Sample Category Title

Notes/Observations

• European Investor confidence hits a fresh decade high
• China Sept FX Reserves rise for 8th straight month

Overnight/weekend

Asia:

• China Sept Caixin Services PMI: 50.6 v 52.7 prior (21-month low)

Europe:

• Spain region of Catalonia Leader Puigdemont said a law passed by the Catalan parliament preparing the way for the referendum called for a declaration of independence in the event of a 'yes' vote
• Spain PM Rajoy: Could use constitution to suspend Catalonia's autonomy if it declares independence. Ruled out mediation to solve Catalonia crisis
• Chancellor Merkel said to have urged party to try to forge 3-way Jamaica coalition. Advised everyone to concentrate on what lies ahead; first between CDU and CSU, then with FDP and Greens and to understand the mandate that voters handed us
• PM May to tell Parliament on Monday, Oct 9th that she was offering Europe a "new, deep and special partnership" with Britain
• EU significantly steps up backroom Brexit talks with Labour Party over fears PM May's government will fall
• UK PM will warn the EU that Britain will not make any more concessions on Brexit until they compromise on trade and transition talks
• PM May said to have decided to commit "billions of pounds" on preparing Britain to leave the European Union without a deal in a bid to save her premiership; spending to be "unlocked" in new year if no progress is made with Brussels
• Turkey suspended non-immigrant visa services for US citizens (**Note: move follow US govt suspended non-immigrant visa services in Turkey. The move by the US followed the arrest of a US consulate employee in Istanbul in relation to alleged links to muslin leader Fethullah Gulen. Sovereign Updates:
• Moody's affirmed Italy's sovereign rating at Baa2; outlook remains Negative
• S&P affirmed France sovereign rating at AA; outlook Stable
• Canadian rating agency DBRS affirms Spain sovereign rating at A (low), stable trend
• Canadian rating agency DBRS affirms Austria sovereign rating at AAA with stable trend

Americas:

• Trump tweet: "Presidents and their administrations have been talking to North Korea for 25 years, agreements made and massive amounts of money paid...... hasn't worked, agreements violated before the ink was dry, makings fools of U.S. negotiators. Sorry, but only one thing will work!"
• US Senate Republican Corker says President Trump could set nation on the path to World War III by threatening other countries - Fed's Rosengren (moderate, non-voter): Fed has to respond to very tight labor markets or may damage the economy (reiterated support for continued gradual interest rate hikes)

Energy:

• OPEC' Sec Gen Barkindo: No talk of holding extraordinary meeting of OPEC at this time. Consultations are under way for the extension of OPEC output cut deal beyond March 30th

Economic data

• (DE) Germany Aug Industrial Production M/M: 2.6% v 0.9%e; Y/Y: 4.7% v 2.9%e
• (FR) Bank of France Sept Industrial Sentiment: 104 v 105e
• (CZ) Czech Sept CPI M/M: -0.1% v -0.1%e; Y/Y: 2.7% v 2.7%e
• (CZ) Czech Sept Unemployment Rate: 3.8% v 3.9%e
• (CH) China Sept Foreign Reserves: $3.109t v $3.100Te (8th straight increase)
• (EU) Euro Zone Oct Sentix Investor Confidence: 29.7 v 28.5e (highest level since 2007)

**Fixed Income Issuance:

• (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 12-month Bills; Avg Yield: 0.42% v 0.39% prior; Bid-to-cover: 2.31x v 2.08x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx600 +0.2% at 390.0, FTSE -0.1% at 7517, DAX +0.1% at 12964, CAC-40 flat at 5360, IBEX-35 +0.8% at 10270, FTSE MIB flat at 22395, SMI flat at 9255, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European Indices trade flat to slightly higher as worries over Catalonia independence ease with the Spanish Ibex rebounding up over 0.7% and the Dax touched a new all time higher. On the corporate front Millennium and Copthorne trades sharply higher after its to be acquired by City Developments, while SAF Holland reversed initial losses after prelim Q3 results, and raised Rev guidance and Ericsson trades higher after naming a new Chairman. Shares of BPost trades sharply lower after acquiring Radial, while Airbus trades lower after bearish comments from the CEO and possible corruption probe.

