Market Brief
The Usd was stronger in the Asian session, as equity market came under significant selling pressure in the US and Asia. A classic case of buy the rumor sell the fact on the US election. The Eurusd traded lower from 1.3023 to 1.2828, while Jpy saw solid demand pushing UsdJpy down to 97.58. Carry trades came under pressure, as risk aversion and corresponding deleveraging was the trade of the day. The AudJpy sank below the 5 day MA to 65.40 and the GbpJpy fell to 154.23. VIX climbed higher, pulling the AudChf down to 0.7798. The short term rally seen in emerging markets took a temporary reprieve, with UsdSgd trending up from 1.4740 to 1.4870. The “Obama bounce” was perhaps the briefest in history, with yesterday's Wall Street session falling well short of markets optimist expectations, as the S&P dropped -5.26%. Asian regional indexes are all trading significantly lower, with the Hang Seng leading the losers down -7.13%. The strong correlation between equity markets/risk aversion and Usd & Jpy is still well entrenched and will sustain today’s FX price action. As with deleverging, trades commodities also came under the knife, with both crude and gold falling. Markets have quickly shifted their focus from the US presidential election to the real economy and that story looks very bleak (yesterday US non-manuf. ISM a record low of 44..4 and ADP -157k signals bad things to come).
In Australia, employment data surprised to the upside an oddity given the state of the domestic economy. Employment growth in Oct. was 34,300 vs. -10,000 exp job decline. The unemployment rate remained steady at 4.3% vs. 4.4% exp. The market will slightly discount this encouraging reading in job growth, as many of the gains were in part time work and job adverts and surveys are all pointing lower.
Today’s focus will be on the BoE and ECB rate announcements. There is significant uncertainty surrounding today’s announcement, with the market pricing in at least 75bp from the MPC and 50/50 probability that the ECB goes with 75bp. We are currently expecting a 50bp cut from the ECB, but have shifted our call on the BoE to 75bp. Recent UK data, including yesterday's PMI, have shown a marked deterioration in the domestic economy. With the housing and financial sectors, two of the largest drivers in the Britain economy, now feeling the full force of the downturn, we expect the BoE to act decisively.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 8,899.14 | -6.53 |
| Hang Seng Index | 13,790.04 | -7.07 |
| Hang Seng Index | 1,717.72 | -2.43 |
| FTSE 100 Index | 4,392.17 | -3.05 |
| DAX Index | 5,031.91 | -2.61 |
| SMI Index | 6,047.85 | -2.09 |
| DJIA futures | 9,118.00 | -0.62 |
| World Markets | Current Level | % Change |
| Gold | 742.1 | 0.23 |
| Silver | 10.27 | -0.51 |
| VIX | 54.56 | 14.31 |
| Crude wti | 64.16 | -1.74 |
| USD Index | 84.99 | 0.45 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Factory Orders (Sep) | -2.3%,-3.2 | 3.6%,-7.6 | GE /10.00 |
| BoE Interest Rate Announcement | 4.00% | 4.50% | UK / 11.00 |
| ECB Interest Rate Announcement | 3.25% | 3.75% | EZ / 11.45 |
| Initial Jobless Claims | 477K | 479K | US / 12.30 |
| Non-Farm Productivity (Q3) | 0.70% | 4.30% | US / 12.30 |
| Unit Labour Costs (Q3) | 3.00% | -0.50% | US / 12.30 |
Currency Tech
AUDUSD
R 3: 0.7357
R 2: 0.7239
R 1: 0.7065
CURRENT: 0.6811
S 1: 0.6603
S 2: 0.6551
S 3: 0.6339
EURJPY
R 3: 131.49
R 2: 131.06
R 1: 127.07
CURRENT: 126.93
S 1: 123.42
S 2: 122.25
S 3: 121.40
USDSGD
R 3: 1.5039
R 2: 1.4948
R 1: 1.4874
CURRENT: 1.4812
S 1: 1.4647
S 2: 1.4585
S 3: 1.4554
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
