Sample Category Title

Notes/Observations

• Markets await FOMC rate decisions (no change expected in policy); still pricing in a Dec rate hike

Asia:

• China Oct Trade Balance $34.0B v $35.2Be with both exports and imports exceeding consensus; surplus with US moved off record highs ($31.8B vs. $34.1B prior)
• Japan Sept Trade Balance: -¥323.3B v ¥334.2Be
• New Zealand Central Bank (RBNZ) left the Official Cash Rate (OCR) unchanged at 1.75% (as expected)

Europe:

• EU Commission said to see Italy 2019 Budget Deficit to GDP of 2.9% compared to govt ceiling of 2.4% and revised the GDP growth lower. EU did not see Italian debt falling in 2019
• UK Ministers said to be increasingly concerned that PM May was about to announce that Britain would be forced to stick with EU rules on state aid, workers' rights and the environment
• PM May said to have called German chancellor Merkel as negotiations over how to avoid a hard border in Ireland intensified
• ECB nominates European Banking Authority (EBA) Chairman Enria to lead ECB bank supervision arm

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.2% at 367.2, FTSE +0.1% at 7123, DAX -0.1% at 11563, CAC-40 -0.1% at 5134, IBEX-35 -0.1% at 9088, FTSE MIB -0.5% at 19451, SMI +0.4% at 9088, S&P 500 Futures -0.4%]
• Market Focal Points/Key Themes: European Indices trade mixed this morning fading earlier gains following sharp gains in the US overnight and a mainly positive session in Asia. In a busy session in terms of earnings, strength is seen for financial names Commerzbank and SocGen after beating estimates, with weakness in Unicredit after cutting outlook. Astrazeneca, Hikma Pharmaceuticals, Sodexo, Inchcape, Duerr, Rheinmetall among the other notable names trading higher following positive results. Shares of Continental trades lower after affirming preliminary results and outlook, ProSiebenSat.1 falls over 15% after cutting outlook, while Bpost is another sharp faller after profits fell below forecasts and and an adjustment lower to their guidance. On a busy after close earnings for US stocks, weakness is seen in Qualcomm, Square, Wynn after earnings, while Fossil, TripAdvisor Carvana, Alarm.com are among the notable risers. Looking ahead earners include Crocs, Care.com, Commscope, Cardinal Health, Johnson Controls, Norweigen Cruiselines, Cheniere Energy and WorldPay among others.

Equities

• Consumer discretionary: Burberry [BRBY.UK] +1% (earnings), Europcar Mobility Group [EUCAR.FR] +9% (earnings), Tod's Spa [TOD.IT] -7% (earnings), Auto Trader [AUTO.UK] +3.5% (earnings; positive guidance), Sodexo [SW.FR] +6.2% (Earnings)
• Financials: Unicredit [UCG.IT] -2% (earnings; outlook cut), Commerzbank [CBK.DE] +6% (earnings; signed final agreement to sell ECM unit to SocGen), Societe Generale [GLE.FR] +3.5% (earnings), Generali SpA [G.IT] +0.5% (earnings), Banco BPM [BAMI.IT] +10% (earnings)
• Healthcare: Hikma Pharmaceuticals [HIK.UK] +7% (trading update; raises outlook; agreement with Vectura Group), Astrazeneca [AZN.UK] +2% (earnings)
• Industrials: Continental AG [CON.DE] -2% (earnings; affirms recently revised outlook), Siemens [SIE.DE] +2% (earnings; initial FY19 guidance; buyback program),Skanska [SCAB.SE] +0.5% (earnings)
• Materials: Rheinmetall [RHM.DE] +3.5% (earnings; outlook cut)

Speakers

• ECB Economic Bulletin reiterated that Euro Zone economy remains in a broad-based expansion even if growth is somewhat weaker than expected. Private consumption expected to display resilient growth in the coming quarters (**Note: In-line with recent ECB decision and Draghi press conference)
• Sweden Central Bank (Riksbank) Gov Ingves: Appropriate to start increasing rate at some point in next few months, either December or February, if things develop as expected. Inflationary pressures were still rather moderate, but strong economic activity was creating good conditions for inflation
• Sweden Central Bank (Riksbank) Dep Gov Floden stated that Inflation had returned to being close to target; could move back from most expansionary policy
• EU Brexit Negotiator Barnier reiterated that the Brexit clock was ticking
• UK PM May said to have asked EU for additional time so she could work out a Brexit deal with her own cabinet
• Ireland Foreign Min Coveney reiterated stance of no withdrawal agreement without backstop; must protect the Good Friday agreement in full
• Italy Dep Pm Salvini: Govt reached an accord on judicial reform - Italy govt official reiterated stance that not planning any changes to budget law
• Turkey Fin Min Albayrak reiterated govt view that upcoming Nov, Dec inflation data to be more positive
• Malaysia Central Bank Policy Statement: Degree of monetary accommodativeness was consistent with intended policy stance at the current level of OPR. Annual average headline inflation would be low in 2018 and higher headline inflation moving into 2019 was primarily due to energy prices. Domestic economy to remain on steady growth path for 2018 and 2019

