Market Roundup
- DXY hits fresh 3 month high at 98.165 fm 97.893 on rate hike expectations.
- EUR/USD consolidates losses to 1.0834. Plays 1.0863/1.0894.
- GBP/USD falls to 1 month low at 1.5137 fm 1.5220.
- Copper broke below $5,000/tonne, within striking distance of 6-year lows.
- UK Sept Industrial Output -0/2% m/m, +1.1% y/y vs previous 0.9%/1.8% revised. -0.1%/1.3% expected.
- UK Sept Manufacturing Output +0.8% m/m, -0.6% y/y vs previous 0.4%/-0.9% revised. 0.4%/-0.9% expected.
- UK Sept Goods trade deficit 9.351bn vs £10.6bn forecast. Aug revised to 10.786bn, from 11.149bn.
- SNB FX reserves rise to 550.933bln in Oct fm 541.362bln rvsd in Sept.
- ECB Hansson: Deposit rate cut would undermine concept of forward guidance.
- Hansson: No reason to ease monetary policy now.
- Swedish CB Jochnick: Keeping close eye on crown.
- China securities regulator says to resume IPOS.
- Kuroda highlights China slowdown as biggest threat to Japan.
Economic Data Ahead
- (0730 ET/1230 GMT) Automakers in Brazil are set to report production and sales data for October.
- (0830 ET/1330 GMT) After two straight months of moderate gains, U.S. job growth is expected to have picked up in October which could strengthen expectations of a December rate hike from the Federal Reserve. Economists expect nonfarm payrolls likely rose180,000, well above the 139,000 jobs per month average for August and September. The jobless rate is expected to stay steady at 5.1 percent, just a touch above the level many Fed officials feel is consistent with full employment.
- (0830 ET/1330 GMT) The Canadian labor market is relatively resilient despite the drop in oil prices, which moved Canada into recession in H1 2015. The economy is expected to have added 10,000 jobs in October, keeping the unemployment rate at 7.1 percent.
- (0830 ET/1330 GMT) Economists expect the value of Canadian building permits is expected to have risen 1.3 percent in September.
- (0900 ET/1400 GMT) The consumer confidence index in Mexico is expected to have fallen to 89.8 in October from 90.6 the prior month.
- (1045 ET/1545 GMT) FedTrade 30-year Ginnie Mae (max $1.075 bn).
- (1500 ET/2000 GMT) The U.S. consumer credit is expected to have risen to $17.50 billion in September.
Key Events Ahead
- (0830 ET/1330 GMT) The current economic conditions and monetary policy will be the topic of discussion for Federal Reserve Bank of Chicago President Charles Evans, who will be appearing in a live interview on CNBC’s “Squawk Box”.
- (0915 ET/1415 GMT) Federal Reserve Bank of St. Louis President James Bullard will be speaking on the U.S. economy and monetary policy before the St. Louis Regional Chamber Financial Forum, in St. Louis, Missouri.
- (1615 ET/2115 GMT) Federal Reserve Board Governor Lael Brainard is scheduled to speak on “Policy Lessons and the Future of Unconventional Monetary Policy” in a panel before the International Monetary Fund “Unconventional Monetary and Exchange Rate Policies” Conference, in Washington.
