Monday 24th November: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.30 %, Shanghai Composite and Hang Seng both gained 2 %, ASX up 1.10 %
  • Commodities: Gold at $1200 (+0.15 %), Silver at $16.45 (-0.10 %), Crude Oil at $76.92 (+0.50 %)
  • Rates: US 10 year yield at 2.312, UK 10 year yield at 2.048, German 10 year yield at 0.771

News & Data:

  • Another China rate cut likely on deflation fears (Reuters)
  • Asian Stocks Advance as China Rate Cut Boosts Optimism (Bloomberg)
  • Iran and powers set to extend nuclear talks if final push fails (Reuters)

CFTC Positioning Data:

  • EUR net short 169K vs net short 164K prior
  • JPY net short 92K vs 83K net short prior
  • GBP net short 23K vs net short 13K prior
  • AUD net short 38K vs net short 38K prior
  • CAD net short 20K vs net short 22K prior
  • CHF net short 22K vs net short 23K prior
  • NZD net short 1k vs net short 1k prior

Markets Overview:

It was a quiet trading session with Japan off for a holiday and no notable data releases. USD/JPY received bit of a boost overnight, as leveraged funds were buyers of AUD/JPY. The pair hit a high of 117.98, but offers from local exporters capped the topside there. Solid bids said to be building ahead of the 117.30 support level, with stops in good size resting beneath. To the topside, the key levels are 118.30 and 119.00.

EUR/USD came under pressure in the early Asian session, reaching a low of 1.2360. The pair bounced from there and is on it’s way to test the 1.24 level. The downtrend is set to resume after a period of consolidation and selling interest remains high. Immediate resistance noted at 1.2440, with 1.2490/1.25 then the pivotal area. Next significant support seen at 1.2255 (August 2012 low).

AUD/USD was well-bid in Asia and the story about another Chinese rate cut helped it to reach a high of 0.87. After the clear bounce off 0.8560, techs are suggesting further gains are likely, with 0.8790 being the next bull target. Dealers report bids resting at 0.8650 and into 0.8620, with stops through 0.8610.

The Week Ahead:

On Monday, the main events will be the German IFO numbers and the US Services PMI. The German Business Climate Index is expected to decline to 103.00 from 103.2, while the Business Expectations Index is forecast to show a decline to 95.5 from 98.3 previously. US Services PMI is expected at 57.3 vs 57.1 prior.

The following day, we will see German GDP figures, expected to remain unchanged at 0.1 % q/q and 1.2 % y/y. Further, Bank of England Governor Carney will be speaking at 10:00 GMT. Later in the day, the US will release it’s GDP, House Price Index and Consumer Confidence data. We’ll also get the Canadian Retail Sales figures.

Wednesday’s main event in the European session is the UK GDP release, expected at 0.7 % q/q and 3.0 % y/y. It will be a busy session in the US with plenty of data releases. We’ll see the Core Durable Goods Orders, Initial Jobless claims, Personal Spending, Chicago PMI, Michigan Consumer Sentiment and New Home Sales data.

US markets will be closed on Thursday for Thanksgiving Day. Markets are open on Friday, but will close earlier (13:00).

On Thursday, we’ll see Swiss GDP, German Employment and Inflation data, as well as Euro Zone Consumer Confidence/Business Climate figures.

Finally, on Friday, the main events will be Japanese inflation figures, German Retail Sales data, Euro Zone inflation numbers and Canadian GDP data.

Upcoming Events:

  • 09:00 GMT – German IFO Business Climate (103.0)
  • 09:00 GMT – German IFO Business Expectations (95.5)
  • 09:00 GMT – German IFO Current Assessment (108.0)
  • 14:45 GMT – US Services PMI (57.3)

Source:: Monday 24th November: European Open Briefing

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