Strong exports boost US economy, USD mixed as caution remains
Market Brief
The better-than-expected growth figures from the US gave a fresh boost to the greenback, raising substantially the likelihood of a tightening move by the Federal Reserve as soon as December. The single currency stood amongst the worst performer within G10 complex in overnight trading as it fell 0.25% against the greenback, down to 1.0957. The US economy at annualised pace of 2.9% in the third quarter, beating median forecast of 2.6% and 1.4% in the second quarter. The growth rebound came on the back on rising inventories and booming exports. For the first time since 1Q 2015, inventories contributed to growth as it jumped 0.61% in the September quarter. Exports rose 1.17% compared to 0.21% in the previous quarter. On the other hand, personal consumption eased to 1.47% from 2.88% in the June quarter. All in all, the dollar index rose 0.15% on Monday.
In Japan, industrial production came on the soft side in September, rising 0.9%y/y versus 1.9% expected. On a month-over-month basis, the industrial output was unchanged compared to the previous month, while market participants were expecting a modest increase of 0.9%. Retail sales also came on the soft side, contracting 1.9%y/y versus -1.8% median forecast. All in all, the Japanese economy has been struggling to gain momentum in spite of a continued efforts from the BOJ to stimulate growth and inflation. The strong yen and weak global demand have been hurting the economy. On Monday, the BoJ started a 2-day monetary policy meeting during which it review its growth and inflation outlook. After sliding to 104.27 in early session, USD/JPY returned at around 104.95 on further dollar gains. The bias remains on the upside. A key resistance can be found at 107.49, while on the downside a support lies at around 103 (previous lows).
Asian equities were losing ground across the board with the Japanese yen down 0.12%, while the broader Topix index was left unchanged at 1,393 points. In mainland China, the Shanghai and Shenzhen Composite were down 0.12% and 0.08% respectively. Offshore, the Hang Seng slid 0.06%, while the Taiex was of 0.18%. Consequently, European equity futures were also wearing red on Monday as traders found no good reason to lift share prices higher.
Today traders will be watching unemployment rate from Germany; retail sales from Spain; mortgage approvals from UK; inflation report from the euro zone and Italy; trade balance from South Africa; personal spending, personal income, PCE deflator, Dallas Fed manufacturing index and Chicago purchasing manager index from the US.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 17425.02 | -0.12 |
| Hang Seng Index | 22935.41 | -0.08 |
| Shanghai Index | 3100.492 | -0.12 |
| FTSE futures | 6944.5 | -0.34 |
| DAX futures | 10656 | -0.29 |
| SMI Futures | 7860 | -0.44 |
| S&P future | 2127.8 | 0.19 |
| Global Indexes | Current Level | % Change |
| Gold | 1273.91 | -0.12 |
| Silver | 17.84 | 0.48 |
| VIX | 16.38 | 1.17 |
| Crude wti | 48.39 | -0.64 |
| USD Index | 98.49 | 0.15 |
| Today's Calendar | Estimates | Previous | Country/GMT |
| DE Sep Unemployment Rate SA | 3,60% | 3,60% | DKK/08:00 |
