IBEX +12 points at 10061

• FTSE +6 points at 7421

• DAX +11 points at 13085

• CAC +6 points at 5347

• IBEX +12 points at 10061

Asian equities traded mixed on Tuesday. Volatility in USDJPY rose to a three-week high due to uncertainties on US tax reforms. The USDJPY remained capped at 113.73 in Tokyo. One-month risk reversals showed increased option hedges against a further slide in USDJPY. Support is eyed at 113.25 (lower Bollinger band on daily chart).

The AUDUSD extended losses to a four-month low. Lower-than-expected Chinese retail sales and slower Chinese industrial production growth in October weighed on the Aussie along with the declining AU/US rate differential. The AU/US two-year yield spread stands at the lowest in six months. Low rate differential curbs the carry appetite. The slide could extend to 0.7580 (lower Bollinger band on daily chart).

Energy stocks in Australia erased as much as 2% as oil traded at a week-low on Monday. OPEC and its allies will unlikely postpone an agreement on oil cut extension this month, although OPEC’s 2018 forecasts point at larger deficit in global supply. An extension of cuts beyond the March 2018 deadline is already widely priced in. WTI crude consolidates near $58/barrel, Brent crude slipped below $63/barrel. Intra-day supports could be found at 200-hour moving averages at $56.30 and $62.58 respectively. Australian miners lost 0.66%. Precious metals were marginally cheaper, copper futures gained more than 1.0% in Shanghai.

The risk-off vibe pushed the FTSE futures 12.5 points lower during the overnight session. FTSE rolling index tested the 7400p on the downside before rebounding past 7420p heading into the London open. Soft pound may have wet investors’ appetite, but resistance could rapidly come into play as the attention has shifted to risks of higher political instability in the UK with declining support for PM Theresa May. Meanwhile, thin chances of a Brexit breakthrough by December continues weighing on the investor sentiment.

Cable fell to 1.3060 on Monday. Traders watch 1.3040 (November support). The UK inflation data is the major macro event today. The headline CPI may have advanced to 3.1% in October. Unless there is a larger positive surprise, the pound will unlikely revive the Bank of England (BoE) hawks and gain a strong positive trend because of the looming political and Brexit risks. The 1.3180-1.3200 region is where offers are sheltered. If surpassed, an upside move could be stretched to 1.3230/1.3254 (Nov 11 high /50-dma) but hardly above.

The EURGBP could be another option for trading the pound weakness. The upswing could extend to 0.8970 (100-day moving average) and 0.90 level.

The EURUSD is testing the 1.1680-offers, but the Eurozone yields remain too low to convince traders to stay on their long-EUR positions. If the single currency doesn’t gain in value to compensate the opportunity cost of holding a low yielding currency, the EURUSD could cheapen more. Therefore, a failure to clear 1.1680-1.1700 offers should bring investors to unwind their long positions. The key mid-term support stands at 1.1509 (major 38.2% retracement on April - September rise). On the upside, surpassing 1.1680-1.1700 resistance could offer a better momentum to the pair and allow a further advance to 1.1755/1.1790 (50/100-day moving average respectively).