FX BeatUSD: The dollar is set to drive the euro below $1.08 for the first time since April, if payroll data today delivers the clue about the U.S. economy’s readiness for higher interest rates. The dollar index was up just under 0.2 percent at 98.081, in sight of a 3-month high of 98.135. EUR/USD: The pair is consolidating between 1.0900 and 1.08330 for the past two trading sessions. Markets await Nonfarm payroll data for the further direction. Intraday trend is still weak as long as resistance 1.0900 holds. Its major support is around 1.0800 and break below targets 1.0780/1.0725. On the higher side minor resistance is around 1.0900 and any break above targets 1.09360/1.0950/1.100. Further bullishness can be seen only above 1.1100.USD/JPY: The pair has broken a major Potential Reversal Zone (PRZ) 121.75 and jumped till 122. Any break above 121.75 confirms short term bullishness, a jump till 123.15/124 is possible. Its weakness can be seen only below 120.80 and break below 120.80 will target 120.25/120. The minor support is around 121.50, bullish invalidation is only below 120.GBP/USD: Sterling touched a 1-month low against the dollar and also slipped against the euro on Friday after the BoE Chief Mark Carney hinted that he was in no hurry to raise interest rates. It fell to $1.5169, down 0.3 percent on day, while the euro was up 0.2 percent at 71.65 pence. The pair has broken major support 1.5200 and declined till 1.5140 level. Its minor resistance is around 1.5180 and break above will take the pair to 1.5220/1.5310. On the downside any break below 1.5135 targets 1.5120/1.5107 in short term, overall bullishness can be seen only above 1.5225.AUD/USD: The Australian dollar was steady at $0.7147, having stumbled in a narrow range in the past 24 hours. It briefly rose to a peak of $0.7224 on Wednesday, but was on track to end the week unchanged. It was a star performer against kiwi at NZ$1.0800, having jumped 2.7 percent this week. If sustained, it would be the largest such gain in 5 years. The pair has slightly recovered after making a low of 0.715 and is facing strong resistance around 0.7170. Further bullishness can be seen only above that level and overall bullishness is only above 0.7225, a break above targets 0.7300/0.7360. On the lower side minor support is around 0.7120 and break below targets 0.7065/0.7000.NZD/USD: The kiwi was weakened by growing speculation of further easing by the RBNZ in December. It was down 2.4 percent this week against the U.S. dollar, the largest drop since early September. It was last at $0.6607, not far from a one-month low of $0.6574 touched this week. A break under there would bring 65 cents into focus.Equities RecapWorld shares moved towards their fifth of six weeks of gains ahead of U.S. jobs data, which is expected to nudge US Fed towards hiking its interest rate.
Europe’s FTSEurofirst 300 slipped 0.2 pct, France’s CAC dropped 0.3 pct, Germany’s DAX fell 0.1 pct, while UK’s FTSE edged up 0.1 pct in early deals.MSCI’s broadest index of Asia-Pacific shares outside Japan dropped down about 0.4 pct, Japan’s Nikkei ended up 0.8 pct on the day and closed the week up almost 1 pct. China’s CSI300 Index edged up 2.4 pct at 3,793.37 points, HK’s Hang Seng Index closed down 0.8 pct at 22,867.33 points and Shanghai’s Composite extended previous gains to rise almost 2 pct, putting it on track for a jump of 6.2 pct for the week.Commodities RecapCrude oil prices rose on Friday after their 2 pct fall in the previous session, oversupply and a strong dollar are likely continue to weigh on fuel markets. U.S. crude futures went up 26 cents from their last settlement were trading at $45.46 a barrel, while Brent crude edged up 18 cents to $48.16 a barrel.Gold hovered near an 8-week low on Friday and was set to post its biggest weekly drop since July as investors positioned themselves for a possible U.S. rate hike this year. Spot gold climbed up 0.5 pct to $1,109.10 an ounce, not far from $1,102.35 hit in the previous session, the lowest since Sept. 11. The metal has lost 3 pct for the week, the sharpest slide since the week ended July 24.Treasuries RecapU.S. 10-year Treasury yield stood at 2.230 pct vs U.S. close of 2.245 percent on Thursday, while German bund futures opened 10 ticks higher at 156.38.JPY swap spreads thinned on Friday as receiving pressure persisted, apparently in reaction to the record-breaking tightening in US spreads. The BoJ, as predicted, offered to buy JPY470bn of JGBs with up to 1 year to maturity and with 5 to 10 years to maturity. The JGB purchasing operations, along with the aforementioned swap receiving, helped JGBs to trade firmer towards the midday close.UK Gilts opened 14 ticks higher than the settlement of 117.24, as expected, as core fixed income space was supported by cautious trading ahead of the US non-farm payroll data due later today. 10-year cash yields retreated under the psychological 2.00% ceiling and returned to the recent 1.93% to 2.00% range.New Zealand government bonds were on a softer tone. Australian government bond futures extended losses to multi-week lows, with the 3-year bond contract dropping 2 ticks at 98.050. The 10-year contract slipped 1.5 tick to 97.1650, while the 20-year contract lost 1 tick to 96.6100.
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