Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
06:45 | Australia | RBA's Governor Philip Lowe Speaks | |||
07:00 | United Kingdom | Nationwide house price index, y/y | October | 0.2% | 0.2% |
07:00 | United Kingdom | Nationwide house price index | October | -0.2% | 0% |
07:45 | France | Consumer confidence | October | 104 | 104 |
09:30 | United Kingdom | Net Lending to Individuals, bln | September | 4.8 | |
09:30 | United Kingdom | Consumer credit, mln | September | 0.901 | 0.9 |
09:30 | United Kingdom | Mortgage Approvals | September | 65.55 | 65 |
09:50 | Germany | German Buba President Weidmann Speaks | |||
13:00 | U.S. | S&P/Case-Shiller Home Price Indices, y/y | August | 2% | 2.1% |
14:00 | U.S. | Pending Home Sales (MoM) | September | 1.6% | 1.7% |
14:00 | U.S. | Consumer confidence | October | 125.1 | 127.4 |
23:50 | Japan | Retail sales, y/y | September | 1.8% | 6.9% |
Time | Country | Event | Period | Previous value | Forecast |
---|---|---|---|---|---|
06:45 | Australia | RBA's Governor Philip Lowe Speaks | |||
07:00 | United Kingdom | Nationwide house price index, y/y | October | 0.2% | 0.2% |
07:00 | United Kingdom | Nationwide house price index | October | -0.2% | 0% |
07:45 | France | Consumer confidence | October | 104 | 104 |
09:30 | United Kingdom | Net Lending to Individuals, bln | September | 4.8 | |
09:30 | United Kingdom | Consumer credit, mln | September | 0.901 | 0.9 |
09:30 | United Kingdom | Mortgage Approvals | September | 65.55 | 65 |
09:50 | Germany | German Buba President Weidmann Speaks | |||
13:00 | U.S. | S&P/Case-Shiller Home Price Indices, y/y | August | 2% | 2.1% |
14:00 | U.S. | Pending Home Sales (MoM) | September | 1.6% | 1.7% |
14:00 | U.S. | Consumer confidence | October | 125.1 | 127.4 |
23:50 | Japan | Retail sales, y/y | September | 1.8% | 6.9% |
After climbing higher toward the 1.31 handle during the European trading hours, the USD/CAD came under modest bearish pressure as the CAD capitalized on rising crude oil prices and gathered strength against its rivals.
U.S. President Donald Trump on Monday said that they were "ahead of schedule" with finalizing the phase-one of the trade deal with China and added that he was expecting to sign the deal at the APEC meeting in Chile in November to ease worries over a dismal demand outlook. The barrel of West Texas Intermediate rose to a fresh monthly high of $56.90 on these comments but erased its gains to return to the $56 area.
USD waits for FOMC
On the other hand, today's data from the United States revealed that the trade deficit narrowed to $70.4 billion in September from $73.06 billion in August. Other data showed that the Chicago Fed's National Activity Index slumped to -0.45 from 0.15 and the Dallas Fed Manufacturing Index dropped to -5.1 to miss the market expectation of 1.4.
The Greenback largely ignored the data and the US Dollar Index extended its sideways grind near the 97.70/80-area as investors seem to be refraining from making large bets ahead of Wednesday's critical Federal Open Market Committee (FOMC) meeting.
Previewing the event, “Given the lack of pushback against that pricing by the recent parade of Fedspeak, it’s a relative safe prediction that they deliver another cut to take the fed funds target range to 1.50-1.75%,” said Deutsche Bank analysts.
Analysts at Deutsche Bank suggest that, ahead of this Wednesday’s Fed meeting, a 25-bps rate cut is just about fully priced now.
Analysts at Deutsche Bank note that political fragmentation in Germany continued over the weekend.
Analysts at TD Securities are expecting Canada’s industry-level to rise by 0.1% in August, helped by stronger services and a partial rebound in the goods-producing sector.
Analysts at Rabobank note that according to the latest CFTC Commitment of Traders Report, USD net longs slipped for a third consecutive week.
Analysts at TD Securities note the Bank of Canada (BoC) is widely expected to keep rates unchanged at 1.75% during the October policy meeting, where updated economic projections will balance a better-than-expected 2019 with modest downgrades to the 2020 outlook.
“We are looking probably to be ahead of schedule to sign a very big portion of the China deal, we’ll call it Phase One but it’s a very big portion,” he told reporters at Joint Base Andrews before leaving on a visit to Chicago.
