Analysts at TD Securities suggest the BoE's hiking bias is likely to be diluted even further at the November meeting, with more of a balanced message instead and a rewrite of the rate guidance in the final paragraph of the Monetary Policy Summary.
James Knightley, the Chief International Economist at ING, notes the U.S. ISM manufacturing index may have risen for the first time in March, but it remains in contraction territory at 48.3 (50 is the break-even level). Moreover, it was weaker than the 48.9 consensus estimate and it has only been weaker twice in the past ten years, he adds.
Analyst at TD Securities (TDS) provided their views on Friday's mostly upbeat US monthly jobs report, showing that the economy added 128K jobs in October.
Department announced on Friday that construction spending rose 0.5 percent
m-o-m in September after a revised 0.3 percent m-o-m decline in August (originally
a 0.1 percent m-o-m gain).
Economists had forecast construction spending increasing 0.2 percent m-o-m in September.
According to the report, investment in public construction surged 1.5 percent m-o-m, while spending on private construction increased 0.2 percent m-o-m.
On a y-o-y basis, construction spending dropped 2.0 percent in September.
A report from
the Institute for Supply Management (ISM) showed on Friday the U.S.
manufacturing sector’s activity contracted in October.
The ISM's index of manufacturing activity came in at 48.3 percent last month, up 0.5 percentage point from the September reading of 47.8 percent, but missed economists' forecast for a 48.9 percent reading.
A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.
According to the report, the Production Index came in at 46.2 percent, down 1.1 percentage points from the September reading, the Deliveries Index registered 49.5 percent, a 1.6-percentage point decrease from the September reading, and the Prices Index recorded 45.5 percent, a 4.2-percentage point decrease from the September reading of 49.7 percent. At the same time, the New Orders Index stood at 49.1 percent, up 1.8 percentage points from the September reading, the Employment Index registered 47.7 percent, a 1.4-percentage point increase from the September reading, and the Inventories Index recorded 48.9 percent, an increase of 2 percentage points from the September reading.
Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, “The past relationship between the PMI and the overall economy indicates that the PMI for for October (48.3 percent) corresponds to a 1.6-percent increase in real gross domestic product (GDP) on an annualized basis."
James Knightley, the Chief International Economist at ING, notes that U.S. non-farm payrolls beat expectations in October, rising 128,000 versus the consensus forecast of 85,000.
U.S. stock-index futures rose on Friday, supported by better-than-expected employment report for October.
Today's Change, points
Today's Change, %
FX Strategists at UOB Group suggest that, in light of the recent performance, there is the possibility that USD/JPY could drop and test the mid-107.00s in the next weeks.
(company / ticker / price / change ($/%) / volume)
ALTRIA GROUP INC.
Amazon.com Inc., NASDAQ
AMERICAN INTERNATIONAL GROUP
Cisco Systems Inc
Citigroup Inc., NYSE
Deere & Company, NYSE
Exxon Mobil Corp
FedEx Corporation, NYSE
Ford Motor Co.
Freeport-McMoRan Copper & Gold Inc., NYSE
General Electric Co
Home Depot Inc
International Business Machines Co...
Johnson & Johnson
JPMorgan Chase and Co
Merck & Co Inc
Procter & Gamble Co
Starbucks Corporation, NASDAQ
Tesla Motors, Inc., NASDAQ
The Coca-Cola Co
Twitter, Inc., NYSE
United Technologies Corp
Verizon Communications Inc
Wal-Mart Stores Inc
Walt Disney Co
Yandex N.V., NASDAQ
Chevron (CVX) reported Q3 FY 2019 earnings of $1.36 per share (versus $2.11 in Q3 FY 2018), missing analysts’ consensus estimate of $1.46.
The company’s quarterly revenues amounted to $36.116 bln (-17.9% y/y), missing analysts’ consensus estimate of $37.690 bln.
CVX fell to $115.00 (-0.98%) in pre-market trading.
