• USD gaining momentum against its major counterparts as risk aversion intensified. Growth concerns after softer manufacturing PMI’s out of China and Europe, a weak German bond auction and continued concerns over the EU debt crisis have weighed heavily on risk. Global equities are a sea of red and U.S. stock futures are currently down about -0.90%. UST yields are lower as investors seek safety in Treasuries and the Dollar Index reached new highs for the month – currently trading around 78.85. On the data front, Oct. durable goods orders, personal income and spending, weekly jobless claims are all due out at 0830ET while the University of Michigan confidence survey for Nov. is due out at 0955ET.
• EUR under pressure as French, German and EZ manufacturing PMI’s continue to deteriorate indicating contraction. Sovereign yields are higher after a disappointing German auction which failed to get bids for 35% of the bonds offered (investors bid 3.9B euros of the 6B euros in 10-yr bunds offered) and Italy’s 10-year yields are approaching 7% again. EUR/USD made new lows for Nov. and broke below the 1.34 figure to current levels of around 1.3380.
• JPY advancing against all of the majors except against the US dollar as investors demand safety. There was no data released overnight as it was a bank holiday in Japan. Of the G10, the yen is strongest against the Aussie as the pair continues to trade within is bearish channel (see: TECHNICAL UPDATE: AUD/JPY bearish channel and EW count). USD/JPY is approaching the convergence of the 21 and 100-day sma’s which come in around 77.30 and may be resistive. EUR/JPY has fallen to test the 76.4% Fibonacci retracement level of the rally from Oct. lows to Oct. highs and GBP/JPY saw a brief dip below the 120.00 big figure before rebounding to current levels around 120.25.
• GBP firmer against all of the G10 except the USD and JPY after MPC minutes of the Nov. 9-10 meeting showed that the committee voted 9-0 to keep the target for asset purchases at 275B pounds. The MPC said that there was “little merit in fine tuning” the program while the current purchases continued but that their forecasts meant that “a further expansion of the asset-purchase program might well become warranted in due course”. GBP/USD fell to the 1.5555 level and GBP/JPY dipped briefly below the 120.00 big figure. The pound was strongest against the Aussie with GBP/AUD rising above the 1.60 level.
• CAD is significantly weaker on declining equities, lower crude oil and overall risk aversion. WTI crude is currently down about -2.03% and USD/CAD is currently trading around the 1.0430 level and has broken above the hourly bull flag identified yesterday within an inverse head and shoulders pattern (see: TECHNICAL UPDATE: USD/CAD possible inverse head and shoulders). There is no economic data due out of Canada today.
• EUR under pressure as French, German and EZ manufacturing PMI’s continue to deteriorate indicating contraction. Sovereign yields are higher after a disappointing German auction which failed to get bids for 35% of the bonds offered (investors bid 3.9B euros of the 6B euros in 10-yr bunds offered) and Italy’s 10-year yields are approaching 7% again. EUR/USD made new lows for Nov. and broke below the 1.34 figure to current levels of around 1.3380.
• JPY advancing against all of the majors except against the US dollar as investors demand safety. There was no data released overnight as it was a bank holiday in Japan. Of the G10, the yen is strongest against the Aussie as the pair continues to trade within is bearish channel (see: TECHNICAL UPDATE: AUD/JPY bearish channel and EW count). USD/JPY is approaching the convergence of the 21 and 100-day sma’s which come in around 77.30 and may be resistive. EUR/JPY has fallen to test the 76.4% Fibonacci retracement level of the rally from Oct. lows to Oct. highs and GBP/JPY saw a brief dip below the 120.00 big figure before rebounding to current levels around 120.25.
• GBP firmer against all of the G10 except the USD and JPY after MPC minutes of the Nov. 9-10 meeting showed that the committee voted 9-0 to keep the target for asset purchases at 275B pounds. The MPC said that there was “little merit in fine tuning” the program while the current purchases continued but that their forecasts meant that “a further expansion of the asset-purchase program might well become warranted in due course”. GBP/USD fell to the 1.5555 level and GBP/JPY dipped briefly below the 120.00 big figure. The pound was strongest against the Aussie with GBP/AUD rising above the 1.60 level.
• CAD is significantly weaker on declining equities, lower crude oil and overall risk aversion. WTI crude is currently down about -2.03% and USD/CAD is currently trading around the 1.0430 level and has broken above the hourly bull flag identified yesterday within an inverse head and shoulders pattern (see: TECHNICAL UPDATE: USD/CAD possible inverse head and shoulders). There is no economic data due out of Canada today.