pair till 121.99/121.80 in short term. On the higher side major resistance is around 123.60 and break above targets 124.13/124.50. Overall bullish invalidation only below 121.80. GBP/USD: Sterling lost most of its earlier gains against the dollar, after the data showed UK earnings grew more slowly than expected and supporting expectations that the Bank of England is in no hurry to raise rates. It fell to $1.5141, still leaving it up 0.1 pct on the day but down from $1.5170 just before the data’s release. Against the euro, it weakened to 71.015 pence, from 70.80 pence beforehand. The pair has recovered till 1.5185 after making a low of 1.5027 level. Its minor resistance is around 1.51850 and break above will take the pair to 1.5225/1.5270. On the downside any break below 1.5012 targets 1.5080/1.5050 in short term, overall bullishness can be seen only above 1.5230 level.USD/CHF: The pair is consolidating between 1.0076 and 0.99967 for past two trading sessions and was trading around 1.00430. Short term trend is bullish as long as support 0.9980 holds. It is facing resistance around 1.0086 and break above targets 1.0125/1.016. On the downside any break below 0.9980 (Resistance turned into support) will drag the pair further down till 0.9950/0.9930 level. Overall weakness can be seen only 0.9930.AUD/USD: The Australian dollar stumbled above one-month lows in Asian trading as investors braced for another batch of economic data out of China. It stood at $0.7044, having traded in a narrow band of $0.7016-$0.7070 in the last three sessions. The pair opened in Asia at 0.7030, trades up from 0.7026 to 0.7079. AUD shorts were being bought back in line with broad USD weakness.Volume are relatively thin ahead of US holiday tonight. The pair has made a low of 0.7016 and slightly recovered from that level. It is facing minor resistance around 0.7080 and above that it can reach till 0.7100/0.7125. Overall bullishness can be seen only above 0.7170 and break above targets 0.7225/0.7300. On the lower side minor support is around 0.7020 and break below targets 0.6935/0.0.6900.NZD/USD: The New Zealand dollar held at $0.6557, having been stuck in a thin band between $0.6500 and $0.6566 since Monday. Strong support was found at 65 cents, a level tested three times in as many sessions. Partial holidays in Europe, holidays in US/Canada dampened interest. Modest size 0.6500 option expiry today, at NZD 150mn strike.
Equities RecapWorld shares shrugged off on mixed China data, Copper prices teetered near a 6-year low on Wednesday as the dollar pulled back slightly, after the world’s second-biggest economy was still in low growth gear.Europe’s FTSEurofirst 300 was flat at 1,484.26 points in early deals, while London’s FTSE, Germany’s DAX and France’s CAC40 opened up 0.4, 0.9 and 0.6 pct respectively.Tokyo’s Nikkie closed up 0.1 pct at 19,691.39, MSCI’s broadest index of Asia-Pacific shares outside Japan closed barely changed as China’s late bounce and modest gains in Australia and in Tokyo offset a 1.4 percent drop in Taiwan. Chinese shares closed the day marginally higher, HK’s Hangseng Index ended down 0.2 pct at 22,352.17 points and Shanghai’s Composite Index edged up 0.3 pct at 3650.25 points. Commodities RecapCrude oil prices dropped on Wednesday after industry data showed an rise in U.S. stockpiles, while China’s factory output slowed and fears emerged that Japan’s economy may have fallen into recession. Benchmark U.S. crude futures slid to a two-week low at $43.55 a barrel in early trading before edging back up to $43.76 a barrel by noon, still down almost half a dollar from their last close. Brent crude futures fell 17 cents at $47.27 a barrel.Gold edged up as the dollar pared some of its recent gains, but the metal remained under pressure near a three-month low as outflows from bullion funds and an anticipated U.S. rate hike put pressure on the market. Spot gold traded high 0.2 pct to $1,091.55 an ounce.Treasuries RecapThe benchmark 10-year US Treasury yields dropped a couple of basis points to 2.34 pct, but remain hostage to the chance of a Fed rate hike next month. The U.S. Treasury market is closed on Wednesday for Veterans Day. Germany’s 2-year bond yield dropped about 1 bps to -0.352 pct, taking it closer to a record low -0.355 pct hit two weeks ago as talk of further action from the ECB as soon as next month continues to underpin short-dated bonds. Portuguese 10-year yields rose 5.7 bps to 2.85 pct, heading towards Monday’s 4-month high of 2.93 pct and lagging other euro zone yields of comparable maturity, which were flat to 2 bps higher.JGB prices closed the day slightly lower, pushing yields up by 0.5bp to 1bp from yesterday’s afternoon close in the 5-yr and longer zone. The current 20s fluctuated between 1.075% (-0.5bp) and 1.09% (+1bp) before closing the afternoon session at 1.085% (+0.5bp). British government bond yields fell briefly by around half a basis point after the UK wages data, and then returned to their levels before the data.New Zealand government bonds inched higher, sending yields 4 bps lower at the long end of the curve. Australian government bond futures slipped off three-month lows, with the 3-year bond contract ended up 1 tick at 97.960. The 10-year contract added half a tick to 97.0850, while the 20-year contract was steady at 96.5450.
The material has been provided by InstaForex Company – www.instaforex.com