The U.S. Labor
Department announced on Friday that nonfarm payrolls increased by 128,000 in
October after an upwardly revised 180,000 gain in the prior month (originally
an increase of 136,000).
According to the report, significant job gains occurred in food services and drinking places (+48,000 jobs), social assistance (+20,000), and financial activities (+16,000). Meanwhile, within manufacturing (-36,000 jobs), employment in motor vehicles and parts (-42,000) decreased due to strike activity at General Motors. Federal government employment also dropped (-17,000 jobs), as 20,000 temporary workers who had been preparing for the 2020 Census completed their work.
The unemployment rate rose to 3.6 percent in October from 3.5 percent in September.
Economists had forecast 89,000 new jobs and the jobless rate to increase to 3.6 percent.
The labor force participation rate edged up to 63.3 percent in October from 63.2 percent in September, while hourly earnings for private-sector workers rose 0.2 percent m-o-m (+6 cent) to $28.18, following a revised 0.4 percent m-o-m gain in September (originally unchanged m-o-m). Economists had forecast a 0.3 percent m-o-m advance in the average hourly earnings. Over the year, average hourly earnings have increased by 3.0 percent, the same pace as in September.
The average workweek remained unchanged at 34.4 hours in October, matching economists’ forecast.
FX Strategists at UOB Group suggested that, following the recent price action, the Aussie Dollar is to move to the 0.6950 area vs. the Greenback in the next weeks.
Exxon Mobil (XOM) reported Q3 FY 2019 earnings of $0.75 per share (versus $1.46 in Q3 FY 2018), beating analysts’ consensus estimate of $0.66.
The company’s quarterly revenues amounted to $65.049 bln (-15.1% y/y), missing analysts’ consensus estimate of $65.864 bln.
XOM rose to $67.97 (+0.59%) in pre-market trading.
Economists at Standard Chartered provide key insights into the official Chinese Manufacturing PMI report released on Wednesday.
Alibaba (BABA) reported Q2 FY 2019 earnings of RMB13.10 per share (versus RMB9.60 in Q2 FY 2018), beating analysts’ consensus estimate of RMB10.68.
The company’s quarterly revenues amounted to RMB119.017 bln (+39.8% y/y), beating analysts’ consensus estimate of RMB116.512 bln.
BABA rose to $179.38 (+1.53%) in pre-market trading.
Cable is seen extending the sideline trading in the next week, in opinion of FX Strategists at UOB Group.
24-hour view: “GBP briefly touched 1.2975 but eased off to close at 1.2939 (+0.28%). Despite the relatively firm daily closing, upward momentum is lackluster and the prospect for GBP to move beyond 1.2975 is not high. From here, GBP is more likely to trade sideways to slightly lower, expected to be within a 1.2895/1.2965 range”.
Next 1-3 weeks: “While the underlying tone in GBP has improved as it closed higher for the fourth straight day yesterday (31 Oct), we continue hold the view that last Monday’s (21 Oct) 1.3012 peak is a short-term top. As highlighted on Tuesday (29 Oct, spot at 1.2855), “Looking ahead, further GBP strength is not ruled out even though the 1.3000/10 level is acting as a ‘high-water mark’ and would be a tough level to crack”. In other words, GBP is expected to trade sideways for now, likely between 1.2800 and 1.3000 (range narrowed from 1.2700/1.3000 previously). Even if GBP were to crack 1.3000 again, there is another formidable resistance at 1.3050”.
FX Strategists at UOB Group remarked the need of EUR/USD to surpass the 1.1180 region to allow for extra gains.
24-hour view: “EUR rose to 1.1174 yesterday, just a few pips below last month’s peak near 1.1180. The rapid retreat from the high has resulted in a loss in momentum. That said, it is too early to expect a significant pullback. The current movement is viewed as part of a consolidation phase. In other words, EUR is likely to trade sideways for today, expected to be within a 1.1125/1.1175 range”.