The Chicago
Federal Reserve announced on Monday the Chicago Fed national activity index
(CFNAI), a weighted average of 85 different economic indicators, came in at -0.45
in September, sharply down from a revised +0.15 in August (originally +0.10),
pointing to slower economic growth.
Economists had
forecast the index to come in at -0.37 in September.
At the same
time, the index’s three-month moving average fell to -0.25 in September from
-0.10 in August.
According to
the report, three of the four broad categories of indicators that make up the
index dropped from August, and all four categories made negative contributions
to the index in September. Production-related indicators made a negative
contribution of -0.37 to the CFNAI in September, down from +0.19 in August. Meanwhile,
the contribution of the sales, orders, and inventories category to the CFNAI edged
down to -0.02 in September from -0.01 in August, and the contribution of the
personal consumption and housing category to the CFNAI ticked down to -0.04 from
a neutral value in August. Employment-related indicators contributed -0.02 to
the CFNAI in September, up slightly from -0.03 in August.
Bert Colijn, a senior Eurozone economist at ING, suggests the slowdown in M3 money supply from 5.8 to 5.5% year-on-year in September is not necessarily very alarming.
"The indicator had seen strong growth over recent months, which was also found in the narrow money aggregate M1, a clear green shoot for a growth pickup in the middle of next year. A one-month blip is not necessarily alarming, but in the light of an already weak economy should be treated with caution.
More concerning is the weakness in private sector lending growth, which declined slightly from 3.8 to 3.7% in September mainly due to a decline in the growth rate of non-financial corporate lending. This drop from 4.3 to 3.7% represents a weakening of the credit impulse and could reflect reluctance in borrowing among businesses as concerns about the economy become widespread.
Next month should show whether this was a one-off blip or whether uncertainty is starting to have more of a material impact on lending demand. That would add to concerns about a prolonged slow growth environment or perhaps even worse."
According to analysts at the Royal Bank of Scotland (RBA), ECB’s outgoing President Mario Draghi failed to pull any rabbits out of the hat at his last meeting.
The CFTC Positioning Report for the week ended on October 22 revealed the following:
The
Confederation of British Industry (CBI) reported on Monday its latest survey of
retailers showed retail sales volume balance rose to -10 in October from -16 in
September. That marked the sixth consecutive month of decline in retail sales
volume, but at the slowest pace over this period so far.
Economist had
forecast the reading to come in at -20.
The report also
revealed that orders placed on suppliers (-9) also dropped in the year to
October (-4 percent), albeit at a slightly slower pace than September (-9
percent). Meanwhile, retailers expect sales volumes to be broadly flat next
month (+1 percent) and orders to deteriorate next month (-22 percent).
Rain
Newton-Smith, CBI Chief Economist, noted: “Retailers have now endured six
months of falling sales, the longest period of decline since the financial
crisis. The sector is struggling with ongoing digital disruption, layered on
top of cost pressures from a weak pound and the cumulative burden of an
outdated business rates regime. Retailers have also had to contend with the
looming Brexit deadline, which has partly driven a record spike in stocks. The
timing could not be worse: the run-up to Christmas is a crucial time of year
for the retail sector, and not knowing where we will be on November 1st is
adding more strain to an already beleaguered sector.”
Analysts at TD Securities note that the UK politics are again at center stage as the EU this morning signed off on an Article 50 extension to 31 January, but with exit dates on 1 Dec or 1 Jan if the Withdrawal Agreement is passed.
Britain and China are building the foundations for strong future cooperation in financial services as the UK readies to leave the European Union, H.E. Liu Xiaoming, China's ambassador to Britain, said on Monday.
"There is a broad and promising future for cooperation," he told a conference, singling out fintech and green finance.
Recent violence in Hong Kong has "inevitably affected" the business environment there, but with strong support from China's central government and the government of Hong Kong, law and order will be restored, he said.
"Hong Kong will continue to be a financial bridge between East and West," he said.
While a soft DXY supported the Chinese yuan (CNY) for most of September, escalating trade tensions weighed on market sentiment, writes Hunter Chan – Economist Greater China at Standard Chartered.