Equities

• Consumer discretionary [Air France [AF.FR] -1.2% (Sep metrics)]
• Materials: [K+S [SDF.DE] -3.5% (2030 strategic plan), Petra Diamonds [PDL.UK] -3.6% ( likely breach of the 31 December 2017 EBITDA covenant measurement ratios has been flagged) ]
• Industrials: [Bpost [BPOST.BE] -1.4% (Acquisition), Airbus [AIR.FR] -1.7% (CEO warns of turbulent times ahead), XP Power [XPP.UK] +6% (Earnings)]
• Financials: [Millennium & Copthorne [MLC.UK] +21% (to be acquired)]
• Telecom: [ Ericsson [ERICB.SE] +1.4% (Names new Chairman)]

Speakers

• ECB: Higher interest rates would lead to higher Net Interest Income in the next three year for a majority of banks, but lower economic value of equity
• ECB's Mersch (Luxembourg): Inflation forecasts harder to make in a globalized world. Recent information needed to be factored into ECB discussion; some disappointment in recent inflation data
• Spain Dep PM Saenz reiterates that applying Article 155 was among options on Catalonia
• Turkey Central Bank Dep Gov Uysal: Do not see any FX liquidity issues at this time
• Japan PM Abe: To give up government reins if he fails to get a majority - election debate

Currencies

• Quiet start to the trading week for the major FX pairs.
• GBP/USD was firmer by 0.4% as reports circulated that PM May might reshuffle her Cabinet to reinforce her grip on power. May might demote Foreign Secretary Johnson.
• The Turkish Lira slumped in trading after US and Turkey govts announces over the weekend they each would stop issuing non-immigrant visas to each others' citizens.

Fixed Income

• Bund futures trade at 161.36 up 24 ticks as markets show signs of selling exhaustion. Further downside targets 160.66 then 160.24, while a reversal targets 161.66 initially then 161.82.
• Monday's liquidity report showed Friday's excess liquidity rose to €1.798T from €1.796T prior. Use of the marginal lending facility fell to €195M from €567M prior.

Looking Ahead

• (UK) Commons Reconvenes After Conference Recess - (UK) PM May meets business leaders on Brexit
• (UR) Ukraine Sept CPI M/M: No est v -0.1% prior; Y/Y: No est v 16.2% prior
• (MX) Mexico Sept Vehicle Production: No est v 351.9K prior; Vehicle Exports: No est v 260.6K prior
• 05:30 (DE) Germany to sell EUR2.0 BuBills
• 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 0.5%e v 0.2% prior; Y/Y: -1.1%e v -1.6% prior
• 07:00 (CZ) Czech Central Bank comments on inflation data
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (UK) Baltic Dry Bulk Index
• 09:00 (MX) Mexico Sept CPI M/M: 0.4%e v 0.5% prior; Y/Y: 6.5%e v 6.7% prior; CPI Core M/M: 0.4%e v 0.3% prior
• 09:30 (EU) ECB announces Covered-Bond Purchases
• 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

USD/CAD - 1.2551

 
Original strategy       :

Buy at 1.2360, Target: 1.2560, Stop: 1.2300

Position: -

Target:  -

Stop: -

 
New strategy             :

Buy at 1.2415, Target: 1.2600, Stop: 1.2355

Position: -

Target:  -

Stop:-

As the greenback resumed recent rise from 1.2061 low and bullishness remains for this move to bring retracement of early downtrend, above 1.2599 would extend further gain towards previous resistance at 1.2663, however, near term overbought condition should limit upside to 1.2700 and price should falter well below another previous resistance at 1.2778. 

In view of this, would not chase this rise here and would be prudent to buy again on pullback as 1.2410-15 should limit downside. Below 1.2395-00 would bring correction back to 1.2350-55 but reckon indicated support at 1.2313 would hold. Only a drop below 1.2313 would abort and signal the aforesaid rise from 1.2061 has ended, bring further fall to 1.2254 support, however, reckon downside would be limited to another previous support at 1.2197, bring rebound later. We are keeping our count that wave v as well as wave (C) ended at 1.3794 and impulsive wave (i ii, i ii) is now unfolding with minor wave iii ended at 1.2414, followed by wave iv correction ended at 1.2778, wave v has reached our indicated downside target at 1.2100 and may extend to 1.2000.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Good day traders! Today's focus is on Gold and AUDUSD.

