Market Brief
The falling oil prices hits the oil exporter currencies heavily. USD/CAD advances to fresh 5-year high of 1.1344 as crude declines to $81.32. The upside move gained good momentum after breaking the former high (1.1279). Bullish trend gains pace, option bids build strong above 1.1200/50 walking into Friday’s CPI reading. Markets expect slight cool down in Canadian infaltion dynamics from 2.1% to 2.0% y/y. Soft inflation should reinforce CAD-bears giving more dovish flexbility to Poloz’s BoC. Especially at times Canada’s larger export business is threatened by falling prices. The BoC rate decision is due on October 22nd, we expect dovish stance.
Another currency heavily hit by oil prices is the Ruble. USD/RUB extends gains to fresh all-time high of 41.0419, as oil prices continue sliding. The Central Bank of Russia canceled its bond auction today, the Russian 10-year government yields hit 9.98% (highest levels since Oct 2009). Trend and momentum indicators are comfortably positive, option bids are building at 40.00+.
In China, the CPI grew 1.6% y/y, near 5-year lows (vs. 1.7% exp. & 2.0% last), the PPI decelerated at the pace of 1.8% (vs. -1.6% exp. & -1.2% last). USD/CNY rebounded to 6.1300 as the soft inflation revived expectations for more PBoC stimulus. Large option barriers are placed at 6.13/6.14 and 6.15 for today expiry. The bias remains negative, with resistance seen at 6.1363/95 (21-dma / MACD pivot).
GBP/USD extended losses to 1.5877 overnight as Asia followed the post-CPI sell-off. The UK labor data is due today (08:30 GMT), expectations are optimistic. We will be closely monitoring the wage growth in August data. Any negative surprise should place 1.5855-support at risk. Resistances are placed at 1.6003 (Fib 50% on Jul’13 – Jul’14 rally), 1.6182 (21-dma), 1.6284 (Fib 61.8%). EUR/GBP tests 100-dma (0.79555) on the upside. Trend and momentum indicators are comfortably bullish. Option barriers at 0.7960/80 are to be cleared.
EUR/USD trades in tight ranges. The German September CPI came in unchanged at 0.0% m/m & 0.8% y/y as expected. Markets gave little reaction. The aggregate Euro-zone September final CPI is due tomorrow. The tech bias remains slightly positive in EUR/USD, traders remain seller on rallies given the soft inflation (deflation) concerns in the EZ. We expect re-test of 1.2501 support.
Today, traders focus on German September Final CPI m/m & y/y, Norwegian September Trade Balance, UK September Claimant Count Rate and Jobless Claims Change, UK August ILO 3M Unemployment Ratey/y & 3M Average Weekly Earnings y/y, Italian 2Q Deficit-to-GDP ytd, US Oct 10th MBA Mortgage Applications, US October Empire Manufacturing, US September Retail Sales m/m, U/S September PPI m/m & y/y, Canadian September Existing Home Sales m/m, Canadian September Teranet/National Bank HPI m/m & y/y, US August Business Inventories, Us September Monthly Budget Statement, and US Fed Beige Book.
| Todays Calender | Estimates | Previous | Country / GMT |
|---|---|---|---|
| GE Sep F CPI MoM | 0.00% | 0.00% | EUR / 6:00 AM |
| GE Sep F CPI YoY | 0.80% | 0.80% | EUR / 6:00 AM |
| GE Sep F CPI EU Harmonized MoM | 0.00% | 0.00% | EUR / 6:00 AM |
| GE Sep F CPI EU Harmonized YoY | 0.80% | 0.80% | EUR / 6:00 AM |
| SZ Bloomberg Oct. Switzerland Economic Survey | - | - | CHF / 7:00 AM |
| NO Sep Trade Balance NOK | - | 22.4B | NOK / 8:00 AM |
| UK Sep Claimant Count Rate | 2.80% | 2.90% | GBP / 8:30 AM |
| UK Sep Jobless Claims Change | -35.0K | -37.2K | GBP / 8:30 AM |
| UK Aug Average Weekly Earnings 3M/YoY | 0.70% | 0.60% | GBP / 8:30 AM |
| UK Aug Weekly Earnings ex Bonus 3M/YoY | 0.80% | 0.70% | GBP / 8:30 AM |
| UK Aug ILO Unemployment Rate 3Mths | 6.10% | 6.20% | GBP / 8:30 AM |
| UK Aug Employment Change 3M/3M | 30K | 74K | GBP / 8:30 AM |
| IT Istat Releases New ESA2010 GDP Quarterly Series up to 2Q | - | - | EUR / 8:30 AM |
| SZ Oct Credit Suisse ZEW Survey Expectations | - | -7.7 | CHF / 9:00 AM |
| IT 2Q Deficit to GDP YTD | - | 6.60% | EUR / 9:00 AM |
| US oCT 10TH MBA Mortgage Applications | - | 3.80% | USD / 11:00 AM |
| US Oct Empire Manufacturing | 20.7 | 27.54 | USD / 12:30 PM |
| US Sep Retail Sales Advance MoM | -0.20% | 0.60% | USD / 12:30 PM |
| US Sep Retail Sales Ex Auto MoM | 0.20% | 0.30% | USD / 12:30 PM |
| US Sep Retail Sales Ex Auto and Gas | 0.40% | 0.50% | USD / 12:30 PM |
| US Sep Retail Sales Control Group | 0.40% | 0.40% | USD / 12:30 PM |
| US Sep PPI Final Demand MoM | 0.10% | 0.00% | USD / 12:30 PM |
| US Sep PPI Ex Food and Energy MoM | 0.10% | 0.10% | USD / 12:30 PM |
| US Sep PPI Final Demand YoY | 1.80% | 1.80% | USD / 12:30 PM |
| US Sep PPI Ex Food and Energy YoY | 1.70% | 1.80% | USD / 12:30 PM |
| CA Sep Existing Home Sales MoM | - | 1.80% | CAD / 1:00 PM |
| CA Sep Teranet/National Bank HPI MoM | - | 0.80% | CAD / 1:00 PM |
| CA Sep Teranet/National Bank HPI YoY | - | 5.00% | CAD / 1:00 PM |
| CA Sep Teranet/National Bank HP Index | - | 167.12 | CAD / 1:00 PM |
| US Aug Business Inventories | 0.40% | 0.40% | USD / 2:00 PM |
| US Sep Monthly Budget Statement | $90.0B | $75.1B | USD / 3:00 PM |
| US U.S. Federal Reserve Releases Beige Book | - | - | USD / 6:00 PM |
Currency Tech
EUR/USD
R 2: 1.2901
R 1: 1.2791
CURRENT: 1.2651
S 1: 1.2606
S 2: 1.2501
GBP/USD
R 2: 1.6182
R 1: 1.6003
CURRENT: 1.5910
S 1: 1.5855
S 2: 1.5738
USD/JPY
R 2: 108.74
R 1: 107.75
CURRENT: 107.37
S 1: 106.64
S 2: 105.44
USD/CHF
R 2: 0.9691
R 1: 0.9598
CURRENT: 0.9546
S 1: 0.9410
S 2: 0.9301