"The US and China imposed additional tariffs on each other’s goods starting from 1 September. While talks between the two sides continue, the date for high-level trade talks in October was not confirmed until the last week of September. Against this backdrop, non-FDI capital outflows picked up to USD 19.7bn in September from a modest USD 11.5bn in August, according to our estimate. FX assets held by the People’s Bank of China (PBoC) saw a small decline of USD 0.1bn, indicating that overall cross-border flows remained balanced. The merchandise trade surplus widened to USD 39.6bn in September after narrowing for two months, leading to a larger Q3-2019 surplus relative to Q2. Meanwhile, we estimate that the September services trade deficit shrank to USD 22.9bn. We calculate that total net capital outflows (including net FDI inflows of USD 2.8bn) edged up by USD 7.3bn to USD 16.9bn in September -- still modest compared with June (USD 31.8bn) and July (USD 20.3bn). The latest data from the State Administration of Foreign Exchange (SAFE) shows that net FX sales picked up in September and the willingness to convert FX receipts into CNY declined. SAFE recently announced new measures to facilitate cross-border trade and investment, including simplifying administrative procedures for FX payment and receipt and removing some payment restrictions on the capital account. The measures aim to improve the business environment and attract foreign capital.
The European Union has agreed to give the U.K. three more months to exit the bloc. European Council President Donald Tusk, who chaired the talks among the 27 European governments, announced the decision on Twitter: “The EU27 has agreed that it will accept the U.K.’s request for a Brexit flextension until 31 January 2020. The decision is expected to be formalised through a written procedure.”
This means that the U.K. will be able to leave the EU at any point before January 31, provided that its Parliament approves the exit agreement that Prime Minister Boris Johnson concluded with the other 27 EU leaders earlier this month.
Tusk’s announcement came after a meeting between the 27 European ambassadors, in Brussels, where they signed off on a third delay.
The Danske Bank analysts provide brief insights on the important events of note, scheduled this week.
"We have a slow start to a very important week today. Today we get euro area monetary aggregates and loan data and Swedish trade balance is also released. After years of negative prints, the trend is once again positive, surely helped by the weak SEK. Our forecast is for a SEK5bn surplus, but this should not be a market mover. Focus this week will be on the Brexit deadline on Thursday (although we expect another extension) and FOMC meeting on Wednesday (where we expect a cut). We also have Bank of Japan policy meeting where markets price around some 50% probability of a rate cut. On Friday, we expect a weak US job report, with an increase of just 50,000. Preliminary Q3 GDP data for both the euro area and the US are due out".
According to the report from European Central Bank, the annual growth rate of the broad monetary aggregate M3 decreased to 5.5% in September 2019 from 5.8% in August, averaging 5.5% in the three months up to September. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, decreased to 7.9% in September from 8.5% in August. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 1.2% in September from 1.0% in August. The annual growth rate of marketable instruments (M3-M2) was -1.6% in September, compared with -2.7% in August.
Annual growth rate of adjusted loans to households stood at 3.4% in September, unchanged from previous month
Annual growth rate of adjusted loans to non-financial corporations decreased to 3.7% in September from 4.3% in August
The outflow from U.S. equity funds this year has been the biggest since 2008, relative to the flood of money into cash and bonds, according to Goldman Sachs Group Inc.
That still leaves cash exposures “near historical lows,” according to Goldman strategists led by David Kostin. At 12%, the aggregate allocation to cash is only in the fifth percentile of the past 30 years, they calculated.
“High uncertainty, investor fears of a recession, and low starting cash allocations will likely limit a significant increase in equity allocations” in 2020, the Goldman team said.
Just like this year, corporate demand will be the top source of U.S. equity buying in 2020, Goldman projected. While buybacks may drop, net demand is still seen as strong thanks to diminished initial public offerings and a rise in cash-based mergers and acquisitions. Households and foreign investors will also be net buyers, while pension funds keep whittling down their allocation, as they have since 2009, Goldman said.
Citi discusses USD/CAD technical outlook and shifts to a neutral bias in the near-term.
"Momentum on the daily chart has now moved to the most oversold we have seen since after the double top in late December 2017 and is starting to turn up. That turn higher in momentum in Jan 2018 saw a good bounce in USDCAD," Citi notes.
"With some overall lack of momentum short-term in the USD down move starting to develop and a lot of event risk beckoning we are happy to move to the sidelines on this," Citi adds.
The European Union will “most likely” agree to delay Brexit until Jan.31 on Monday, said a source close to French President Emmanuel Macron who last week prevented the bloc from reaching a decision on the delay.
“There will most likely be an agreement on Monday morning between the 27 on extension until January 31,” the source said, adding that came after Macron spoke to British Prime Minister Boris Johnson during the weekend.
