FTSE -11 points at 7511 DAX +25 points at 12980 CAC +11 points at 5370 Euro Stoxx +4 points at 3607
Turkish lira plunged as the US and Turkey mutually suspended non-immigrant visas after a Turkish national working in the US consulate was arrested for involvement in July 2016 military coup. The EUR/TRY traded at 4.5211 for the first time and the USD/TRY hit 3.8533. The lira will likely remain vulnerable due to political risks. The key resistance against the US dollar stands at 3.9415, the all-time high hit in January 2017.
Japan was closed due to bank holiday; Chinese mainland stocks were upbeat after traders returned from the one-week Mid-Autumn festival break. Shanghai Composite (+1.24%) gained despite the weaker-than-expected Chinese manufacturing and services PMI in September. The AUD/USD opened slightly stronger as Chinese traders pushed metals higher as they returned from holidays. Copper (+1.48%), zinc (2.58%) and steel rebar (+3.03%) futures traded higher in Shanghai.
Elsewhere, the US dollar started the week slightly softer against the G10 complex. The US and Canada will also be closed due to bank holiday, hinting at low trading volumes later in Monday's session.
The kiwi (-0.25%) was the leading G10 loser against the US dollar as the ruling National Party and its Labour opposition both collected enough support to form a coalition, a situation which increases the political uncertainty and keeps the FX traders away from the kiwi.
Oil and gold were better bid in Asia. Gold rebounded after trading at $1’260, a two-month low. Tensions with North Korea continues as the US President Trump hinted at an eventual military action by tweeting ‘only one thing will work’. The 100-day moving average ($1’273) could provide support to the gold recovery.
WTI (+0.34%) and Brent crude (+0.23%) gained as OPEC’s Secretary General Barkindo said the OPEC and its allies could take extraordinary measures in 2018 to rebalance the oil market. There are ongoing talks among major producers before the Vienna meeting due on November 30th. Brent crude holds the ground above the $55/barrel level although the positive trend appears to lose momentum. In the US, Hurricane Nate interrupted 93% of the US Gulf production over the weekend, yet the impact could remain short-lived according to news and the WTI crude could remain offered below the $50 per barrel.
German industrial production beat estimates (+2.6% month-on-month versus 0.9% expected by analysts). The EUR/USD consolidates above the 100-day moving average (1.1676), if broken could pave the way toward a key mid-term support of 1.1509 (major 38.2% retrace on April – September rise). Short-term offers are touted at the 200-hour moving average (1.1752).
The European stock markets are set for a positive open. Spanish stocks could pare losses at the open as nearly a million pro-unity protesters marched in Barcelona on Sunday. Though, the risk of a unilateral declaration of Catalan independence prevails and could further harm the Spanish stocks if realized.
The pound is again under a decent political pressure. According to latest news, PM Theresa May could reshuffle her cabinet and exclude Foreign Secretary Boris Johnson. May’s disastrous speech at the Tory party conference last week has successfully caricaturized the dull atmosphere at the heart of the party and the way the Brexit negotiations have been handled so far. Talks on cabinet reshuffle could be a light hope for pound traders, yet the reshuffle would not happen before May’s October 19/20 meeting with the European leaders in Brussels, according to the Sunday Times. Cable is preparing to test the 1.30 support. Offers are eyed into the 50-day moving average (1.3145) and 1.3176 (minor 23.6% retracement on September-October decline).
Firmer oil, commodity prices and the softer pound could underpin the positive trend in FTSE 100, despite the politically tense trading environment.