Tuesday 11th November: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 2.10 %, Shanghai Composite gained 0.60 %, Hang Seng 0.40 % higher, ASX dropped 0.10 %
• Commodities: Gold at $1150 (-0.80 %), Silver at $15.53 (-0.90 %), Crude Oil at $77.10 (-0.40 %)
• Rates: US 10 year yield at 2.36, UK 10 year yield at 2.211, German 10 year yield at 0.835

News & Data:

• Japan Current Account ¥0.96trln, Expected: ¥0.53trln, Previous: ¥0.287trln
• Japan Adjusted Current Account ¥0.41trln, Expected: ¥0.03trln, Previous: ¥0.13trln
• Australia House Price Index 1.5 %, Expected: 1.6 %, Previous: 1.9 %
• Australia NAB Business Confidence 4, Previous: 5

Markets Update:

The US Dollar catched a bid again, led by USD/JPY buying. While dealers saw some short covering from speculators early yesterday, the pair bounced at the NY session open, together with US yields (the 10 year rose from 2.27 to 2.36). Japanese names had again good demand for the pair overnight and it broke above 115.00 as the Nikkei rallied over 2 %. Real money funds reported as good buyers of Japanese equities today, while CTAs and other fast money names chased the USD/JPY higher. Key intraday support noted at 114.60, with stops building through 114.40, and then 113.90. To the topside, 115.50 remains the pivotal short-term resistance level for now, but it seems we’ll see a breakout fairly soon. Above there, some offers noted ahead of a 116 barrier option, but those are not much of an obstacle anymore.

EUR/CHF hit a fresh two-year low yesterday, at 1.2018. While most analysts see a breach of the 1.20 SNB floor as unlikely, it seems we could see some consolidation in the lower 1.20s until the Swiss Gold referendum on November 30^th. Again, several banks note that they expect the SNB to get active in the 1.2010-20, but we have yet to see any actual intervention from the bank, which has so far relied on verbal intervention only.

EUR/USD dropped to 1.2415 in Asia. The fake breakout above 1.25 and decline back sub-1.2440 suggest we’ll see another test of 1.2360 soon. However, while there are no larger option expiries today, there are again some huge expiries at 1.25 from Wednesday to Friday, so those may attract given the lack of data releases & events this week.

GBP/USD hit a low of 1.5832 earlier. Strong tech support noted at 1.5770-90, while 1.5920 is now the pivotal resistance level.

Upcoming Events:

• 13:55 GMT – US Redbook
• 20:05 GMT – RBNZ Governor Wheeler speaks

Source:: Tuesday 11th November: European Open Briefing