Main market themes
- US stocks rallied on Friday to finish the week on a stronger note, boosted mainly by the surprisingly good nonfarm payrolls, better Chinese manufacturing data as well as positive trade headlines. US added 128k new jobs, China Markit manufacturing PMI ticked up while on the trade front, US officials said that a partial trade deal could be signed this month.
- According to Reuters, China Commerce Ministry said that both US and China had reached a “consensus on principles” over a phone call between key negotiators.
- Key indexes advanced by around 1%, the Dow Jones and S&P jumped to record closings.
- The recovery in sentiment led treasuries yields higher by around 1-3bps and the greenback to slip across the board.
- Oil prices rallied on Friday – WTI settled 3.7% higher at $56.2/barrel and Brent crude was up by 2.4% to $61.69/barrel.
- Key events this week are RBA and BOE’s monetary policy meetings markets are expecting both central banks to keep respective benchmark rate unchanged.
- ‘Super Thursday’ will be closely watched in the UK, whereby the Bank of England issues its policy decision and statement, as well as its Monetary Policy Report (previously known as Inflation Report), followed by a press conference by BoE Governor Mark Carney. As for economic data, the construction PMI for October is due on Monday, followed by the services and composite PMIs on Tuesday. As always, politics will continue to be in focus as well, but of a different nature as the election campaign starts to gather steam.
- Positioning shifted away from the USD. On the CFTC front, large non-commercial accounts and leveraged accounts alike pared their net implied long dollar bias in aggregate in the latest week. Elsewhere, asset manager accounts also increased their net implied dollar shorts in the latest week.
Today’s Options Expiries for 10AM New York Cut (notable size in bold)
- EURUSD: 1.1050 (EUR690mn); 1.1070 (EUR706mn); 1.1100 (EUR1.1bn); 1.1155 (EUR807mn); 1.1185 (EUR372mn); 1.1190 (EUR409mn); 1.1200 (EUR562mn)
- USDJPY: 107.90 (USD510mn); 109.00 (USD384mn); 109.10 (USD316mn); 109.50 (USD650mn)
- GBPUSD: 1.2700 (GBP315mn); 1.2800 (GBP266mn); 1.2866 (GBP202mn)
- AUDUSD: 0.6885 (AUD304mn); 0.6920 (AUD345mn); 0.6950 (AUD1.0bn)
EURUSD (Intraday bias: Bullish above 1.1140 target 1.12)
From a technical and trading perspective, as 1.1130 acts as support 1.12 test is the next upside objective. Only below 1.11 concerns bullish bias, opening a move to test pivotal support back at 1.1070.
GBPUSD (Intraday bias: Bullish above 1.29 target 1.3150)
From a technical and trading perspective,Daily chart has flipped bullish as per the daily VWAP, also the daily chart has a potentially bullish triangle developing, as 1.29 supports look for continued consolidation, with the potential to challenge stops above 1.30.
USDJPY (intraday bias: Bearish below 108.50 target 107.90)
From a technical and trading perspective, as 108.50 now acts as resistance look for a test of bids towards 107.90, a failure to find support here opens 107.50 bids next.
AUDUSD (Intraday bias: Bullish above .6865 target .7000)
From a technical and trading perspective,initial bullish objective achieved, as .6880 now acts as support look for a test of offers towards .6950 and then stops above.
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