Market Roundup

  • Turkey AKP election win: Erdogan says Turks voted for stability.
  • USD/TRY falls over 5% from Friday 2.9135 close.
  • Sterling trade-weighted index hits 10 week high of 93.5.
  • EUR/GBP hits 10 week low as PMI surged in Oct. Tests 0.7107 from 0.7158.
  • GBP/USD rose to 1.5498, highest since Oct 22.
  • UK Oct Markit/CIPS Manufacturing PMI 55.5 vs previous 51.5. 51.3 expected.
  • Dollar index down 0.2% to 96.658 fm 96.937.
  • EZ Oct Markit Manuf PMI 52.3 vs previous 52.0. 52.0 expected.
  • Swiss Sept Retail Sales 0.2% y/y vs previous-0.6% revised.
  • Swiss Oct Manufacturing PMI 50.7 vs previous 49.5. 50.2 expected.
  • Nowotny: ECB has to act given infl. well below target.
  • Swedish CB Jansson: Would like to see the SEK weaken from current level.
  • Jansson: Still room to cut rates further.
  • IMF Sopkesman: Report being finalized on adding China yuan to SDR basket- Nov decision.

Economic Data Ahead

  • 0945 ET/ 1445 GMT) Markit is set to release its U.S. manufacturing PMI final for Oct, the index stood at 54.0 in September.
  • (1000 ET/1500 GMT) U.S. construction spending probably to have increased 0.5 percent in September, rising for a ninth straight month, suggesting the economy remains on firmer ground despite some slowing in consumer spending and persistent weakness inmanufacturing.
  • (1000 ET/1500 GMT) The pace of growth in the U.S. manufacturing sector is expected to have slowed in October. The Institute for Supply Management’s index of national factory activity likely fell to 50.0 from 50.2 a month before. Manufacturing prices paid likely to remain unchanged at 38.0, while employment Index is likely to be at 50.1.

Key Events Ahead

  • 15:45 FedTrade 30-year Fannie Mae / Freddie Mac (max $1.900 bn).
  • U.S. Federal Reserve Chair Janet Yellen, Treasury Secretary Jack Lew, Comptroller of the Currency Thomas Curry, Federal Deposit Insurance Corp. Chair Martin Gruenberg, Securities and Exchange Commission Chair Mary Jo White and others are scheduled toattend a meeting of the Financial Stability Oversight Council in Washington.