Next 1-3 weeks: “There is not much to add to the update from yesterday (31 Oct, spot at 1.1155). As highlighted, EUR has to punch through last month’s peak at 1.1179 or the current upward momentum could deteriorate quickly. Note that the positive phase in EUR that started earlier last month is in its fourth week now and if EUR were hover below the 1.1179 peak, the risk of a top would increase quickly. Looking ahead, a clear break of 1.1179 would increase the odds for a break of 1.1200 (the next resistance is at 1.1250). On the downside, only a move below 1.1090 (‘strong support’ level finally moved higher from 1.1070) would indicate that the current EUR strength has run its course”.
In opinion of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, the cross could extend losses to, initially, the 120.00 neighbourhood.
“EUR/JPY is at last showing signs of failure at tough resistance which extends from current levels all the way up to the 200 day ma at 122.11. It currently remains capped by the 121.34/ 50% Fibonacci retracement and the 121.38 late July high (on a closing basis). Yesterday’s price action constituted an outside day to the downside, which is negative. We should see a test of the 20 day ma at 120.07 and the 55 day ma at 118.79 and eventually the 118.06 uptrend. The October low at 117.06 guards the 116.58/115.87 recent lows”.
Economist Ho Woei Chen at UOB Group evaluated the recent PMI releases in China and the outlook on the economic activity.
“China’s official PMIs for October showed further signs of weakness in both the manufacturing and non-manufacturing sectors. The US and China still face significant challenges in addressing bilateral trade concerns but there are enough positive developments to point to the likely success of a “Phase 1” trade deal. The cancellation of the 16-17 November APEC summit may lead to some delays but the interim agreement is expected to be signed before 15 December when the US is scheduled to implement new additional tariffs of 15% on approximately US$160 of Chinese goods. The cancellation of these new additional tariffs will help to further de-escalate the trade tensions. Looking ahead, China’s manufacturing outlook is dependent on the sustainability of the US-China trade truce and prospect of an eventual trade agreement. As there remains significant uncertainties, China’s growth outlook may stay weak into 2020 should existing tariffs stay in force. China’s economy expanded by 6.2% y/y in the first three quarters of 2019. For now, we maintain our growth forecast for China to expand 6.1% in 2019 (4Q19f: 6.0%) and 5.9% in 2020”.
According to the report from IHS Markit, ongoing uncertainties surrounding Brexit, the economic outlook and the political situation continued to weigh on the UK manufacturing sector during October. Output and new order inflows contracted, leading to further job losses. Firms also ramped up stock-building and purchasing activity in the lead-up to the (postponed) October Brexit departure date.
The headline seasonally adjusted IHS Markit/CIPS PMI rose to 49.6 in October, up for the second successive month but remaining below the neutral 50.0 mark separating expansion from contraction. Economists had expected a decrease to 48.1. Please note that data for the latest survey were collected from 11-28 October. This was before the confirmation of the latest Brexit extension on the 28th and the passing of the Early Parliamentary General Election Bill by the UK House of Commons on the 29th.
The downturn in manufacturing production continued, although the rate of contraction slowed. Firms reported that weaker inflows of new business, especially from the domestic market, had led to a further scaling back of output. This was partly offset by manufacturers who raised production to build-up stocks in advance of the October Brexit deadline.
Francesco Pesole, FX Strategist at ING, expects the dollar weakness to be mainly channelled via the activity currencies, with the NZD possibly leading the pack.