Metals saw a nice recovery on Friday, quite impulsive here on hourly chart, so ideally gold completed a downtrend in five waves for wave A, therefore market may travel higher this week, with a new three wave rally back above 1300 region. In the mean time 1290 can act as a temporary resistance for subwave a.

GOLD, 1H

Commodity currencies are also weak, and may see more weakness after any three wave recovery. Aussie can be at the end of wave 5 of 3), so be aware of a turn up this week, back above 0.7800 possibly even to 0.7880 resistance.

AUDUSD, 1H

WTI Oil is trading in choppy consolidation on Monday with upside attempts struggling to return above broken 200SMA ($49.44).

Oil price fell sharply on Friday after dollar rose on US jobs data and dipped to $49.09, the lowest in nearly one month (around 50% of $45.57/$52.84 rally).

Friday's close below psychological $50 point, as well as below 200SMA, was strong bearish signal but losses were contained by rising 55SMA and further recovery could be anticipated as slow stochastic is reversing from oversold territory on daily chart and signals recovery.

Corrective rally needs close above $50 to sideline immediate downside risk and allow for further recovery. Break and close above $51.00 (daily Tenkan-sen) is needed to signal higher low at $49.09 and shift near-term focus higher.

Res: 49.76; 50.00; 50.44; 50.73
Sup: 49.03; 48.35; 47.76; 47.29

Gold shone brightly on Monday as a renewed focus on geopolitical risks stoked demand for safe-haven assets.
Fresh concerns over North Korea's nuclear program has accelerated the flight to safety, consequently sending Gold to a weekly high above $1285 during early trading. While short-term bulls may exploit the current uncertainty and geopolitical jitters to drive prices higher, the upside is likely to be limited by a strengthening Dollar. With expectations mounting over the Federal Reserve raising US interest rates in December, the zero-yielding metal remains at risk of reversing its gains.

Technical traders will be paying very close attention to how prices react above the $1280 resistance level. A technical bounce seems to be in play, with bears still in firm control below the psychological $1300 level. Sustained weakness back below $1280, should forge a path back towards $1267. In an alternative scenario, a daily close above this level may encourage a further incline towards $1290.

Turkish Lira nosedives against Dollar

The Turkish Lira was under intense selling pressure during early trading on Monday following an escalation of diplomatic tensions between Turkey and the United States. A mutual suspension for visa services for non-immigrants remains the key culprit behind the Lira's startling 6.6% depreciation against the Dollar. Although the Lira has clawed back recent losses since the sharp depreciation, increased political tensions may continue to impact the Turkish currency this week.

Currency spotlight – GBPUSD

Sterling staged an aggressive rebound on Monday, as investors warmly received Theresa May's promises to fend off challenges to her leadership.

While the current optimism may fuel the Pound's appreciation in the short term, political risks at home and Brexit uncertainty, are likely to limit upside gains. With round five of the Brexit talks beginning today in Brussels and no clear plan on how the UK will break away from the EU, Sterling remains vulnerable to downside risks. It could get very messy for Sterling this quarter, especially if the ongoing Brexit drama and soft economic fundamentals, prevent the Bank of England from raising UK interest in November.

From a technical standpoint, the GBPUSD has broken back above 1.3150 on Monday. A daily close above this level may signal the start of a technical bounce, with 1.3230 being the next level of interest. Alternatively, sustained weakness below 1.3150 may open a path back towards 1.3050.

GBPUSD: With the pair halting its broader weakness to trigger a strong correction on Monday, more strength is expected. Support lies at the 1.3100 level where a break will turn attention to the 1.3050 level. Further down, support lies at the 1.3000 level. Below here will set the stage for more weakness towards the 1.2950 level. Conversely, resistance stands at the 1.3200 levels with a turn above here allowing more strength to build up towards the 1.3250 level. Further out, resistance resides at the 1.3300 level followed by the 1.3350 level. Its daily RSI is bullish and pointing higher suggesting further strength. On the whole, GBPUSD continues to face further upside pressure on correction.

