The European equities managed to hold onto their early gains, tracking a decent bounce in Asia. The Euro Stoxx index gained 1.5%, as the CAC40 outperformed with L’Oreal and Sanofi both rising around 5% after solid earnings. Basic resources and oil and gas sectors led gains, with healthy numbers from Facebook and eBay underpinned tech names.
Core European Government Bonds led losses ahead of the month-end index extensions and heavy month-end re-balancing. The German 10Y yields were rejected again at 40bp as per yesterday, while the CT10 breached last Thursday’s best levels. Curves are slightly bear steeper. Bund/BTP spread was tighter approximately 10bp tighter back to 300bp on local press reports, while other peripheral and semi-core bonds traded a similar theme. The Spanish yields were resilient as GDP data from the country showed the nation remained a bright spot in Europe.
The Bloomberg dollar index resumed its climb higher, as the AUD and NZD lagged behind their Group-of-10 peers, and the GBP strengthened. The INR pared some overnight weakness after the Government statement. The TRY shrugged off its inflation forecasts.
WTI was steady around $66.50, while base metals were in the red.
In the key headlines for the European session:
- China Politburo says timely steps needed to counter a slowdown
- ECB’s Hansson sees no significant change to raise doubt over ECB forecasts; wage growth is increasing ECB confidence in inflation
- Italy Govt may argue that “effective” deficit is nearer to 2%: Il Sole
- Italy Treasury will respond to EU request for debt reduction plans by Nov. 13
- German Fin Min calls for higher minimum wage: Bild
- Bank of Japan Gov Kuroda says not thinking about changing zero percent target or widening 10Y tolerance range
- Bank of Japan leaves policy unchanged, tweaks language to reflect downside risk
- China Oct Manufacturing PMI 50.2 vs 50.6 est., Non-Manufacturing PMI 53.9 vs 54.6 est.
- API inventories according to people familiar w/data: Crude +5.7m, Cushing +1.4m, Gasoline -3.5m, Distillates -3.1m
As this is written the ADP Non-Farm Payroll got released with whopping 227 Thousand new jobs added into the workplace, and since the ADP is usually, for often than not, a precursor to the much more anticipated Government issued NFP, it is sufficing to say that investors can look forward to the NFP to release a good figure.
However, that would seem to be the only piece of relevant information in terms of Economic Calendar releases that can be expected from the U.S. as focus shifts to Canada as it is set to release its GDP figure. For the most part, the Canadian economy had been suffering for the past couple of quarters and this time around, more of the same can be expected as the expectation is of 0.0% growth, i.e. no growth.
Speaking on other subjects, Investors will also have their ears to the ground regarding anything to do with the Mid-Term Elections that seem to be on everyone’s mind lately. Mainly due to the fact that is literally less than a week away. This is keeping markets somewhat high strung as a Democratic upset over the GOP might render the markets more turbulent than they already are.
The Bloomberg Dollar Spot index headed for its best month in two years amid supportive month-end flows that offset profit-taking by short-term investors. Price action in the euro was quiet while the pound rebounded, tracking trading in the options market. Treasuries were lower while stocks advanced globally to pare their widest monthly losses in more than six years.
EUR/USD – Daily DeMark buy setup completed, but the pair fails to gain upside traction; analysis suggests a correction north may be due before fresh cycle lows can be sustainable.
GBP/USD – No respite for bulls as year-to-date low in play; stays bearish as 21-DMA, currently at 1.3006, looks to cross below 55-DMA at 1.2996.
USD/JPY – Retains bullish bias, 21-DMA fails to cap; 200- weekly MA at 113.06.
AUD/USD – Struggles to overcome 21-DMA resistance at 0.7093 as the upside is defined by the 55-DMA.
EUR/CHF – Trapped between short-term MAs, slight bullish bias.