"Our economics team is expecting today's US jobs data to be below market expectations, with the headline employment increase at 70k in October versus the consensus 85k (according to a Bloomberg survey). The Oct ISM manufacturing will also be closely watched. Consensus overestimated the index in five of the past six reads, and our economists believe this could be the case again as they see the widely expected rebound in the gauge limited to 48.5 (vs cons. 49). We expect today’s slew of data to weigh on the dollar whilst possibly undermining the freshly-formed expectations that the Fed will pause in December. The slew of Fed speakers (Kaplan, Clarida, Quarles, Daly, Williams) may also attract some attention as markets seek clarity after this week’s FOMC announcement. The kiwi dollar has outperformed risk-sensitive peers AUD and CAD, gaining good momentum. NZD/USD is now stabilizing above 0.64, mostly thanks to a strong repricing of RBNZ rate expectations and some short-squeezing effect (the NZD is the most oversold currency in G10). We expect such momentum to help NZD outperform the G10 block if payrolls disappoint".
China's Foreign Ministry said on Friday China and the United States have maintained close contact on a potential meeting of U.S. President Donald Trump and Chinese President Xi Jinping.
Trump said on Thursday that the two countries would soon announce a new location at which he and Xi would sign a "Phase One" trade deal.
But speaking at a daily news briefing in Beijing, ministry spokesman Geng Shuang dismissed as speculation talk the two leaders will meet in Macau.
Britain's government will not name a successor to Bank of England Governor Mark Carney before a national election due on Dec. 12, a finance ministry official said.
Earlier on Thursday, a spokesman for Prime Minister Boris Johnson said the process for the appointment remained on track to be made this autumn.
The BoE's current governor, Mark Carney, is due to leave the central bank on Jan. 31, which is also the latest deadline for Britain to leave the European Union.
By convention, British governments do not make major appointments in the run-up to elections.
Finance Minister Sajid Javid said earlier this month that he was looking for an independent-minded new BoE governor.
The U.S. dollar index could fall to as low as 85 as the Federal Reserve grows its balance sheet again by purchasing more bond assets, a Citi strategist said.
“Our latest projections are that it would weaken even further — maybe to the high 80s, perhaps even as low as 85,” Mohammed Apabhai, head of Asia Pacific trading strategies group at Citi, told CNBC.
Technical analyst Daryl Guppy said last year that 85 is a “historical support level” for the dollar.
The Fed increases its balance sheet by buying up bonds and Treasurys as a way of pumping cash into the market. That in turn makes bond yields — which move inversely to prices — drop as the bond prices rise. The dollar usually weakens when bond yields fall.
“We’re basically saying that the Fed is probably going to be the most dovish of all the central banks, regardless of the fact that … they’ve put rates on pause,” he said.
That’s because the Fed’s balance sheet has expanded quickly, by more than $205 billion since the beginning of September, Apabhai explained. In comparison, an increase of that size would take the European Central Bank more than a year to complete, he said.
“For us, the fact that the Fed has gone into pause mode is not really as significant as the fact that the balance sheet of the Fed is going to expand,” he said. “We’re basically looking at substantially weaker levels on the dollar.”
If the dollar index were to weaken to 85, the euro could strengthen to 1.21 against the greenback, Apabhai predicted. “That’s … going to be very positive for emerging market equities.”
Cable is expected to keep the bullish view unchanged while above 1.2582, noted Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank.
“GBP/USD has recovered from near term support offered by the 1.2784 25th June high. This leaves the market well placed to tackle psychological resistance at 1.30. Directly above here we have the 200 week ma at 1.3138 and the 1.3187 May high and these remain our short term targets. The 200 day ma at 1.2711 guards 1.2582. For now, provided dips lower hold over 1.2582 (20th September high) an immediate upside bias is maintained. The 1.3187 May high guards the 1.3382 2019 high. Below 1.2582 lies the 1.2382 17th July low and the 1.2348 uptrend. The uptrend guards 1.2196/94”.
According to the report from Federal Statistical Office (FSO), turnover adjusted for sales days and holidays rose in the retail sector by 0.6% in nominal terms in September 2019 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.5% compared with the previous month.
Real turnover adjusted for sales days and holidays rose in the retail sector by 0.9% in September 2019 compared with the previous year. Real growth takes inflation into consideration. Compared with the previous month, real, seasonally adjusted retail trade turnover registered a decline of 0.3%.