| DE Sep Unemployment Rate Gross Rate | 4,30% | 4,30% | DKK/08:00 |
| SP Sep Retail Sales YoY | - | 4,90% | EUR/08:00 |
| SP Sep Retail Sales SA YoY | 3,30% | 3,40% | EUR/08:00 |
| SW Aug Wages Non-Manual Workers YoY | - | 1,40% | SEK/08:30 |
| SP Aug Current Account Balance | - | 3.0b | EUR/09:00 |
| NO Nov Norges Bank Daily FX Purchases | -900m | -900m | NOK/09:00 |
| SZ oct..28 Total Sight Deposits | - | 518.5b | CHF/09:00 |
| SZ oct..28 Domestic Sight Deposits | - | 451.3b | CHF/09:00 |
| UK Sep Net Lending Sec. on Dwellings | 3.0b | 2.9b | GBP/09:30 |
| UK Sep Mortgage Approvals | 61.5k | 60.1k | GBP/09:30 |
| UK Sep Money Supply M4 MoM | - | 0,90% | GBP/09:30 |
| UK Sep M4 Money Supply YoY | - | 5,40% | GBP/09:30 |
| UK Sep M4 Ex IOFCs 3M Annualised | - | 10,90% | GBP/09:30 |
| EC Oct CPI Estimate YoY | 0,50% | 0,40% | EUR/10:00 |
| EC Oct A CPI Core YoY | 0,80% | 0,80% | EUR/10:00 |
| EC 3Q A GDP SA QoQ | 0,30% | 0,30% | EUR/10:00 |
| EC 3Q A GDP SA YoY | 1,60% | 1,60% | EUR/10:00 |
| IT Oct P CPI NIC incl. tobacco MoM | 0,20% | -0,20% | EUR/10:00 |
| IT Oct P CPI NIC incl. tobacco YoY | 0,10% | 0,10% | EUR/10:00 |
| IT Oct P CPI EU Harmonized MoM | 0,40% | 1,90% | EUR/10:00 |
| IT Oct P CPI EU Harmonized YoY | 0,10% | 0,10% | EUR/10:00 |
| BZ Central Bank Weekly Economists Survey (Table) | - | - | BRL/10:25 |
| IT Sep PPI MoM | - | -0,30% | EUR/11:00 |
| IT Sep PPI YoY | - | -1,10% | EUR/11:00 |
| IN Sep Fiscal Deficit INR Crore | - | 14333 | INR/11:00 |
| SA Sep Trade Balance Rand | 0.8b | -8.6b | ZAR/12:00 |
| US Sep Personal Income | 0,40% | 0,20% | USD/12:30 |
| BZ Sep Primary Budget Balance | -27.0b | -22.3b | BRL/12:30 |
| US Sep Personal Spending | 0,40% | 0,00% | USD/12:30 |
| BZ Sep Nominal Budget Balance | -71.3b | -62.9b | BRL/12:30 |
| US Sep Real Personal Spending | 0,20% | -0,10% | USD/12:30 |
| CA Sep Industrial Product Price MoM | 0,40% | -0,50% | CAD/12:30 |
| BZ Sep Net Debt % GDP | 44,10% | 43,30% | BRL/12:30 |
| US Sep PCE Deflator MoM | 0,20% | 0,10% | USD/12:30 |
| CA Sep Raw Materials Price Index MoM | 0,50% | -0,70% | CAD/12:30 |
| US Sep PCE Deflator YoY | 1,20% | 1,00% | USD/12:30 |
| US Sep PCE Core MoM | 0,10% | 0,20% | USD/12:30 |
| US Sep PCE Core YoY | 1,70% | 1,70% | USD/12:30 |
| US Oct Chicago Purchasing Manager | 54 | 54,2 | USD/13:45 |
| CA oct..28 Bloomberg Nanos Confidence | - | 56,4 | CAD/14:00 |
| US Oct Dallas Fed Manf. Activity | 2 | -3,7 | USD/14:30 |
| UK Bank of England Bond-Buying Operation Results | - | - | GBP/14:50 |
| BZ oct..30 Trade Balance Weekly | - | $709m | BRL/17:00 |
| AU Oct AiG Perf of Mfg Index | - | 49,8 | AUD/22:30 |
| AU oct..30 ANZ Roy Morgan Weekly Consumer Confidence Index | - | 113,6 | AUD/22:30 |
Currency Tech
EUR/USD
R 2: 1.1352
R 1: 1.1058
CURRENT: 1.0959
S 1: 1.0822
S 2: 1.0711
GBPUSD
R 2: 1.2857
R 1: 1.2477
CURRENT: 1.2186
S 1: 1.2083
S 2: 1.1841
USDJPY
R 2: 111.45
R 1: 107.49
CURRENT: 104.94
S 1: 102.80
S 2: 100.09
USDCHF
R 2: 1.0093
R 1: 0.9999
CURRENT: 0.9888
S 1: 0.9843
S 2: 0.9632
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
Author
Arnaud Masset
Swissquote Bank Ltd
Arnaud Masset is a Market Analyst at Swissquote Bank. He has a strong technical background and also works in the development of quantitative trading strategies.
