Thursday 13th November: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 1.10 %, Shanghai Composite down 0.30 %, Hang Seng gained 0.20 %, ASX lost 0.40 %
  • Commodities: Gold at $1164 (+0.40 %), Silver at $15.67 (+0.30 %), Crude Oil at $77.10 (-0.10 %)
  • Rates: US 10 year yield at 2.375, UK 10 year yield at 2.198, German 10 year yield at 0.811

News & Data:

  • Australia MI Inflation Expectations 4.1 %, Previous: 3.4 %
  • Japan Core Machinery Orders y/y 7.3 %, Expected: -1.3 %, Previous: -3.3 %
  • China Industrial Production7.7 % y/y , Expected: 8.0 %, Previous: 8.0 %
  • China Retail Sales 11.5 % y/y , Expected: 11.6 %, Previous: 11.6 %
  • China Fixed Asset Investment 15.9 % y/y , Expected: 16.0 %, Previous: 16.1 %
  • RBA’s Kent: We haven’t ruled out FX intervention
  • Kent: AUD too high relative to fundamentals
  • Kent: Sees average growth for major trading partners next 2 years, mining investment falling more rapidly in coming year
  • Japan Chief Cabinet Secretary Suga: Strengthening GPIF governance to be carried out speedily, appropriate decision on sales tax to be made by year’s end

Markets Update:

AUD/USD fell overnight on comments from the RBA Assistant Governor Kent, who said that the bank has not ruled out intervention in the FX market should the AUD strengthen again. We have heard this several times already, but fast money names decided it might be worth selling some AUD on those headlines. The decline has been partly retraced as we are heading towards the London open. Chinese econ data came in a bit weaker than expected, but didn’t have much of an impact on AUD/USD and the pair is currently consolidating around 0.87. In the earlier session, dealers saw some decent EUR/AUD buying going through from leveraged funds. Meanwhile, AUD/JPY remains well bid, with 100.00/20 now the pivotal support area.

USD/JPY gained on rumors that Japanese PM Abe is planning an early election and hit a high of 115.85 earlier. Bids from offshore names are reported at 115.30 and into 115.00, with large stops noted through 114.85/90 and 116.15/20 to the topside. Meanwhile, EUR/USD is still stuck within the 1.24-1.25 range. We have a good amount of econ data out of the Euro Zone today, but it’s likely the pair will continue to consolidate until the Euro Zone CPI release tomorrow at 10:00 GMT. Keep in mind that there is again a large option expiry at 1.25 at today’s NY cut (15:00 GMT).

GBP/USD has broken through the 1.5770-90 support area after the Bank of England minutes yesterday. The market is now expecting a BoE rate hike in autumn next year. The key levels to watch for intraday are 1.5740, 1.5830 and 1.5870.

Upcoming Events:

  • 07:00 GMT – German CPI (-0.3 % m/m, 0.8 % y/y)
  • 07:45 GMT – French CPI (-0.1 % m/m)
  • 08:00 GMT – Spanish CPI
  • 08:15 GMT – Swiss PPI (-0.2 % m/m, -1.3 % y/y)
  • 09:00 GMT – Italian CPI (0.1 % m/m, 0.1 % y/y)
  • 09:00 GMT – ECB Monthly Report
  • 13:30 GMT – US Initial Jobless Claims (282k)
  • 15:00 GMT – US JOLTs Job Openings (4.85mln)

Source:: Thursday 13th November: European Open Briefing

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