Turkish lira fell sharply against the dollar on Monday's opening on fresh tensions between the USA and Turkey. The USDTRY pair spiked towards 3.80 zone in thin market in early Asian trading. Strong bullish acceleration on Monday comes in extension of Friday's rally which signaled continuation of an uptrend from 3.3883 (11 Sep low) which paused for 3.5954/3.5400 consolidation, with several Dojis last week signaling strong indecision and awaiting for fresh direction signal. US jobs data that boosted the greenback were initial signal with fresh political tensions between two countries, sparking further upside. Today's spike broke well above Fibo 61.8% of pullback from record high at 3.9414 to 3.3883 at 3.7301 and close above the latter would generate another bullish signal. The pair may extend rally to fully retrace 3.9414/3.3883 pullback if tensions intensify. Corrective easing may extend further as daily studies are strongly overextended but overall bullish picture sees dips as buying opportunities. Session low at 3.6500 marks strong support with extended dips to be contained above weekly cloud top/rising 10SMA (3.5835).

Res: 3.7301; 3.7853; 3.8109; 3.8800
Sup: 3.6650; 3.6500; 3.6000; 3.5835

USD/CHF - 0.9800

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite surging to 0.9837 on Friday, the subsequent retreat in NY suggests top has possibly been formed there and consolidation with mild downside bias is seen for weakness to 0.9750-55 (50% Fibonacci retracement of 0.9670-0.9837), however, break of 0.9730-35 (61.8% Fibonacci retracement) is needed to add credence to this view, bring further fall towards support at 0.9710 which is likely to hold on first testing.

On the upside, whilst recovery to 0.9805-10 cannot be ruled out, reckon said resistance at 0.9837 would hold and bring another retreat later. Above said resistance at 0.9837 would shift risk back to upside and signal the rise from 0.9421 low is still in progress, then gain to 0.9875-80 would follow but reckon 0.9900 would hold from here. As near term outlook is mixed, would be prudent to stand aside for now.

The CAC index is unchanged in the Monday session. Currently, the CAC is trading at 5,360.30, down 0.03% on the day. On the release front, Eurozone Sentix Investor Confidence improved to 29.7, above the estimate of 28.6 points. On Tuesday, France releases Industrial Production, which is expected to remain unchanged at 0.5%.

French President Emmanuel Macron faces a serious challenge on Tuesday, as France braces for a nationwide strike by public service workers, which will affect bus, rail and air transport, hospitals and government offices. The strike has been endorsed by all nine public sector unions, who represent 5.4 million workers. The unions are protesting the government's plan to dismiss 120,000 public sector workers and reduce sick leave benefits. Macron ran on a campaign of reform, but his plan to trim the bloated public sector has predictably run into strong opposition. The government has already pushed through labor reforms, and says more measures are needed in order to boost the French economy.

What's next for Catalonia? The region's parliament meets on Tuesday, and Catalan leader Carles Puigdemont has said that it is up to the Catalan parliament to approve independence, but it's unclear what path lawmakers will take. Puigdemont has not had any talks with Spanish Prime Minister Mariano Rajoy, as the constitutional crisis continues this week. On Sunday, a demonstration against the referendum attracted some 350,000 people, in a strong show of support for Catalonia remaining in Spain. Under Spain's constitution, the Spanish government could literally shut down the Catalan parliament, but has hesitated to take such drastic action so far. However, if the Catalan parliament declares independence, Rajoy could respond forcefully. Investors are nervously monitoring the crisis, which could take a toll on the Spanish economy. Last week, two major banks, Caixabank and Sabadell, said they would relocate their corporate headquarters out of Catalonia, and other large companies could follow suit.

GBP/USD - 1.3158

Original strategy :

Sold at 1.3170, Target: 1.3070, Stop: 1.3205

Position : - Short at 1.3170

Target :  - 1.3070

Stop : - 1.3205

New strategy  :

Hold short entered at 1.3170, Target: 1.3070, Stop: 1.3195

Position : - Short at 1.3170

Target :  - 1.3070

Stop : - 1.3195

Although cable surged again today and marginal gain cannot be ruled out, reckon 1.3190-95 (61.8% Fibonacci retracement of 1.3292-1.3027 as well as 38.2% Fibonacci retracement of 1.3455-1.3027) would cap upside and bring retreat later, below 1.3100 would suggest an intra-day top is formed, bring test of 1.3065-75, break there would suggest the rebound from 1.3027 has ended, bring retest of this level, break there would extend recent decline to psychological support at 1.3000 next.

In view of this, we are holding on to our short position entered at 1.3170. Above 1.3190-95 would risk test of previous support at 1.3222-29 (now resistance), break there would abort and signal low has been formed at 1.3027 instead, bring further gain to 1.3250 but price should falter below resistance at 1.3292.