Market Brief
There were very few scheduled risk events yesterday but a late slump across equity markets prompted a defiant rally from the USD, and caused EURUSD to plummet from 1.5000 to 1.4840 lows (currently 1.4920). GBP spent yesterday as one of the best performers against the USD, perhaps predictable given the extent of Friday’s sell-off; but despite CAD gaining some ground as BoC’s Carney failed to repeat or expand on his prior currency intervention comments, it too later succumbed to the wave of USD strength.
The move appeared to be triggered by an aggressive sell-off in the S&P on high volumes, led predominantly by financial and insurance names. Specifically, there was speculation about the imminent withdrawal of home-buyer tax credits that dragged down banking stocks, as investors panicked about the consequences for the housing market without stimulus. It is likely there will be more to come in this corrective move; the high volumes going through on the equity futures may highlight a near-term top – and whilst we do still believe the broader global recovery trade still dominates, we have been long overdue a correction and at some stage investor confidence in equity valuations will run out of steam for this leg of the rally. Given the high correlation between EURUSD, equities and gold, it’s unsurprisingly then that gold plunged through downside support to touch a low of $1037 overnight (currently $1042).
Asian equities are down across the board this morning; the blame apportioned to the slump in commodity prices. Today’s key risk events will be Swedish PPI, Eurozone M3 and US Consumer Confidence. Although the latter is likely to be the biggest market mover, we feel risk sentiment will be more sensitive to any moves in the equity markets in the coming session that economic data.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10'212.46 | - 1.45 |
| Hang Seng Index | 22'219.01 | - 1.64 |
| Shanghai Index | 3'021.46 | - 2.83 |
| FTSE 100 Index | 5'191.74 | - 0.97 |
| DAX Index | 5'642.16 | - 1.71 |
| SMI Index | 6'303.35 | - 1.17 |
| S&P future | 1'065.50 | - 0.08 |
| World Markets | Current Level | % Change |
| Gold | 1'041.93 | + 0.33 |
| Silver | 17.13 | + 0.34 |
| VIX | 24.31 | + 9.16 |
| Crude wti | 78.85 | + 0.22 |
| USD Index | 75.83 | - 0.30 |
| Todays Calender | Estimates | Previous | Country / GMT |
| M3, % y/y (3mma) Sep | 2.2 (2.5) | 2.5 (3.0) | EUR/09:00 |
| CBI distributive trades survey, reported sales Oct | -4 | 3 | GBP/11:00 |
| S&P/Case-Shiller house price index, % y/y Aug | -11.9 | -13.3 | USD/13:00 |
| Consumer confidence index Oct | 53.5 | 53.1 | USD/14:00 |
| Richmond Fed Manu. Index Oct | 14 | 14 | USD/14:00 |
Currency Tech
AUDUSD
R 2: 0.9347
R 1: 0.9260
CURRENT: 0.9185
S 1: 0.9113
S 2: 0.8985
USDCAD
R 2: 1.0960
R 1: 1.0790
CURRENT: 1.0700
S 1: 1.0520
S 2: 1.0380
EURJPY
R 2: 139.20
R 1: 138.70
CURRENT: 137.15
S 1: 136.29
S 2: 135.22
USDMXN
R 2: 13.475
R 1: 13.330
CURRENT: 13.245
S 1: 13.100
S 2: 12.855
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
