FTSE -14 points at 7546 DAX -6 points at 13472 CAC -10 points at 5511 IBEX 35 -17 points at 10340
The US dollar gained in Asia. The yen was the biggest loser against the greenback as the Bank of Japan (BoJ) meeting minutes reiterated the bank’s commitment to its ultra-loose monetary policy and the US President Donald Trump didn’t mention the weak yen as he called for a ‘fair’ trade relationship between the US and Japan. Trump said that the trade between the two countries is not fair due to ‘massive trade deficits’ and should be renegotiated in ‘quick and friendly way’. The US recorded a trade deficit of $62’898 million against Japan in 2016. If the US increases efforts in reducing this deficit, that would mean that the Japanese surplus would have to decline symmetrically. A lower trade surplus would further weigh on the Japanese yen.
The USD/JPY advanced to 114.73. It is perhaps just a matter of time before the USDJPY pushes above the 115 level. Exporters are hedging against a softer yen. Large call options are seen at 114.50/115.00 at today’s expiry.
On Friday, the US nonfarm payrolls (NFP) data were perceived as being strong, although the October figure missed the analysts’ ambitious estimate of 313K on hurricane rebound. The US economy added 216K new nonfarm jobs in October, versus -33K printed a month earlier. The August and September figures were revised higher as well, suggesting that the improvement in the US labour market remains satisfactory after the hurricane impact is filtered out.
NASDAQ (+0.74%) traded at an all-time high on Friday (6’297.625) as Apple (NASDAQ:AAPL) gapped higher and hit a record high (174.262) on the back of solid holiday sales forecast for the newly launched iPhone X. The Dow Jones (+0.10%) and the S&P500 (+0.31%) also stretched to uncharted territories (23557.06 & 2588.42 respectively).
Asian stock traders showed limited appetite on Monday. Hang Seng lost as much as 1% as People’s Bank of China (PBoC) Governor Zhou Xiaochuan warned about the accumulating risks to the Chinese financial system due to high leveraged trading. He called for less capital controls and more flexibility for non-Chinese financial institutions willing to operate in the mainland China.
FTSE and US stock futures edged lower as Saudi Prince Alwaleed has been arrested on anti-corruption surge. The WTI crude extended gains past $56/barrel on Saudi Arabia’s anti-corruption purge as the probe would consolidate the power of Crown Prince Mohammad bin Salman, who is in favour of an extension of the OPEC’s production cut agreement.
The AUD/USD is testing the 50-week moving average (0.7638) on the downside. Last week’s failure to consolidate gains above the 200-day moving average (0.7708) has been an invitation to the bears before the Reserve Bank of Australia (AUD) meeting due tomorrow. The RBA is expected to stay pat and maintain its accommodative tone, as the relatively soft inflation allows the policymakers to maintain a supportive monetary policy to deal with the high household debt and the relatively strong Aussie. Leveraged funds cut their longs AUD-positions to three-and-a-half month lows. Breaking the 0.7638 support could encourage a further slide to 0.7583 (lower Bollinger band on weekly chart).
The EUR/USD trades near the lowest levels in more than three months. The decline in the Eurozone yields discourage traders from opening fresh long positions. The Eurozone final services PMI data is due today and a positive surprise could have a positive drive, yet the trend and momentum indicators remain comfortably negative and the upside could remain capped. The pair is preparing to test the critical 1.1509-support (major 38.2% retrace on April – September rise). A slide below this level would suggest a mid-term bearish reversal against the US dollar.
The GBP/USD traded in the tight range of 1.3059/1.3086 overnight.
Demand in gold continues fading, as money flows into the bonds and stocks. Offers are eyed at $1,275 (200-hour moving average, 100-day moving average). Next critical support stands at $1,261 (200-day moving average).