Market Update 7-11

Market Briefs 

  • USD/JPY +1.27%, USD/CHF +0.85%, EUR/USD -0.65%
  • DXY +0.28%, DAX +1.5%, Brent +1.25%, Iron +3.28%
  • DE Sept Ind. Orders -0.6% m/m vs rvsd 0.9% prev, 0.3% exp
  • CH Oct CPI -0.2% y/y vs -0.2% prev, -0.2% exp
  • UK Oct Halifax Hse prices +5.2% 3mth/y/y vs 5.8% prev, 4.8% exp
  • EZ Nov Sentix idx 13.1 vs 8.5 prev, 9.0 exp
  • UK Oct Mtg rate 4.24% vs 4.2% prev
  • EZ Sept R.Sales 1.1% y/y vs tvsd 1.2% prev, 1.3% exp
  • NBC-WSJ poll has Clinton leading Trump by four points, 44% vs 40%
  • Jump in Florida, Nev early voting could reap Latino gains for Clinton – Rtrs
  • CFTC IMM CTA data – Specs up USD bets in latest week, highest since Jan
  • BoJ Sept 20-21 minutes – Most see delay in meeting inflation  target
  • Jpn MoF Asakawa – Eyes impact of US polls, to take steps if needed – Jiji, Rtrs
  • FOMC ViceChair Fischer– Labor market strong, Fed could overshoot goals –Rtrs
  • ECB VP Constancio – EZ inflation could rise to 1.3% by March – Rtrs

Looking Ahead – Economic Data (GMT)

  • 15:00 Labor Market Conditions Index Oct prev -2.2
  • 15:00 Employment Trends Index Oct prev 128.5
  • 20:00 Cons Credit Aug mkt +$18.00 bln, prev +$25.87 bln
  • 20:00 Treasury STRIPS

Looking Ahead – Events, Other Releases (GMT)

  • 16:45 FedTrade ops 30-Yr Ginnie Mae max $1.275 bln

Currency Summaries

EUR/USD 

  • Europe arrive to a higher USD but see little follow-through
  • Specs now handcuffed by the proximity to the US vote
  • Poor risk-reward for fresh positions, better to wait and see
  • EUR/USD 1.1140-1.1041. Europe 1.1048-74
  • Range close 1.10-1.11 seems a safe bet until a winner emerges
  • Risk on/off may dominate over USD up/down after
  • Specs longer of dollars into the event (21 USD bln high since Jan)

USD/JPY 

  • USD/JPY has risen from 103.10 to 104.63, hovering below session high
  • Offers are said to be thick all the way up to 105.54, October 28 peak
  • Japanese exporters said to be on top of the market
  • CTAs have been buyers below 104.00 level in Asia
  • Spot jumped in Asia as FBI clears Clinton over emails, “risk on”

CHF

  • USD/CHF sharply higher to 0.9789 and through 200DMA @ 0.9773
  • FBI clears Clinton and USD rallies: Risk tentatively on
  • EUR/CHF in step but not such  marked rally as EUR/USD applies brakes
  • Swiss Oct CPI -0.2% y/y and Rtrs poll –
  • Disinflation still the theme here and SNB likely to turn the heat up
  • Modest increase in Swiss reserves in Oct
  • Chart

GBP/USD

  • GBP/USD fell to a European am low of 1.2380 on expectations of a Clinton win
  • 1.2524 was early Asia high, before FBI cleared Clinton. 1.2558 = 4wk high Friday
  • EUR/GBP rose to a European am high of 0.8937 amid ongoing Brexit uncertainty
  • Sky News says UK govt preparing A50 bill for Commons/Lords to consider

USD/CAD

  • USD/CAD rose to a European am high of 1.3416 on expectations of a Clinton win
  • 1.3300 was Asia low. Trump 4/1 with Paddy Power (7/4 with William Hill Nov 3)
  • WTI oil up to eye $45 as OPEC promises output cut after Nov 30 meeting

 AUD/USD

  • AUD/USD topped out above 0.77 for the 12th time since Aug 10 in Asia
  • 0.7708 = Asia high, ensuing retreat based 6 pips shy of 0.7652 (Friday’s low)
  • Latest foray thru 0.7700 spurred by risk appetite rise on Clinton win expectation
  • 0.7709 = high on prior above-figure fail. 0.7700 expiry for NY cut, A$318mn strike

NZD/USD

  • NZD/USD elicited support pre-0.7290 during the European am
  • 0.7290 = Asia pullback low from 0.7362 (6wk high)
  • Ascent to 0.7362 spurred by rise in risk appetite on Clinton win expectation
  • FBI cleared Clinton Sunday afternoon (ET) after email review
  • 0.7300 option expiry Tuesday, just under half-yard strike

OPTIONS

  • FBI/Clinton news USD positive, Trump risk pared – vols hit in major pairs
  • USD/JPY 1wk 9.0 to 19.0, 1mth 10.3 to 12.7 last week, now 15.5 and 11.3
  • EUR/USD 1wk 8.0 to 14.75 and 1mth 7.3 to 9.8 and now 11.25 and 8.6
  • Risk reversal bids for USD puts have been slower to ease
  • Buyers low delta USD puts favored strategy to hedge any Trump win
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