Market Brief
In the FX markets the USD regained some lost ground against G10 currencies after yesterday's steep decline. The US rate curve rose slightly in the short end as 2 year yields climbed to 0.909% up 5bps. In EM FX, the USD continued to lose ground with solid rallies in KRW, TWR and IDR. The PBoC lowered the USDCNY fix slightly to 6.3780. Overall, trading volumes were subdued after the long and emotionally challenging week. USDJPY bounced around 123.05 to 122.75, while AUDUSD traded between 0.7185 to 0.7210. EURUSD reversed current bullish bounced trading down to 1.0704. With a thin calendar today we anticipate further range trading and would adjust to short term mean revering strategies. Although risk seeking was limited in FX, equity markets continued to see positive developments. Asia regional indices were marginally higher across the board with only Taiwan trading in the red. The Nikkei and Hang Seng rose 0.10%, while the Shanghai composite improved by 0.37%. In the US, Federal Reserve Vice Chairman Stanley Fischer suggested that financial markets were prepared for a rate hike as the Fed had commutated their strategy correctly. Fischer told the Asia Economic Policy Conference the Fed, “have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market central bankers have, for some time, been telling the Fed to ’just do it.’” He reiterated that no decision has been made on the precise timing of the first rate hike in ten year, yet stated: "in the relatively near future probably some major central banks will begin gradually moving away from near-zero interest rates.” Sound to us like a December hike. We remain constructive on the USD against G10 currencies based on further policy divergence.
Elsewhere, Greece’s parliament has passed reforms in order to unlock €12bn from the €85bn bailout agreement. After a contentious debate, which saw the firing of two deputies from Syriza-led coalition government, the measures were passed by 153 to 137 votes. In New Zealand, credit card spending increased 7.8% y/y in October, compared to a prior 7.3% in September.
On the docket today traders will be listening to Mario Draghi speech in Frankfurt at the European Banking Congress. Yesterday’s, ECB monetary policy October meeting minutes indicated that the Governing Council (GC) was disappointed in the ability of QE to deliver the desired effect. As a result the ECB indicated that the “degree of monetary policy accommodation would need to be re-examined in December.” This view indicates to us that additional monetary policy stimulus will be launched next month (more QE, deposit rate cuts and verbal intervention). Today's speech could help clarity Draghi’s and the ECB's stance. Given the EURUSD recovery we anticipate the speech will have a bearish effect on the pair.
On the data front, Euro area consumer confidence is expected to fall to -8.0 in November from -7.7 in October. Canada, September Headline CPI is expected to come in at 0.1% m/m prior -0.2% and core at 0.2% prior 0.2%. The risk is for a more disappointed read as sluggish oil prices have generated disinflationary pressure. A weaker-than-expected CPI print will revised expectations for BoC easing and pushed CAD lower. Finally, Mexican Q3 GDP is anticipated to increase to 2.4% y/y, up from 2.2% in 2Q, however with the Fed on the verge of hiking and crude prices weak we remain bearish on MXN.
Global Indexes | Current Level | % Change |
Nikkei 225 Index | 19879.81 | 0.1 |
Hang Seng Index | 22734.46 | 1.04 |
Shanghai Index | 3630.5 | 0.37 |
FTSE futures | 6347.5 | 0.18 |
DAX futures | 11099.5 | 0.09 |
SMI Futures | 9023 | 0.36 |
S&P future | 2085 | 0.27 |
Global Indexes | Current Level | % Change |
Gold | 1081.06 | -0.1 |
Silver | 14.24 | -0.17 |
VIX | 16.99 | 0.83 |
Crude wti | 40.42 | -0.29 |
USD Index | 99.24 | 0.24 |
Today's Calendar | Estimates | Previous | Country/GMT |
UK Oct Public Finances (PSNCR) | - | 1,79E+10 | GBP /09:30 |
UK Oct Central Government NCR | - | 2,15E+10 | GBP /09:30 |
UK Oct Public Sector Net Borrowing | 5,30E+09 | 8,60E+09 | GBP /09:30 |
UK Oct PSNB ex Banking Groups | 6,00E+09 | 9,40E+09 | GBP /09:30 |
SW Bloomberg Nov. Sweden Economic Survey | - | - | SEK /10:00 |
NO Bloomberg Nov. Norway Economic Survey | - | - | NOK /10:05 |
DE Bloomberg Nov. Denmark Economic Survey | - | - | DKK /10:10 |
CA Sep Retail Sales MoM | 0,10% | 0,50% | CAD /13:30 |
CA Sep Retail Sales Ex Auto MoM | -0,40% | 0,00% | CAD /13:30 |
CA Oct CPI NSA MoM | 0,10% | -0,20% | CAD /13:30 |
CA Oct CPI YoY | 1,00% | 1,00% | CAD /13:30 |
CA Oct Consumer Price Index | 127,1 | 127,1 | CAD /13:30 |
CA Oct CPI Core MoM | 0,20% | 0,20% | CAD /13:30 |
CA Oct CPI Core YoY | 2,00% | 2,10% | CAD /13:30 |
CA Oct CPI SA MoM | 0,10% | -0,20% | CAD /13:30 |
CA Oct CPI Core SA MoM | 0,20% | 0,10% | CAD /13:30 |
EC Nov A Consumer Confidence | -7,5 | -7,7 | EUR /15:00 |
US Nov Kansas City Fed Manf. Activity | - | - | USD /16:00 |
Currency Tech
EURUSD
R 2: 1.1387
R 1: 1.1095
CURRENT: 1.0668
S 1: 1.0458
S 2: 1.0000
GBPUSD
R 2: 1.5659
R 1: 1.5529
CURRENT: 1.5206
S 1: 1.5027
S 2: 1.4566
USDJPY
R 2: 135.15
R 1: 125.86
CURRENT: 123.27
S 1: 120.07
S 2: 118.07
USDCHF
R 2: 1.0240
R 1: 1.0129
CURRENT: 1.0133
S 1: 0.9739
S 2: 0.9476
- 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.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.