Europe Roundup: Usd Strengthens Against Eur, Jpy on Firmer U.s. Treasury Yields, Gbp Hits 11-Week High Vs Eur- Wednesday,

Market Roundup

• EUR/USD falls to new lows for the move. From 1.0968 to 1.0914.

• EUR/JPY tracks EUR/USD. Cross plays 132.89-132.30.

• GBP hits 11 week high vs EUR at 0.7075 after PMI beats f/casts.

• DXY up 0.2%, plays 97.174 to 97.492.

• DAX makes new high at 10999 but then eases. Down 0.2% on the day.

• EZ Oct Markit Serv final PMI 54.1 vs previous 54.2. 54.2 expected.

• EZ Oct Markit Comp final PMI 53.9 vs previous 54.0. 54.0 expected.

• UK Oct Markit/CIPS Services PMI 54.9 vs previous 53.3. 54.5 expected.

• EZ Sept Producer prices -0.3% m/m, -3.1% y/y vs previous -0.8%/-2.6%. -0.4%/-3.3% expected.

• EU Moscovici: Greece needs to progress with reforms before euro group on Monday.

• Iceland Central Bank raises interest rate by 0.25 to 5.75.

• Polish Central Bank leaves key interest rate unch at 1.50%, in line with expectations. 

• Hungry Central Bank Governor: Monetary easing will be carried out with “non-conventional” tools.

• IMF to postpone decision on yuan’s inclusion in SDR basket.

• Japan PM calls for steps to achieve a $5 trln economy.

Economic Data Ahead

• (0815 ET/1315 GMT) ADP’s report on U.S. private employment is expected to show a gain of 180,000 jobs in October vs 200,000 in September. 
• (0830 ET/1330 GMT) The U.S. trade deficit likely narrowed sharply to $41.1 billion in September from $48.3 billion in August as exports increased, a sign that the dollar’s negative impact on trade was starting to ease, according to a survey of economists. 
• (0830 ET/1330 GMT) Canada’s trade deficit likely to have narrowed in September to C$1.90 billion and investors will watch to see if exports can bounce back from August’s decline. Unless there are major revisions to the previous months’ figures, analysts are expecting trade activity to have contributed significantly to overall economic growth in Q3. 
• (0945 ET/ 1445 GMT) The financial firm Markit is set to release its U.S. Services Final PMI for October, the index stood at 54.4 in September.
• (1000 ET/1500 GMT) The Institute for Supply Management non-manufacturing index for October is expected to have slipped to 56.5 in October from 56.9 in September, showing a slight deceleration in the pace of U.S. service sector’s growth. Non-manufacturing business activity is likely to have slipped to 59.5 from 60.2.

Key Events Ahead

• (0845 ET/1345 GMT) The Federal Reserve Bank of Philadelphia President,Patrick Harker, speaks on “Why Pay for Success: The Need for New Sources of Social Innovation Capital” before the “Capital for Communities: Pay for Success Financing” event. 
• (1000 ET/1500 GMT) Federal Reserve Chair Janet Yellen is scheduled to testify before the House Financial Services Committee on Federal Reserve actions and plans for bank regulation and supervision. 
• (1045 ET/1545 GMT) FedTrade 15-year Fannie Mae/Freddie Mac (max $425 mn).
• (1330 ET/1830 GMT) The New York Fed President William Dudley will participate in a briefing, “Looking Beyond the Macro Economy,” in New York with staff researchers to discuss what broader policy decisions mean for individuals, households and regions. 
• (1330 ET/1830 GMT) Fed Vice Chair Fischer speaks.

