RECAP

There was little respite for the Chinese equity markets at the start of a new week as the Shanghai Composite slid as much as 2%. The MSCI Asia Pacific index was down 0.1%, as stocks in Hong Kong were bolstered by a profit beat for HSBC, and the Hang Seng index rose 0.2%.

Bond yields were broadly soft, with the Treasury note yield at 3.08%, and the Aussie 10-year yields were down 3bps to 2.56%.

The Kiwi was the leader on the Group-of-10 scoreboard, with the Korean won as the best performer among Asian currencies. The Bloomberg Dollar index was up 0.3%, with the USD/CNY modestly higher, despite a parity fixing being close to the forecast.

The WTI crude was up 0.1% to $67.66.

The Key Headlines of the Asian Session:

  • Bostic says Fed must be wary of U.S. economy overheating
  • Italy budget deal could use ‘standby’ on some items: Messaggero
  • Brazil swings right with Jair Bolsonaro’s commanding victory
  • Japan Sept. retail sales fall 0.2% m/m; est. -0.2%
  • HSBC shows progress taming costs with quarterly profit beat
  • Early indicators show China’s slowdown worsened again in October
  • China inc. $287 billion perpetual bonds flash warning signs

OUTLOOK

Some respite came to the Asian equity market as Daylight Saving hits the market and traders try to adjust to the mangled timing it causes for one week as the U.S. takes it time in setting the clock back one hour.

In today’s Economic Calendar from the European session shows the U.K. Budget and Mortgage approvals on the agenda. Things are looking to be quiet for the meantime in this trading session as not much is expected to happen in terms of Economic News as well as in any geopolitical news that might cause the markets to behave irrationally.

There is one thing that might have some kind of an impact on the market and that involves Germany. Angela Merkel will be facing her fragile coalition as it suffered a thrashing which added to further instability to her government.

TRADERS VIEW

Euro edges lower after German Chancellor Angela Merkel’s fragile coalition suffered a drubbing in a state election, adding further instability to her government. Pound consolidates above $1.28 as investors wait for Chancellor of the Exchequer Philip Hammond to deliver the nation’s budget. Weakness in the euro bolsters the dollar.

USDJPY – The pair may be testing the 100-Day Moving Average in the near-term. Resistance is seen at the 112.89 followed by 114.10. Support, on the other hand, is seen at 111.38 followed by 110.38.

EURUSD – The pair has bearishly breached the support at October 9th low. Resistance is seen at 1.1550 followed by 1.1621. Support, on the other hand, is seen at 1.1336 followed by 1.1301.

EURJPY – The pair is looking to extend the bear trend. Resistance is seen at the 128.44 followed by the 130.50. Support, on the other hand, is seen at 126.64 followed by 124.91.