RECAP

The MSCI Asia Pacific index gained 1%, as the Japanese Topix index rose 2.0%, and the Shanghai Composite was 1.0% stronger. The South Korean Kospi underperformed after South Korea’s industrial output slumped the most in nine years.

S&P futures climbed, and the Treasury 10-year yield edged up 1 basis point to 3.13%. The Australian curve bear-steepened with long-end yields approximately 3.5bps higher, and the Japanese Government Bond futures remained lower after the Bank of Japan left policy measures and forward guidance unchanged.

The Dollar hovered near its 2018 highs, as the Aussie slipped following a soggy inflation and the weakest China PMI in over two years. The Indian rupee weakened on speculation of a worsening rift between the government and the Reserve Bank of India. The Yuan briefly trimmed its losses after the People Bank of China planned a bill issuance in Hong Kong, this helped H shares rise 0.7% higher.

The WTI crude held near the $66.40, the base metals were broadly unchanged.

The Key Headlines of the Asian Session:

  • K. GfK consumer confidence -10 vs -10 est., Lloyds business barometer 19 vs 29 est., BRC shop price index y/y -0.2% vs 0.2% est.
  • China Oct Manufacturing PMI 50.2 vs 50.6 est., Non-Manufacturing PMI 53.9 vs 54.6 est.
  • BOJ leaves policy unchanged, tweaks language to reflect downside risks
  • India govt said to have used Section 7 powers to direct RBI’s Patel
  • Australia 3Q CPI 0.4% vs 0.5% est., trimmed-mean CPI 0.4% vs 0.4% est.
  • API inventories according to people familiar w/data: Crude +5.7m, Cushing +1.4m, Gasoline -3.5m, Distillates -3.1m

OUTLOOK

The Economic Calendar during the European session will focus on the CPI estimates in the Euro Zone. The expectation here is to increase which might be some good news for the ECB as it has been waiting on inflation to start increase towards their goal and things might be looking up for the European Central Bank and their targets.

However, most traders will be more concerned with the fact that today is the ADP Non-Farm Employment Change in the U.S. which is the precursor of the government issued NFP. A Good figure here could mean a good figure from the NFP.

TRADERS VIEW

Dollar rises for the third day versus major peers with Aussie dollar leading declines, weighed down by slowing inflation and deteriorating Chinese PMI data. Yen holds losses after the BOJ leaves its monetary policy unchanged, and forecasts inflation to remain below its 2% target through until at least early 2021. Euro is steady ahead of inflation data. Sterling is also little changed after Gfk consumer confidence worsened in line with estimate.

USDJPY – The pair has bullishly breached the initial resistance at the October 22nd high. Resistance is seen at the 114.10 followed by 114.55. 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 seeking to consolidate on the short-term. Resistance is seen at the 129.22 followed by the 130.50. Support, on the other hand, is seen at 126.64 followed by 124.91.