Market Brief
GBP has continued to outperform this morning (GBPUSD 1.6355, EURGBP 0.9125) on a combination of chatter regarding M&A activity and rumours that the BoE will not be increasing QE in November. GBP-crosses have looked oversold for some time now, and this correction has brought us within reach of some key technical levels; the high so far in GBPUSD has been 1.6400, a break of 1.6468 opens up next target above 1.6700, meanwhile EURGBP’s pivotal support lies at 0.9070.
The Asian session was light in terms of significant data releases, however AUD was given a boost by hawkish rhetoric from RBA Governor Glenn Stevens that they cannot be “too timid” in raising rates; AUDUSD traded to a high of 0.9720 on the news, and after breaking up out of its rising wedge in the past few days and managing to hold above the upper trend line on the re-test, price action looks extremely bullish.
This morning’s data highlights will be Swiss Retail Sales, expected to increase 0.8% YoY in Aug (from 1.0% last month); a strong number is likely to increase the likelihood that we see USDCHF march onward towards parity (currently 1.0160), however EURCHF has so far remained wary of retesting intervention territory below 1.5130 and we expect the market to continue to respect this boundary given the conviction with which the SNB has defended it in the past few months.
Canadian CPI (Sep) is also due out today (exp. 0.1% MoM, 0.0% prior); contrary to the theme across other major pairs, USDCAD rallied yesterday and is marginally higher again today (currently 1.0340). We believe that positioning in this trade is now becoming a drag on further gains for CAD, and considering the comments from the BoC about their discomfort with the strength of the currency, this may indicate we have reached a bottom for the near-term and a further correction higher is due. The US session also sees the release of Net TIC Flows, Industrial Production and U. Mich Consumer Confidence, while the earnings focus turns to General Electric, Merrill Lynch, Bank of America, and troubled financial firm CIT Group Inc.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10'257.56 | 0.18 |
| Hang Seng Index | 22'025.71 | 0.12 |
| Shanghai Index | 2'950.10 | -1 |
| FTSE 100 Index | 5'222.95 | -0.63 |
| DAX Index | 5'830.77 | -0.4 |
| SMI Index | 6'383.19 | -0.35 |
| S&P future | 1'091.40 | 0.15 |
| World Markets | Current Level | % Change |
| Gold | 1'047.91 | -0.22 |
| Silver | 17.29 | -0.4 |
| VIX | 21.72 | -4.99 |
| Crude wti | 77.87 | 0.37 |
| USD Index | 75.55 | 0.09 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Adjusted real retail sales, % y/y Aug | 0.8 | 1 | CHF/07:15 |
| Trade balance, € bn (sa) Aug | 4.9 | 6.8 | EUR/09:00 |
| Consumer Price Index, % m/m (y/y) Sep | 0.1 (-0.9) | 0.0 (-0.8) | CAD/11:00 |
| Net long-term TIC flows, $ bn Aug | 30 | 15.3 | USD/13:00 |
| Industrial production, % m/m (y/y) Sep | 0.2(-7.0) | 0.8(-10.3) | USD/13:15 |
| Capacity utilization, % Sep | 69.8 | 69.6 | USD/13:15 |
| University of Michigan consumer sentiment, Oct | 73.3 | 73.5 | USD/13:55 |
Currency Tech
AUDUSD
R 2: 0.9475
R 1: 0.9345
CURRENT: 0.9190
S 1: 0.9125
S 2: 0.8985
USDCAD
R 2: 1.0400
R 1: 1.0360
CURRENT: 1.0350
S 1: 1.0127
S 2: 1.0055
EURJPY
R 2: 136.90
R 1: 136.10
CURRENT: 135.50
S 1: 132.50
S 2: 131.60
USDMXN
R 2: 13.330
R 1: 13.184
CURRENT: 13.095
S 1: 12.980
S 2: 12.750
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
