Wednesday 12th November: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 1.60 %, Shanghai Composite down 0.30 %, Hang Seng unchanged, ASX down 1.00 %
  • Commodities: Gold at $1163 (unch), Silver at $15.68 (unch), Crude Oil at $77.44 (-0.60 %)
  • Rates: US 10 year yield at 2.364, UK 10 year yield at 2.242, German 10 year yield at 0.828

News & Data:

  • Australia Westpac Consumer Sentiment 1.9 %, Previous: 0.9 %
  • Australia Wage Price Index q/q 0.6 %, Expected: 0.6 %, Previous: 0.6 %
  • Japan’s PM Abe Advisor Etsuro Honda says tax hike out of question if 3Q GDP less than 3.8%
  • Japan’s PM Abe Advisor Etsuro Honda says Yen stable at 115 would cause recovery of Japan’s firms
  • Japan’s PM Abe Advisor Etsuro Honda: Wants to delay tax hike until real wages begin to increase
  • RBNZ Governor Wheeler: pleased $NZD has declined; says $NZD still overvalued
  • Wheeler: $NZD level unsustainable, unjustifiable
  • Wheeler: interest rates are still at a low level; says interest rates still stimulating economy
  • Wheeler: rates would have risen more without loan limits

Markets Update:

The past 24 hours have been very volatile for the USD/JPY amid various rumors about a delay of the planned sales tax hike and an early election in Japan. Overnight, Japanese names were sellers at the Tokyo open as they probably expected that someone will deny the rumors. Indeed, it did happen, with Chief Cabinet Secretary Suga denying the Reuters report that the tax hike will be delayed. After a quick decline to 115.25, the market forgot about those headlines and the USD/JPY rallied back to 115.85. It has been quite choppy for intraday traders! Stops reported sub-114.90 and above 116.15, while solid bids seen from 115.10 down to the big figure. Key intraday resistance at 116.10. Meanwhile, the charts suggest no serious tech resistance until the October 2007 peak at 117.95.

EUR/USD almost touched 1.25 in yesterday’s late NY session, but was trading with an offered tone in Asia and retraced some of the earlier gains. Bids reported at 1.2420/25, while offers in solid size towards 1.2520. Cross flows were mixed with some EUR/AUD buying noted, but a heavy EUR/JPY, which dropped 100 pips in the session.

AUD/USD briefly traded above 0.87 yesterday, but momentum faded away as we went into the Asian session. Expect heavy resistance at 0.8750/60. To the downside, intraday support at 0.8655/60 and then 0.8620. The Canadian Dollar weakened again as Oil prices continue to decline. USD/CAD back above 1.1350 after hitting a low of 1.1315 in yesterday’s NY session.

Upcoming Events:

  • 09:30 GMT – UK Unemployment Rate (5.9 %)
  • 09:30 GMT – UK Claimant Count Change (-24.9k)
  • 09:30 GMT – UK Average Earnings (1.1 %)
  • 10:00 GMT – Euro Zone Industrial Production (1.0 % m/m)
  • 10:30 GMT – Bank of England Inflation Report
  • 10:30 GMT – Bank of England Governor Carney speaks
  • 13:55 GMT – US Redbook
  • 17:00 GMT – FOMC Member Kocherlakota speaks

Source:: Wednesday 12th November: European Open Briefing

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