Arnaud Masset
Swissquote Bank Ltd
Market Brief
After surging more than 0.50% last week, the US dollar has been trading sideways since yesterday as the single currency kept moving lower on speculations that the ECB will somehow increase its stimulus against the backdrop of subdued inflation and anaemic growth, while the pound sterling remained under substantial pressure as investors continued to expect harsh consequences amid the UK decision to leave the European Union. Yesterday, the dollar index climbed to a nine-month high at 98.846 as EUR/USD tumbled to 1.0860 and the cable traded at around 1.22. We believe that the market has now almost completely priced in a December interest rate hike by the Federal Reserve. Therefore, we believe that further dollar gains are unlikely.
During the Asian session, EUR/USD treaded water at around 1.0870, edging down 0.04%. GBP/USD took a small hit as it slid 0.15% to 1.2220. In Switzerland, EUR/CHF’s response to Thomas Jordan’s speech was muted. The currency pair has consolidated at around 1.0810 over the last 24 hours as Mr. Jordan reiterated the necessity for negative interest rate but underlined that negative interest rates are a temporary solution and that side-effects have to be closely monitored. Over the last two weeks, the Swiss franc strengthened substantially as the market sent the single currency to multi-month lows. The odds are pretty goods that the SNB will have to intervene - once again - in the FX market to weaken the CHF as the currency pair tested again the 1.08 level. This level is now broadly seen as an implicit floor as the Swiss National Bank systematically stepped in when EUR/CHF got closer to 1.08.
In the equity market, Asian regional returns were mostly trading higher. In Japan, both the Nikkei and Topix index extended gains, climbing 0.76% and 0.71% respectively. In China, the Shanghai and Shenzhen Composites rose 0.05% and 0.29%, while offshore the Hang Seng slid 0.11%. Further South, Australian shares were up 0.63%, while in New Zealand the NZX 50 was up 0.64%. US futures were blinking green on the screen. Finally, European futures were trading higher across the board with the Footsie up 0.22% and the DAX surging 0.14%.
Today traders will be watching PPI from Spain and Sweden; IFO survey from Germany; industrial orders from Italy; current account balance, FDI and COPOM monetary policy meeting minutes from Brazil; consumer confidence index and Richmond Fed manufacturing index from the US. On the central bank side, Draghi will address in Berlin, BoE’s Carney will speak before the economic committee, while in the US, Fed’s Lockhart will also speak.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 17365.25 | 0.76 |
| Hang Seng Index | 23578.43 | -0.11 |
| Shanghai Index | 3129.925 | 0.05 |
| FTSE futures | 6975 | 0.22 |
| DAX futures | 10780 | 0.14 |
| SMI Futures | 7994 | 0.13 |
| S&P future | 2147.2 | 0.14 |
| Global Indexes | Current Level | % Change |
| Gold | 1267.11 | 0.2 |
| Silver | 17.66 | 0.35 |
| VIX | 13.02 | -2.4 |
| Crude wti | 50.48 | -0.08 |
| USD Index | 98.77 | 0.01 |
| Today's Calendar | Estimates | Previous | Country/GMT |
| SP Sep PPI MoM | - | -0,20% | EUR/07:00 |
| SP Sep PPI YoY | - | -3,10% | EUR/07:00 |
| SA Aug Leading Indicator | - | 91,6 | ZAR/07:00 |
| SA Bloomberg Oct. South Africa Economic Survey (Table) | - | - | ZAR/07:00 |
| SW Sep PPI MoM | - | 1,00% | SEK/07:30 |
| SW Sep PPI YoY | - | -0,30% | SEK/07:30 |
| GE Oct IFO Business Climate | 109,6 | 109,5 | EUR/08:00 |
| GE Oct IFO Current Assessment | 114,9 | 114,7 | EUR/08:00 |
| GE Oct IFO Expectations | 104,5 | 104,5 | EUR/08:00 |
| IT Aug Industrial Sales MoM | - | 2,10% | EUR/08:00 |
| IT Aug Industrial Sales WDA YoY | - | -0,70% | EUR/08:00 |
| IT Aug Industrial Orders MoM | - | -10,80% | EUR/08:00 |
| IT Aug Industrial Orders NSA YoY | - | -11,80% | EUR/08:00 |
| BZ COPOM Monetary Policy Meeting Minutes | - | - | BRL/10:30 |
| TU Oct Real Sector Confidence SA | 106,9 | 107,1 | TRY/11:30 |
| TU Oct Real Sector Confidence NSA | 104,9 | 106,5 | TRY/11:30 |
| TU Oct Capacity Utilization | 76,90% | 76,60% | TRY/11:30 |
| US Aug FHFA House Price Index MoM | 0,40% | 0,50% | USD/13:00 |
| US Aug S&P CoreLogic CS US HPI MoM SA | - | 0,41% | USD/13:00 |
| US Aug S&P CoreLogic CS 20-City NSA Index | - | 190,91 | USD/13:00 |
| US Aug S&P CoreLogic CS 20-City MoM SA | 0,10% | -0,01% | USD/13:00 |
| US Aug S&P CoreLogic CS 20-City YoY NSA | 5,00% | 5,02% | USD/13:00 |
| US Aug S&P CoreLogic CS US HPI NSA Index | - | 183,57 | USD/13:00 |
| US Aug S&P CoreLogic CS US HPI YoY NSA | - | 5,10% | USD/13:00 |
| BZ Sep Current Account Balance | -$1600m | -$579m | BRL/13:00 |
| BZ Sep Foreign Direct Investment | $6500m | $7208m | BRL/13:00 |
| UK Bank of England Bond-Buying Operation Results | - | - | GBP/13:50 |
| US Oct Consumer Confidence Index | 101,5 | 104,1 | USD/14:00 |
| US Oct Richmond Fed Manufact. Index | -4 | -8 | USD/14:00 |
| US Oct IBD/TIPP Economic Optimism | 47,5 | 46,7 | USD/14:00 |
| UK Carney Appears at House of Lords Economic Committee | - | - | GBP/14:35 |
| EC ECB President Draghi Speaks in Berlin | - | - | EUR/15:30 |
| FR Sep Total Jobseekers | 3518.4k | 3556.8k | EUR/16:00 |
| FR Sep Jobseekers Net Change | -16,8 | 50,2 | EUR/16:00 |
| BZ Sep Federal Debt Total | - | 2955b | BRL/16:30 |
| US Fed's Lockhart Speaks on Community Development | - | - | USD/17:00 |
| SK Oct Consumer Confidence | - | 101,7 | KRW/21:00 |
| BZ Sep Tax Collections | 95014m | 91808m | BRL/22:00 |
| BZ Sep Formal Job Creation Total | -7000 | -33953 | BRL/22:00 |
Currency Tech
EURUSD
R 2: 1.1352
R 1: 1.1058
CURRENT: 1.0878
S 1: 1.0822
S 2: 1.0711
GBPUSD
R 2: 1.2857
R 1: 1.2477
CURRENT: 1.2224
S 1: 1.2090
S 2: 1.1841
USDJPY
R 2: 111.45
R 1: 107.49
CURRENT: 104.40
S 1: 102.80
S 2: 100.09
USDCHF
R 2: 1.0328
R 1: 1.0093
CURRENT: 0.9948
S 1: 0.9632
S 2: 0.9522
- 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.
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