Improved Jobless Claims sees bond yields higher, USDJPY trying resistance. US 30-year auction results up later.
MAJOR HEADLINES – PREVIOUS SESSION
- New Zealand Oct. Business PMI out at 50.6 vs. 51.5 in Sep.
- New Zealand Sep. Retail Sales out at 0.2%/0.0% MoM less Autos vs. 0.4%/0.4% expected, respectively
- Japan Oct. Domestic CGPI fell -0.7% MoM and -6.7% YoY vs. -0.1%/-6.0% expected, respectively
- Australia Oct. Employment Change rose 24.5k vs. -10k expected
- Sweden Oct. CPI out at +0.3% MoM and -1.5% YoY vs. +0.2/-1.6% expected, respectively
- EuroZone Sep. Industrial Production rose 0.3% MoM vs. 0.5% expected (YoY was -12.9% vs. -14.1% exp.)
- Canada Sep. New Housing Price Index rose +0.5% MoM vs. +0.2% expected
- US Weekly Initial Jobless Claims fell to 502k vs. 510k expected and 514k last week
- US Weekly Continuing Jobless Claims fell to 5631k vs. 5700k expected and 5770k last week
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
- US Weekly DOE Crude Oil and Product Inventories (!600)
- Switzerland SNB's Jordan to Speak (1700)
- US Oct. Monthly Budget Statement (1900)
- New Zealand Oct. REINZ House Sales (2100)
- New Zealand Oct. Non-resident Bond Holdings (0200)
- Japan Oct. Consumer Confidence (0500)
Australian employment report
The Australian employment data was better than expected on the surface of things, but as was the case with some of the data over the summer, failed to show convincing strength in the Full Time Employment component, which was essentially flat month on month at 2.9k. Still, that latter number might ought to be considered better than expected as last month's huge 39.8k advance in full time positions was similar to previous spikes that usually reverted back to trend. In this case, the trend was looking negative, so an unchanged level is somewhat positive in the bigger picture. An advance in part time positions by 21.5k was the reason for the positive headline figure. AUDUSD tried to post a new top on the news, but the new highs failed to hold as global equities have backed off yesterday's highs and interest rate differentials between Australia and the US did not budge on the news.
The Australian employment data was better than expected on the surface of things, but as was the case with some of the data over the summer, failed to show convincing strength in the Full Time Employment component, which was essentially flat month on month at 2.9k. Still, that latter number might ought to be considered better than expected as last month's huge 39.8k advance in full time positions was similar to previous spikes that usually reverted back to trend. In this case, the trend was looking negative, so an unchanged level is somewhat positive in the bigger picture. An advance in part time positions by 21.5k was the reason for the positive headline figure. AUDUSD tried to post a new top on the news, but the new highs failed to hold as global equities have backed off yesterday's highs and interest rate differentials between Australia and the US did not budge on the news.
USD: brief consolidation or outright rally?
The greenback was at an interesting crossroads yesterday, with the EUR, CHF, and AUD trading at, or close to a high vs. the USD, while CAD and NZD were at interesting retracement levels and GBPUSD had seen an outright reversal of the sequence above 1.6700. The pendulum has swung to the upside for the dollar today, as new highs in equities have not held and technical arguments are therefore in place for some extension of USD consolidation here in the short term, though it will certainly take some doing to inflict further structural damage on the weak USD trend. EURUSD has failed to convincingly break the tactical support line at 1.4920, a simple prerequisite for getting anything going to the downside at the moment.
The greenback was at an interesting crossroads yesterday, with the EUR, CHF, and AUD trading at, or close to a high vs. the USD, while CAD and NZD were at interesting retracement levels and GBPUSD had seen an outright reversal of the sequence above 1.6700. The pendulum has swung to the upside for the dollar today, as new highs in equities have not held and technical arguments are therefore in place for some extension of USD consolidation here in the short term, though it will certainly take some doing to inflict further structural damage on the weak USD trend. EURUSD has failed to convincingly break the tactical support line at 1.4920, a simple prerequisite for getting anything going to the downside at the moment.
With the positive jobless claims data out of the US, bonds are dipping and USDJPY is up challenging that Ichimoku cloud resistance area once again that we pointed out yesterday and that comes in just above 90.00. The high for the week in USDJPY is just above 90.25.
T-bond auction today
Today's auction of US 30-year T-bonds is worth watching to see how the market treats the longest end of the yield curve. With gold at all time highs and the idea that countries are devaluing their currencies with current fiscal and central bank policies, it is always interesting to see how the market approaches a 30-year government-backed instrument yielding less than 4.5% of taxable interest. In FX, it seems that JPY is the only major currency that moves consistently on the zigs and zags in the bond market. The bond market only becomes an influential factor across the board in currencies if we witness a massive sell-off, something that would probably trigger risk aversion, as the latest trends in risk appetite have been driven by the bubble mentality of low-rates-forever, or at least for "an extended period" to borrow from the Fed's policy statement.
Today's auction of US 30-year T-bonds is worth watching to see how the market treats the longest end of the yield curve. With gold at all time highs and the idea that countries are devaluing their currencies with current fiscal and central bank policies, it is always interesting to see how the market approaches a 30-year government-backed instrument yielding less than 4.5% of taxable interest. In FX, it seems that JPY is the only major currency that moves consistently on the zigs and zags in the bond market. The bond market only becomes an influential factor across the board in currencies if we witness a massive sell-off, something that would probably trigger risk aversion, as the latest trends in risk appetite have been driven by the bubble mentality of low-rates-forever, or at least for "an extended period" to borrow from the Fed's policy statement.
Looking ahead
The rest of the US session features a look at the latest energy inventory numbers from the US. Inventories are still very high, especially for the seasonally most important distillates. Crude becomes a factor on the likes of USDCAD if the December contract trades below the 76.50 support. USDCAD finally found support not far below the 1.0460 Fibo level, so the low from the Asian session becomes an important support for the view on that pair. The first major upside resistance there is 1.0600. Today's rally and reverse action looks like a tactical run on the stops so far. Tomorrow we have the first estimate of German and EuroZone Q3 GDP, Canadian Sep. Merchandise Trade, the US Sep. Trade Balance, and preliminary US University of Michigan Confidence.
The rest of the US session features a look at the latest energy inventory numbers from the US. Inventories are still very high, especially for the seasonally most important distillates. Crude becomes a factor on the likes of USDCAD if the December contract trades below the 76.50 support. USDCAD finally found support not far below the 1.0460 Fibo level, so the low from the Asian session becomes an important support for the view on that pair. The first major upside resistance there is 1.0600. Today's rally and reverse action looks like a tactical run on the stops so far. Tomorrow we have the first estimate of German and EuroZone Q3 GDP, Canadian Sep. Merchandise Trade, the US Sep. Trade Balance, and preliminary US University of Michigan Confidence.
Chart: EURUSD
Tactically, we look at the 1.4920 area for whether the EURUSD sell-off will continue, as this was a level of resistance last week. Below that, the 21-day moving average has often been in play during this market cycle. The weekly pivot doesnt come in until 1.4800. To the updside, tactical resistance is perhaps 1.4952, yesterday's low.
Tactically, we look at the 1.4920 area for whether the EURUSD sell-off will continue, as this was a level of resistance last week. Below that, the 21-day moving average has often been in play during this market cycle. The weekly pivot doesnt come in until 1.4800. To the updside, tactical resistance is perhaps 1.4952, yesterday's low.
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