Global Markets: 

  • Asian stock markets: Shanghai Composite down 1 %, Hang Seng dropped 0.60 %, ASX lost 0.70 %, Nikkei closed for a holiday
  • Commodities: Gold at $1232 (+0.90 %), Silver at $17.48 (+1.00 %), Crude Oil at $84.64 (-1.40 %)
  • Rates: US 10 year yield at 2.28, German 10 year yield at 0.89, UK 10 year yield at 2.22 

News & Data: 

  • China Trade Balance +31.00bln, Expected: +41.00bln, Previous: +49.80bln
  • China Exports 15.3 %, Expected: 11.8 %, Previous: 9.4 %
  • China Imports 7.0 %, Expected: -2.7 %, Previous: -2.4 %
  • PBOC Governor Zhou: Estimates that China FY GDP growth at about 7.5%; stresses prudent monetary policy
  • PBOC Governor Zhou: Employment situation better than expected
  • PBOC Governor Zhou: Employment situation better than expected 

CFTC Positioning Data: 

  • EUR net short 146k vs net short 138k prior
  • JPY net short 113k vs net short 120k prior
  • GBP net short 1k vs net long 3.5k prior
  • AUD net short 26k vs net short 2k prior
  • CAD net short 7k vs net short 4.5k prior
  • CHF net short 12.5k vs net short 12.5k prior
  • NZD flat vs flat prior 

FX Overview: 

Despite Japanese traders being off their desks for a holiday, the overnight session was quite lively. S&P 500 futures declined to fresh lows, while precious metals extended their gains from last week. Crude Oil remains weak however, as Saudi-Arabia signaled it is comfortable with lower prices in the near-term. In FX, the general theme was USD weakness as USD/JPY position unwinding continues. It first looked like a classic risk-off session with equities lower and the Yen strengthening, but better than expected Chinese econ data helped other currencies as the Australian Dollar to rally against the USD.

EUR/USD opened around 1.2645 and eventually made it to 1.2696. Solid offers noted from 1.2715 towards 1.2720, as well as stops resting above the resistance area. To the downside, initial support at 1.2640, with 1.26 now being the key short-term support level. EUR was also supported by cross flows, with EUR/AUD briefly trading above 1.46 and EUR/JPY holding above 135.50 support.

USD/JPY broke sub-107.50 in a rather thin market. Stops were cleared through 107.40 & 107.15 and the pair hit a low of 107.05. Dealers are seeing decent bids in front of the 107.00 level, but techs and sentiment point to further losses. Key support now at 106.80. To the topside, offers at 107.50/60 and in better size pre-108.00. Large stops building above 108.20.

AUD/USD was quite weak in the early session and it looked like it would break sub-0.8650 any moment. The currency then got bid though, as traders were anticipating good data out of China. The numbers didn’t disappoint and the pair extended gains towards 0.8748. Similar price action in NZD/USD, where the topside was capped at 0.7880 resistance. Meanwhile, the Canadian Dollar failed to gain vs the USD as USD/CAD remains around 1.12. There has been a quick drop to 1.1170 in the early session, but dealers blame it on a large stop order being executed and price reversed back to 1.12 within thirty minutes.

Keep in mind that there is a holiday in the US and Canada today, so liquidity will be rather poor after towards the London close.

The Week Ahead in FX:

On Tuesday, we’ll see the UK inflation figures, with the market expecting 0.2 % month-on-month and 1.4 % year-on-year. German will publish their ZEW numbers and we’ll see the Euro Zone Industrial Production data.

Wednesday, the focus will be on Chinese CPI numbers, followed by German inflation data and UK employment figures. Later in the day, the US will release their Retail Sales and PPI data. The following day, we’ll see inflation figures from the Euro-Zone, as well as Initial Jobless Claims, Industrial & Manufacturing Production and Phily Fed Manufacturing data out of the US.

Finally, on Friday, the US will publish their Building Permits, Housing Starts and Michigan Consumer Confidence numbers. 

Upcoming Events: 

  • All day – US Holiday (Columbus Day)
  • All day – Canadian Holiday (Thanksgiving)
  • 06:00 GMT – German WPI (0.1 % MoM, -1.0 % YoY)