Adjusted for sales days and holidays, the retail sector excluding service stations showed a 1.3% increase in nominal turnover in September 2019 compared with September 2018 (in real terms +1.4%). Retail sales of food, drinks and tobacco registered an increase in nominal and real turnover of 0.3% whereas the non-food sector registered a nominal plus of 2.3% (in real terms +2.9%).
Excluding service stations, the retail sector showed a seasonally adjusted decline in nominal turnover of 0.6% compared with the previous month (in real terms –0.5%). Retail sales of food, drinks and tobacco registered a nominal minus of 0.5% (in real terms –0.6%). The non-food sector showed a minus of 0.3% (in real terms 0.0%).
A separate report from the FSO showed, the consumer price index (CPI) fell by 0.2% in October 2019 compared with the previous month, reaching 101.8 points (December 2015 = 100). Inflation was –0.3% compared with the same month of the previous year. Prices were expected to remain unchanged.
The decrease of 0.2% compared with the previous month can be explained by several factors including falling prices for international package holidays and hotel accommodation. The prices of vegetables and pasta also declined. In contrast, prices for clothing and footwear increased.
U.S. President Donald Trump is fighting an “all-front” trade war and that may not be a bad thing for China, said one professor at the London School of Economics.
Washington has locked itself into trade disputes with multiple countries, which has weakened historical ties and prevented some of those nations from aligning themselves against China, said Keyu Jin, associate professor of economics at LSE, told CNBC.
“Trump is fighting an all-front war. What could not be better for China? If there were not such a strong alliance with Europe, which is what China’s more concerned about — everyone ganging up against China. Now, Trump is not making that possible, so that’s why he’s the least worst option,” Jin said.
The U.S. and China have slapped tariffs on billions of dollars of one another’s goods. But key sticking points in trade talks include other issues like intellectual property protection and forced technology transfers.
“It is pushing China’s strive for self-sufficiency, technological independence,” Jin said.
For one, China is developing its own chip industry to increase domestic semiconductor production, she said.
In light of the ongoing performance, DXY faces increasing risks of a sharp pullback, suggested Quek Ser Leang of Global Economics & Markets Research at UOB Group.
“USD Index (DXY) rose to a 29-month high of 99.67 in October before dropping back to end the month sharply lower at 97.35. The weak monthly closing is not only the largest 1-month decline in 21 months but is also an ‘outside reversal bar’. On the weekly chart, the decline took out the 20-month rising trend line connecting the low of 88.25 (Feb 2018) and the high of 99.67 (Oct 2019). The break of the strong rising trend line support coincided with weekly MACD crossing into negative territory. All in, the above suggests 99.67 could be a significant top and the current price action is likely the early stages of a pull-back that appears to have ample room to extend lower. From here, the next weekly support is at 95.84 but the stronger support is further down at 95.02. On the upside, resistance is at 98.80 and we doubt the October peak of 99.67 would come back into the picture for the next several months”.
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.1159
Support levels (open interest**, contracts):
- Overall open interest on the CALL options and PUT options with the expiration date November, 8 is 72985 contracts (according to data from October, 31) with the maximum number of contracts with strike price $1,1000 (4058);
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.2957
Support levels (open interest**, contracts):
- Overall open interest on the CALL options with the expiration date November, 8 is 26824 contracts, with the maximum number of contracts with strike price $1,3200 (3252);
- Overall open interest on the PUT options with the expiration date November, 8 is 32073 contracts, with the maximum number of contracts with strike price $1,2100 (3166);
- The ratio of PUT/CALL was 1.20 versus 1.07 from the previous trading day according to data from October, 31
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
|Raw materials||Closed||Change, %|
|Index||Change, points||Closed||Change, %|
© 2000-2020. All rights reserved.
This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at email@example.com.