FX BeatUSD: The dollar strengthend in line with higher U.S. Treasury yields, as a regional rally in equities grinded investors’ appetite for risk. The dollar index last stood at 97.342, up 0.2 percent, adding to its 0.3 percent gain the previous session and moving back toward a 2-1/2-month high of 97.818 touched on Oct. 28. Against the yen, the dollar inched higher about 0.2 percent to 121.30, pulling away from Tuesday’s low of 120.60. EUR/USD: The euro slipped about 0.2 percent to $1.0939 after ECB President Draghi reiterated that further easing was on the table for December. The pair has made a high of 1.09687 at the time of writing and started to retreat from that level. It is currently trading around 1.09210 and intraday trend is still weak as long as resistance 1.100 holds. Its major support is around 1.09150 and break below targets 1.0880/1.0850. On the higher side minor resistance is around 1.100  and any break above targets 1.10350/1.1070.USD/JPY: The pair declined after making a high of 121.48 on the day, the overall trend is still weak as long as resistance 121.50 holds. The major support is around 119.60 and any break below 119.60 will drag the pair further down till 119.20/118.90 in short term. It is facing short term resistance around 121.5 and any indicative break above would extend gains till 122/122.40. USD/CHF: The pair has made a low of 0.99354 and retreated from that level . Overall trend is still weak  as long as resistance  0.9960 holds, its minor resistance is around 0.9935 and break above would extend gains till 0.9960/0.9100. On the downside minor support is around 0.9890 and below that level will target 0.9850/0.9820.GBP/USD: Sterling touched an 11-week high against a struggling euro after data showed UK’s dominant services sector grew at a faster-than-expected pace in October, bolstering a view that the economy is growing robustly in Q. The Markit/CIPS UK services PMI rose to 54.9, up from September’s 28-month low of 53.3. Sterling rose to 70.78 pence per euro after the data, up around 0.4 percent on the day. Against the dollar, sterling rose to $1.5446, up slightly on the day, compared with $1.5420 before the numbers’ release. The pair has made a high of 1.5445 at the time of writing and is currently trading at 1.54150. Its minor resistance is around 1.5450 and break above will take the pair to 1.5370 till 1.5510. On the downside any break below 1.53980 targets 1.5340/1.5320 in short term, overall bullishness can be seen only above 1.5510.AUD/USD: The Aussie rose to its highest in a week at $0.7224 and was last up 0.4 percent at $0.7216. It was well off a recent low of $0.7067. In contrast, the kiwi jumped nearly two full NZ cents to NZ$1.0840 – its biggest one-day rally against the Aussie in nearly two months. The pair recovered till 0.7225 after making a low of 0.7068. and is facing strong resistance around 0.7250 and further bullishness is seen only above that level. It is currently trading at 0.7190 and overall bullishness can be seen only above 0.7300 and break above targets 0.7360/0.7380. On the lower side minor support is around 0.7150 and break below targets 0.7100/0.7065.NZD/USD: Against the greenback, the kiwi dropped about 0.1 percent to $0.6658 after bumping to a session low of $0.6633, peeling back from highs near 68 U.S. cents set in the past three sessions.Equities RecapGlobal equities posted gains for a third straight day on Wednesday, supported by positive economic data and a fresh confirmation from the ECB to increase stimulus if necessary.Europe’s FTSEurofirst 300 edged up 1 pct, Germany’s DAX remained flat, Britain’s FTSE 100 rose 0.3 pct, while France’s CAC 40 climbed 0.3 pct in early trades .Tokyo’s Nikkei closed up 1.30 pct at 18,926.91, China’s CSI300 Index ended up 4.7 pct at 3,628.54 points, Shanghai Composite Index edged up 4.3 pct at 3,459.64 points and HK’s Hang Seng Index surged 2.2 pct at 23,053.57 points.Commodities RecapOil prices slid in thin trading on Wednesday as investors took profit from the previous session’s rally, although supply disruptions in Brazil and Libya helped to limit the losses. Brent futures for 

December delivery fell 34 cents to $50.20 at barrel. U.S. crude for December delivery slipped 20 cents to $47.70 a barrel. Gold was steady after a 5-day slide on Wednesday, but stayed within striking distance of a 4-week low as investors positioned for a U.S. rate hike this year. Spot gold climbed 0.2 pct to $1,119.75 an ounce, but was not far from an overnight low of $1,114.10, its weakest since Oct. 2.Treasuries RecapThe benchmark U.S.10-year note yield stood at 2.212 pct in Asian trade, not far from a 1-1/2-month peak of 2.225 pct scaled on Tuesday. Euro zone yields dropped after ECB Draghi again stressed the central bank would assess the impact of its monetary stimulus next month and remains ready and willing to act. German 10-year yields were 2 bps lower at 0.56 pct, but still well off 6-month lows of 0.42 pct touched last week. Italian and Spanish yields were 2 bps lower at 1.53 pct and 1.72 pct, respectively, as were most other euro zone equivalents. 10-year Portuguese yields fell 6 bps to 2.52 pct.UK Gilts opened lower by 13 ticks than the 117.1 settlement. 10-years cash yeilds posed threat to some solid resistance around 2% level. Dec Gilts traded slightly lower117.22 due to weak business confidence.JGBs opened moderately weaker on higher US Treasury yields and stock prices over the last two sessions, and then recovered part or most of their earlier losses, after the BoJ, as expected, purchased JGBs in the 1-yr to 3-yr zone, 3-yr to 5-yr zone, 10-yr to 25-yr zone and 25-yr to 40-yr zone under its massive JGB purchase program today. JGB prices closed the day marginally mixed in quiet trading after yesterday’s national holiday in Japan.New Zealand government bonds were mixed, with yields 2.5 bps lower at the short end of the curve. While markets revised RBA’s December rate cut risk to 26 pct, the margin between 10-year and 3-year government bond yields grew to 85 bps, the widest since mid-September. Australian government bond futures held near 3-week lows, the 3-year bond contract fell 1 tick at 98.140. The 10-year contract lost 3.5 ticks to 97.2550, while the 20-year contract was down 4 ticks to 96.6900.

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