Monday 10th November: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei down 0.70 %, Shanghai Composite up 1.30 %, Hang Seng gained 1.70 %, ASX lost 0.50 %
• Commodities: Gold at $1173 (+0.30 %), Silver at $15.82 (+0.70 %), Crude Oil at $79.05 (+0.50 %)
• Rates: US 10 year yield at 2.303, UK 10 year yield at 2.210, German 10 year yield at 0.819

News & Data:

• China CPI m/m 0.0 %, Expected: 0.1 %, Previous: 0.5 %
• China CPI y/y 1.6 %, Expected: 1.6 %, Previous: 1.6 %
• China PPI y/y -2.2 %, Expected: -2.0 %, Previous: -1.8 %
• Australia Home Loans m/m -0.7 %, Expected: -0.3 %, Previous: -0.9 %

CFTC Positioning Data:

• EUR net short 178K vs net short 166K prior
• JPY net short 72K vs net short 67K prior
• GBP net short 8K vs net short 6K prior
• AUD net short 38K vs net short 34K prior
• CAD net short 19K vs net short 21K prior
• CHF net short 20K vs net short 20K prior
• NZD net short 4k vs net short 4k prior

Markets Overview:

The USD has been slightly offered in the Asian session as traders are covering some of their long positions after the NFP release on Friday. There will be only a few data releases out of the US this week, so we could see a deeper correction in the Dollar.

EUR/USD is approaching the 1.25 level and a break above would trigger further short covering. Above there, resistance seen at 1.2530, but the key short-term resistance level now lies at 1.2570. In EUR/JPY, there are trailing stops sub-142.00 and it seems the market could go for them soon.

GBP/USD had a strong bounce off the 1.5790 support level on Friday and has climbed back above 1.59. Immediate resistance noted at 1.5950, with 1.6020 the key level to the topside. The focus will be on the employment data on Wednesday, as well as the BoE Inflation Report & Carney speech one hour after the data release.

USD/JPY is under pressure amid broad USD weakness and testing the 114.00 level as we are heading into the London open. After that big rally post-BoJ, it could be finally time for a deeper retracement. The key level lies at 113.15, which is last Tuesday’s low.

The Week Ahead:

There are not many data releases to start the week with, with Canadian Housing Starts the main event today. Tomorrow, we’ll see Australian Business Confidence figures and Japanese Current Account numbers. No major data releases during the EU and US session.

On Wednesday, RBNZ Governor Wheeler will be speaking and Australia will release it’s Consumer Sentiment & Wage Price Index data. In the EU session, we’ll get UK employment data, with the unemployment rate expected to drop to 5.9 % from 6.0 %, while the Claimant Count Change is forecast to arrive at -24.9k. A bit later, the Bank of England will release it’s Inflation Report and Governor Carney will be speaking.

The following day, China will release Industrial Production and New Loans data. In the EU session, we’ll see the inflation numbers from Germany, France, Italy and Spain and the ECB monthly report. Later in the day, the US will publish the Initial Jobless Claims numbers, expected at 282k.

Finally, on Friday, Germany will publish it’s GDP data, expected at 0.1 % q/q and 1.0 % y/y. The main event of the day will be the Euro Zone inflation print, expected at 0.4 % year-on-year. In the US session, we’ll see US Retail Sales numbers, followed by the Michigan Consumer Sentiment figures.

Upcoming Events:

• 09:00 GMT – Italian Industrial Production (0.2 % MoM)
• 09:30 GMT – Euro Zone Sentix Investor Confidence (-6.9)
• 13:15 GMT – Canadian Housing Starts (200k)

Source:: Monday 10th November: European Open Briefing