Currencies/Fixed Income

• Markets awaited FOMC rate decision later today (no change expected in policy) with participants still pricing in a Dec rate hike
• EUR/USD was little changed but holding above the 1.14 level. EU Commission updated its forecast and saw the Italian budget deficit rising to 3.1% in 2020. Italian government to submit a revised budget plan approach but have stressed they would not change the budget law for 2019

Economic data

• ECB Economic Bulletin reiterated that Euro Zone economy remains in a broad-based expansion even if growth is somewhat weaker than expected. Private consumption expected to display resilient growth in the coming quarters (**Note: In-line with recent ECB decision and Draghi press conference)
• EU Commission Autumn Economic Forecasts raised the Italian budget deficit to GDP ratios for the 2018 thru 2020 period. It saw the 2019 deficit at 2.9% vs. the Italian govt ‘ceiling' of 2.4%
• Sweden Central Bank (Riksbank) Gov Ingves: Appropriate to start increasing rate at some point in next few months, either December or February, if things develop as expected. Inflationary pressures were still rather moderate, but strong economic activity was creating good conditions for inflation
• Sweden Central Bank (Riksbank) Dep Gov Floden stated that Inflation had returned to being close to target; could move back from most expansionary policy
• EU Brexit Negotiator Barnier reiterated that the Brexit clock was ticking
• UK PM May said to have asked EU for additional time so she could work out a Brexit deal with her own cabinet
• Ireland Foreign Min Coveney reiterated stance of no withdrawal agreement without backstop; must protect the Good Friday agreement in full
• Italy Dep Pm Salvini: Govt reached an accord on judicial reform
• Italy govt official reiterated stance that not planning any changes to budget law
• Turkey Fin Min Albayrak reiterated govt view that upcoming Nov, Dec inflation data to be more positive
• Malaysia Central Bank Policy Statement: Degree of monetary accommodativeness was consistent with intended policy stance at the current level of OPR. Annual average headline inflation would be low in 2018 and higher headline inflation moving into 2019 was primarily due to energy prices. Domestic economy to remain on steady growth path for 2018 and 2019

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €3.994BB vs. €3.5-4.5B indicated range in 2021, 2023, 2037 and 2066 Bonds
• Sold €1.22B in 0.05% Oct 2021 SPGB; Avg yield: 0.102% v 0.126% prior, Bid-to-cover: 2.17x v 1.77x prior
• Sold €1.42B in 0.35% July 2023 SPGB; Avg yield: 0.565% v 0.613% prior; Bid-to-cover: 1.95x v 1.78x prior
• Sold €553M in 4.20% Jan 2037 SPGB; Avg Yield: 2.224% v 2.314% prior; Bid-to-cover: 2.05x v 1.58x prior
• Sold €800M in 3.45% July 2066 SPGB; Yield: 3.030% v 2.664% prior; Bid-to-cover: 2.37x v 2.09x prior
• (FR) France Debt Agency (AFT) sold total €8.871B vs. €8.0-9.0B indicated range in 2026, 2028, 2030 and 2041 bonds
• Sold €1.72B in 0.25% Nov 2026 Oat; Avg Yield: 0.54% v 0.36% prior; Bid-to-cover: 2.05x v 1.86x prior
• Sold €3.76B in 0.75% Nov 2028 Oat; Avg Yield: 0.82% v 0.86% prior; Bid-to-cover: 1.81x v 1.59x prior
• Sold €1.465B in 2.50% May 2030 Oat; Avg Yield 0.92% v 1.07% prior; Bid-to-cover: 2.05x v 2.16x prior
• Sold €1.96B in 4.50% Apr 2041 Oat; Avg yield: 1.43% v 1.49% prior; Bid-to-cover: 1.56x v 2.26x prior
• (SE) Sweden sold SEK500M vs. SEK500M indicated in 0.125% 2027 I/L bonds; Avg Yield: -1.4214% v -1.4452% prior; Bid-to-cover: x v 2.2X prior
• (IE) Ireland Debt Agency (NTMA) sold total €750M vs. €750M indicated in 2023 and 2028 IGB bonds

