Market Brief
Yesterday, the single currency erased early session gains on disappointing PMI data from the Eurozone and especially Germany. Final reading of the Markit/BME composite PMI for September printed slightly below the 54.3 figure expected by the market as it came in at 54.1. While in the Eurozone, the final composite PMI for September printed at 53.6 versus 53.9 expected and previous reading. Only the French PMI managed to grow in September, the gauge increased to 51.9 from 51.4. As a result, EUR/USD returned quickly below the 1.12 threshold on fading euro appetite. On the medium-term, the pair continues to trade range-bound between 1.11 and 1.1320 and is currently sitting on its 200dma at around 1.1160.
In the UK, data continues to disappoint with the Markit/CIPS composite PMI printing at 53.3, below market expectations of 54.3 and upwardly revised figure of 55.2 in August. We expect the pound sterling to remain under selling pressure as the economy is going through a soft patch. After breaking the resistance implied the low from September 4th at 1.5165, the pair is now heading toward the following one standing at 1.5089 (low from May 5th).
As was widely expected the RBA held rates steady at 2.00%. The tone of the basically unchanged statement was slightly less dovish then the market had expected. Despite expectations, there was no downgrade in the global growth assessment or additional discussion on uncertainly in China. The RBA maintained the general view that "the global economy is expanding at a moderate pace, with some further softening in conditions in China and East Asia of late, but stronger US growth". In regards to FX, the RBA maintained that the AUD, “is adjusting to the significant declines in key commodity prices.” On the data front, Australia’s August trade deficit widened to AU$3095mn worse than market consensus of AU$2400mn and revised deficit of AU$2792mn in July. The soft data highlights that regional growth is losing momentum which will potentially have a deeper impact on Australia than the RBA recognizes. AUD rallied on the less pessimistic RBA results, improvement risk sentiment and TPP deal. AUD/USD jumped to 0.7134 from 0.7085 as bullish sentiment should push current rebound to challenge 55dma at 0.7186.
In the stock market, most Asian regional markets emulate Wall Street and European markets. In Japan, the Nikkei rose 1% to 18,186 while the Topix index climbed 0.81%. Mainland Chinese markets are still closed due to holiday while in Hong Kong the Hang Seng is the only loser, dropping -0.21%. In Australia, the S&P/ASX edge up 0.33% while in New Zealand the S&P/NZX climbed 0.67%. In Europe, the equities are taking a breather after the quick rally of the previous days. Futures are mixed this morning: the DAX edges up 0.10%, the Footsie 0.18% and the SMI 0.11%. The French CAC 40 fell -0.10%. The Euro Stoxx 50 is up 0.13%.
Today traders will be watching Halifax house price from the UK; Swiss CPI; Mario Draghi’s speech in Frankfurt and retail PMI from the Eurozone; Fed’s Williams’ speech in San Francisco and trade balance from the US.
Global Indexes | Current Level | % Change |
Nikkei 225 Index | 18186.1 | 1 |
Hang Seng Index | 21808.58 | -0.21 |
FTSE futures | 6269.5 | 0.18 |
DAX futures | 9809 | 0.1 |
SMI Futures | 8722 | 0.11 |
CAC futures | 4606 | -0.1 |
S&P future | 1966.7 | -0.41 |
Global Indexes | Current Level | % Change |
Gold | 1138.83 | 0.28 |
Silver | 15.69 | 0.18 |
VIX | 19.54 | -6.69 |
Crude wti | 46.17 | -0.19 |
USD Index | 96.01 | -0.1 |
Today's Calendar | Estimates | Previous | Country/GMT |
UK Sep Halifax House Prices MoM | 0.10% | 2.70% | GBP/07:00 |
UK Sep Halifax House Price 3Mths/Year | 9.10% | 9.00% | GBP/07:00 |
SP Aug House transactions YoY | - | 13.90% | EUR/07:00 |
SZ Sep CPI MoM | 0.00% | -0.20% | CHF/07:15 |
SZ Sep CPI YoY | -1.50% | -1.40% | CHF/07:15 |
SZ Sep CPI EU Harmonized MoM | - | -0.60% | CHF/07:15 |
SZ Sep CPI EU Harmonized YoY | - | -1.20% | CHF/07:15 |
GE Sep Markit Germany Construction PMI | - | 50.3 | EUR/07:30 |
UK Sep New Car Registrations YoY | - | 9.60% | GBP/08:00 |
GE Sep Markit Germany Retail PMI | - | 54.7 | EUR/08:10 |
EC Sep Markit Eurozone Retail PMI | - | 51.4 | EUR/08:10 |
FR Sep Markit France Retail PMI | - | 49.5 | EUR/08:10 |
IT Sep Markit Italy Retail PMI | - | 48.7 | EUR/08:10 |
IT Bank of Italy's Visco Opens Event on Corruption, UN Convention | - | - | EUR/09:00 |
SA Sep SACCI Business Confidence | - | 84.3 | ZAR/09:30 |
CA Aug Int'l Merchandise Trade | -1.20b | -0.59b | CAD/12:30 |
US Aug Trade Balance | -$48.00b | -$41.86b | USD/12:30 |
US Fed's George Keynote Speaks at Event in Chicago | - | - | USD/13:15 |
CA Sep Ivey Purchasing Managers Index SA | 54 | 58 | CAD/14:00 |
US Oct IBD/TIPP Economic Optimism | 44.5 | 42 | USD/14:00 |
BZ Sep Vehicle Production Anfavea | - | 216465 | BRL/14:20 |
BZ Sep Vehicle Sales Anfavea | - | 207250 | BRL/14:20 |
BZ Sep Vehicle Exports Anfavea | - | 34591 | BRL/14:20 |
EC ECB President Mario Draghi Speaks in Frankfurt | - | - | EUR/17:00 |
US Fed's Williams Gives Outlook Speech in San Francisco | - | - | USD/21:30 |
Currency Tech
EURUSD
R 2: 1.1561
R 1: 1.1330
CURRENT: 1.1198
S 1: 1.1017
S 2: 1.0809
GBPUSD
R 2: 1.5659
R 1: 1.5383
CURRENT: 1.5149
S 1: 1.5089
S 2: 1.4960
USDJPY
R 2: 125.86
R 1: 121.75
CURRENT: 120.25
S 1: 118.61
S 2: 116.18
USDCHF
R 2: 1.0240
R 1: 0.9903
CURRENT: 0.9740
S 1: 0.9513
S 2: 0.9259
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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