Oil traded below $45/bbl before major producers meet later today to discuss output constraints in Algiers, while Asian indices fell despite a better-than expected consumer confidence and services PMI data from the US last night. The dollar strengthened for the first time this week while gold fell.
- US September consumer confidence jumped to the highest since 2007, up from 101.1 in August to 104.1 this month and beating the consensus estimate of 99.0.
- Markit’s services PMI rose to 51.9 from 51.0, exceeding the consensus projection of 51.2.
- The Mexican peso, increasingly a barometer of anxiety around the Trump campaign, jumped the most since February against the dollar on the market-perception that Hillary Clinton beat Donald Trump in their first debate yesterday.
- The Fed’s Vice Chairman Stanley Fischer said the economy is better off with higher rates and that wages are starting to rise amid stronger pressure in the labor market.
- A CNN poll showed that 62% of voters who watched the debate said Clinton won the discussion, compared with 27% for Trump.
- The S&P 500 Index added 0.6% to bring its quarterly advance to 2.9%. A positive 3 month performance in the benchmark gauge prior to each presidential election led to the incumbent party winning, 19 out of 22 times since 1928.
- The dollar stabilized earlier today, with the Bloomberg Dollar Spot Index rebounding 0.1% following yesterday’s 0.3% decline.
- US 10yr Treasuries advanced for a second day, with yields falling 3bps to 1.56%.
- Bank of Canada Governor Poloz hinted at a change in the central bank’s stance yesterday, nothing “it will take three to five years for the economy to restructure itself” from slumping commodity prices.
- Recent disappointing data – falling core inflation and worse-than-expected retail sales, support a bias towards easing in October. A downside miss in this Friday’s GDP report will likely increase odds of a rate-cut next month.
- According to the China Beige book, the country’s economic rebalancing to consumer-led growth is reversing and third quarter growth this year has been driven by strong performances in manufacturing, property and commodities while services-led sectors like retail, services and transportation all saw weaker results.
- Spot gold fell 0.9% to $1,324.68/Oz, as a surge in US consumer confidence dampened demand for the metal. China’s gold imports from Hong Kong slid to a seven-month low. The key support level remains at the $1,300/Oz level.
- Silver is poised to fall for the fourth straight day, after sliding 2.2% to below the $19/Oz handle.
- Crude oil for November delivery slid 2.7% to $44.67/bbl ahead of OPEC’s meeting in Algiers after Iran said it won’t freeze output at current levels; Iran Oil Minister Zanganeh claimed it isn’t on their agenda to reach an agreement at OPEC talks.
- The head of IEA said supply and demand won’t be in balance until late 2017 while Goldman Sachs cut its fourth quarter price forecast to $43/bbl.
- Spot 1.3610
- USDSGD maintained near the 1.3600 handle, paring yesterday’s losses to trade 0.3% higher earlier today.
- ABN Amro forecasts MAS to ease in October by shifting its policy bond lower by 0.5%-1% and projects USDSGD to reach 1.4000 by the end of the year.
- Spot 0.7672
- AUDUSD was largely unchanged, with the currency pair fluctuating around its prior close.
- The long-term downward trend since 2014 is in danger of being broken and a strong move up beyond 0.7750 should confirm the break-out.
- Spot 1.3228
- For the second day running, USDCAD made a higher high, only to retrace back to 1.3200 handle.
- A strong close above the 200-day moving average of 1.3242 should confirm the break-out. The next resistance comes in around 1.3500.
- Spot 6.6801
- Onshore and offshore yuan was steady as a week-long national holiday approaches; onshore yuan was barely changed all week.
- The PBOC weakened its reference rate by 0.05% to 6.6681 against the dollar.
- USDCNH remained largely unchanged around the 6.6800 handle.
- Spot 100.58
- USDJPY continues to hover above the key support level of 100, with the currency pair 0.3% higher earlier today at 100.66.
- An economic adviser to Prime Minister Abe warned that further gains in the yen would undermine any additional monetary easing by the BOJ.
- A break below the all-important 100.00 level would confirm further downward momentum for the currency pair, with 95.00 a realistically possible target.
- Spot 1.3007
- GBPUSD gained 0.5% to recover back above the 1.3000 level.
- Immediate-term resistance should come in around the one-week high of 1.3121.