FX BeatUSD: The U.S. dollar Dropped on Monday, as downbeat Chinese factory surveys reduced the appetite for risk, which also lent support to the low-yielding euro and the safe-haven yen. The dollar slipped 0.1 percent against the yen to trade at 120.45 yen. The dollar index was down 0.2 percent at 96.75.EUR/USD: The euro rose 0.3 percent to $1.1035 and 0.1 percent against the yen to 132.80 yen. EUR/GBP sales after strong UK manufacturing data weighed on the pair, while the German engineering orders data was a stark contrast to UK data. Below 100-HMA at 1.0006 required to encourage tech sellers. Short-end rates continue to weigh heavily on EUR/USD, 2 yr spread 105.3bp EUR/USD widely eyed lower ahead Dec’s Fed/ECB meetings. Traders seek opportunities to sell ahead 200-DMA at 1.1111 with a stop at 1.1120. GBP/USD: Sterling hit a 10-week high against the euro after the data showed British factory activity unexpectedly surged in October, suggesting economic growth could pick up in the last three months of the year. The Markit/CIPS UK Manufacturing PMI jumped to 55.5 in October, its highest in 16 months and up from 51.8 in September. Sterling strengthened to 71.11 pence per euro after the data, having traded at 71.38 pence just before its release, leaving it up 0.3 percent up on the day. Against the dollar, the pound rose to $1.5498, up 0.4 percent on the day and its strongest since Oct. 22. USD/JPY: The pair was firm in London session and saw a plenty of downside support. The price action has been contained within the daily cloud. The pair is currently trading by cloud base resistance at 120.67. Supports on the downside are seen at 120.18 (2o DMA) and further below at 119.96 (cloud top). Failure to close below 120.25 – 38.2% of Oct rise can be seen as bullish. Decent sized 120.00 (1.15B) & 120.50 (902M) NY cut option strikes stand out.USD/CHF: CHF bulls were in control following the release of Switzerland’s retail sales data which came in-line with expectations. Upbeat Oct Swiss manufacturing PMI report which came in at 50.7 points versus 50.0 expectations also supported the Swissy. The pair remained rangebound, with highs at 0.9892 and lows of 0.9849. Immediate support lies at daily Tenkan by 0.9742 and resistance lies at 0.9902 (Aug 11 highs).AUD/USD: The Aussie dollar appears to have found a base near 70 U.S. cents having already slid nearly 13 pct this year, and a rebound looms should the Reserve Bank of Australia (RBA) resist pressure for further stimulus at a policy review on currency has drifted sideways since dipping under 69 U.S. cents in September – a low not seen since early 2009. It was last near  71 cents. The pair finds roadblocks at 0.7150; few players keen to reload short possies. The pair is currently trading at 0.7130, day’s range till now 0.7153/7112. Immediate resistance is located at 0.7158 (Daily Kijun), while support is seen at 0.7112 (session low). A close today above cloud top at 0.7121 cloud buoy bulls. Equities RecapEuropean shares reduced losses, by trading up on Monday mid-morning, with Greece shares outperforming as investors welcomed the outcome of European Central Bank (ECB) stress tests on its four main banks. The pan-European FTSEurofirst 300 edged up 0.03 pct, Germany DAX was up 0.6 pct, France’s CAC 40 rose 0.25 pct and UK’s FTSE dropped 0.3 pct.Tokyo’s Nikkei retreated 2.1 pct, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped as much as 0.7 pct, hitting its lowest level since Oct 14. China’s CSI300 Index ended down 1.6 pct at 3475.96 points, HK’s Hangseng Index edged down 1.2 pct at 22370.04 points, while Shanghai’s Composite Index closed down 1.7 pct at 3325.08 points.Commodities RecapOil prices plunged on Monday as weak Chinese economic data fuelled concerns about demand slowing in one of the world’s largest oil-consuming nations, while record-high production in Russia exacerbated the global supply glut. Brent crude futures, the global benchmark, traded down 55 cents at $49.01 a barrel. U.S. futures were trading at $45.95 a barrel, down 64 cents on Friday’s close.Gold slipped to its lowest level in four weeks on Monday as investors feared the US Fed would hike interest rates this year. Spot gold slid to $1,134.60 an ounce, its lowest since Oct. 5, early on Monday before recovering to trade at $1,141.50.Treasuries Recap10-year U.S. Treasury yeild stood at 2.136 pct vs U.S. close of 2.151 pct on Friday.The 10-year German Bund yield was hovering around 0.55 percent, Italian, Spanish and Portuguese bond yeilds all rose by 7 bps on Monday.JGB prices closed the day slightly lower, sending yields up by 1bp to 1.5bp from last Friday’s afternoon close in the 7-yr and longer zone. Yields on the current 5-yr, 10-yr, 20-yr and 30-yr JGBs moved little all through the session, as domestic real money accounts took a wait-and-see stance today ahead of tomorrow’s national holiday in Japan.UK Gilt futures extended losses by more than 10 ticks, hitting session’s low after UK factory PMI. The government bond prices also extended losses. The 10-year gilt yield rose to its highest level since Sept. 17 at 1.961 pct, up 4 bps on the day, while 5-year yield rose to 1.309 pct.New Zealand government bonds climbed up, pushing yields half a tick lower. Australian government bond futures had a soft tone, with the 3-year bond contract off 1 tick at 98.220. The 10-year contract also shed 1 tick to 97.3500, while the 20-year contract nudged off half a tick to 96.7950.

The material has been provided by InstaForex Company – www.instaforex.com