Market Brief
Markets remain in a bullish mode, despite the pause on Friday of risky asset accumulation. In the Asian session, the EURUSD traded in the range of 1.4840-1.4920 and the USDJPY traded higher, in the range of 90.75-91.15. Last weekÕs Q3 earnings were broadly ahead of expectations, giving plenty of support to risk takers. The biggest gainer was the sterling, as traders paired down bets that the BoE would extend their quantitative easing program in November, on the back of comments by MPC member Fisher. However, this weekend in an article in the UK 's Sunday Times, MPC member Posen signalled that he had an inclination towards voting for an extension to the QE program. In regards to his decision making process, he states: "It goes back to how much you think there is real overshooting and inflation risk, and how much you think the financial system has recovered. And then goes on to say "My answer to the first is that I'm not worried about overshooting inflation right now. His lack of concern over inflation suggests that he is in the extension camp. With much of last weeks sterling gain based on unwinding of QE thinking and pressure on short, we would expect of QE to come back in to the markets psyche, expecting the GBP to come under renewed selling pressure. From Japan there has been a shift in MoF rhetoric in recent days, and on Friday Senior Advisor Gyohten, commenting that Japan, China and the US should cooperate to stabilise the USD. Perhaps the strongest signal so far that Japanese officals are moving back to the weak JPY policy.
TodayÕs light economic calendar will keep markets range bound. Today, Fed Chairman Ben Bernanke will speak and markets will be keen on any mention of exist strategies, given last weekÕs earning and the divergence seen in FOMC minutes. The other big near term event will be the RBAÕs October minutes released tomorrow. The market is pricing in about a 25% chance of a 50bp rate hike in November and we believe that this pricing could become considerably more aggressive by the next meeting. Evidently, re-pricing of the RBA monetary policy path will equate to a stronger AUD.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10,236.51 | -0.2 |
| Hang Seng Index | 22,015.60 | 0.39 |
| Shanghai Index | 3,033.84 | 1.92 |
| FTSE futures | 5,177.00 | -0.53 |
| DAX futures | 5,774.00 | 0.2 |
| SMI Futures | 6,358.00 | 0.09 |
| S&P future | 1,083.80 | 0.16 |
| World Markets | Current Level | % Change |
| Gold | 1,052.65 | -0.09 |
| Silver | 17.43 | -0.21 |
| VIX | 21.43 | -1.33 |
| Crude wti | 78.55 | 0.02 |
| USD Index | 75.66 | 0.08 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Fed Chairman Bernanke speaks on economy at SF | -- | -- | USD / 15.00 |
| NAHB housing index | 20 | 19 | USD / 17.00 |
Currency Tech
AUDUSD
R 2: 0.9475
R 1: 0.9345
CURRENT: 0.9187
S 1: 0.8985
S 2: 0.8865
USDCAD
R 2: 1.0650
R 1: 1.0450
CURRENT: 1.0387
S 1: 1.0290
S 2: 1.0210
EURJPY
R 2: 137.85
R 1: 136.10
CURRENT: 135.22
S 1: 133.35
S 2: 132.25
USDMXN
R 2: 13.385
R 1: 13.330
CURRENT: 13.0841
S 1: 12.980
S 2. 12.765
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