“The prospect of elections has strengthened significantly over the weekend,” the source added, stressing the third postponement of Brexit would come with conditions. They include a refusal to renegotiate Johnson’s divorce agreement and giving a green light to the 27 other EU countries to meet without Britain to discuss the bloc’s future.
The correction lower in Cable should meet strong contention in the 1.2760/00 band, suggested Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank.
“GBP/USD last week failed at psychological resistance at 1.30, and is correcting lower very near term. Dips are indicated to hold circa 1.2760/00. Directly above here we have the 200 week ma at 1.3138 and the 1.3187 May high and these remain our short term targets. For now, provided dips lower hold over 1.2582 (20th September high) an immediate upside bias is maintained. The 1.3187 May high guards the 1.3382 2019 high. Below 1.2582 lies the 1.2382 17th July low and the 1.2285 uptrend. The near term uptrend guards 1.2196/94”.
In opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, EUR/USD could drop and test the 1.1060/30 band ahead of a potential recovery.
“EUR/USD spent much of the week easing back from the 200 day ma at 1.1201 and then the top of the channel at 1.1283 this week. The 55 week ma lies at 1.1248. Very near term we would allow for slippage to the 1.1060/1.1030 vicinity ahead of recovery. Longer term the critical resistance to overcome is the 200 week ma at 1.1356 and while we would allow for this zone of resistance to hold the initial test, longer term we look for a break higher to feature. This will target 1.1520/70, the 2019 high, as a minimum”.
According to the report from Federal Statistical Office (Destatis), the index of import prices decreased by 2.5% in September 2019 compared to the corresponding month of the preceding year. Economists had expected a 2.4% decrease. In August 2019 and in July 2019 the annual rates of change were -2.7% and -2.1%, respectively.
From August 2019 to September 2019 the index rose by 0.6%. Economists had expected a 0.2% increase.
The index of import prices, excluding crude oil and mineral oil products, decreased in September 2019 by 1.6% compared to September 2018 and in comparison with August 2019 it rose by 0.4%.
The index of export prices remained unchanged in September 2019 compared to the corresponding month of the preceding year. In August 2019 and in July 2019 the annual rates of change were -0.1% and +0.2%, respectively. From August 2019 to September 2019 the index slightly rose by 0.1%.
Data from the National Bureau of Statistics showed that China's industrial profits declined at a faster pace in September as producer prices continued to fall.
Industrial profits decreased 5.3 percent year-on-year, after easing 2 percent in August. During January to September, profits earned by industrial firms declined 2.1 percent compared to a 1.7 percent drop in January to August period.
Profits of state owned enterprises fell 9.6 percent on year and that of private enterprises increased 5.4 percent. Larger decline in profits reflects faster fall in industrial product prices and slower rise in sales, bureau said.
EUR/USD
Resistance levels (open interest**, contracts)
$1.1178 (2927)
$1.1150 (3591)
$1.1124 (2237)
Price at time of writing this review: $1.1087
Support levels (open interest**, contracts):
$1.1034 (2503)
$1.0993 (4024)
$1.0947 (3370)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date November, 8 is 72536 contracts (according to data from October, 25) with the maximum number of contracts with strike price $1,1000 (4024);
GBP/USD
Resistance levels (open interest**, contracts)
$1.3043 (2273)
$1.2980 (1912)
$1.2914 (1527)
Price at time of writing this review: $1.2823
Support levels (open interest**, contracts):
$1.2717 (166)
$1.2686 (191)
$1.2651 (292)
Comments:
- Overall open interest on the CALL options with the expiration date November, 8 is 31100 contracts, with the maximum number of contracts with strike price $1,3200 (3744);
- Overall open interest on the PUT options with the expiration date November, 8 is 28240 contracts, with the maximum number of contracts with strike price $1,2100 (3168);
- The ratio of PUT/CALL was 0.91 versus 0.90 from the previous trading day according to data from October, 25
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.68199 | 0.05 |
EURJPY | 120.395 | -0.19 |
EURUSD | 1.10792 | -0.23 |
GBPJPY | 139.332 | -0.11 |
GBPUSD | 1.28224 | -0.15 |
NZDUSD | 0.63484 | -0.51 |
USDCAD | 1.30576 | -0.1 |
USDCHF | 0.9944 | 0.28 |
USDJPY | 108.66 | 0.04 |
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