Looking Ahead

• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
• 06:00 (IE) Ireland Oct CPI M/M: No est v -0.4% prior; Y/Y: No est v 0.9% prior
• 06:00 (IE) Ireland Oct CPI EU Harmonized M/M: No est v -0.3% prior; Y/Y: No est v 1.2% prior
• 06:00 (ZA) South Africa Sept Manufacturing Production M/M: -0.3%e v +0.1% prior; Y/Y: 1.9%e v 1.3% prior
• 06:00 (BR) Brazil CONAB Report
• 06:00 (CL) Chile Oct CPI M/M: 0.3%e v 0.3% prior; Y/Y: 2.9%e v 3.1% prior
• 06:00 (CL) Chile Oct CPI (Ex Food and Energy) M/M: 0.3%e v 0.2% prior; Y/Y: No est v 2.1% prior
• 06:00 (RO) Romania to sell Bonds
• 06:30 (CL) Chile Central Bank Traders Survey
• 06:45 (US) Daily Libor Fixing
• 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 2nd: No est v $460.7B prior
• 08:00 (RU) Russia Oct Official Reserve Assets: $461.0Be v $459.2B prior
• 08:00 (FR) ECB's Villeroy (France) in Lyon
• 08:10 (UK) Baltic Dry Bulk Index
• 08:15 (CA) Canada Oct Annualized Housing Starts: 198.0Ke v 188.7K prior
• 08:30 (US) Initial Jobless Claims: 213Ke v 214K prior; Continuing Claims: 1.63Me v 1.631M prior
• 08:30 (CA) Canada Sept New Housing Price Index M/M: 0.0%e v 0.0% prior; Y/Y: 0.2%e v 0.4% prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (MX) Mexico Oct CPI M/M: 0.5%e v 0.4% prior; Y/Y: 4.9%e v 5.0% prior; CPI Core M/M: 0.3%e v 0.3% prior
• 09:15 (FR) ECB's Coeure (France) speaks in Berlin
• 10:20 (EU) ECB chief Draghi in Dublin
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 12:00 (US) WASDE Crop Report
• 12:30 (CH) SNB's Maechler speaks in Geneva
• 14:00 (US) FOMC Interest Rate Decision: expected to leave rates unchanged
• (IT) Italy Debt Agency (Tesoro) announces upcoming BTP auction for Nov 13th

The company reported smashing numbers today, Burberry still needs to address the growth equation because its competitors like Gucci and LVMH are far ahead of the game

Fundamental Analysis

Burberry has proven one thing that hiring the right person for the right job matters a lot. The company reported smashing numbers today and its half-year adjusted profit was £173m, a number which was ahead of consensus number of £169m. Designer Ricardo, is the hope for the company and his collection has received exceptional response despite the fact that most products won't reach stores until February. The company styled ad campaign resonated with its lovers.

This was something which the firm was lacking. What Burberry has realised that it needs to create FOMO among its customers and have more limited lines is the way forward. Communication and delivering a product which the users like is the key to the fashion industry because the competition is as fierce as it can be. In order to create the buzz and keep it going, it needs to be more active on social platforms like Instagram. Burberry still needs to address the growth equation because its competitors like Gucci and LVMH are far ahead of the game. In other words, their growth is nearly in double-digit and Burberry has a lot to catch up.

Technical Analysis

In terms of technical analysis patterns, the price has formed two bearish Harmi candles and the patterns played out perfectly.

The price is trading above the 200,100 & 50-day moving average, this confirms that the price is bullish.

The RSI is also positive and this further strengthens the above argument'

The Fed hasn't been much vocal about the trade uncertainties which are created due to the ongoing war between the US and China.

European markets and US futures are picking up the positive momentum from Wall Street. Looking at the markets, it appears that traders have decided that they can work with the split government. This can be actually good for them as this will keep the Trump administration in check. The hope is that we won't see may gridlock situations but something where both parties can work together.

Mr Trump has already shown his willingness to work with Democrats. He has said that his focus remains on growth and infrastructure projects. I think as long as his emphasis remains on vital issues like these (rather than other ridiculous policies like building the wall), there is a hope that he can claim some more victory tokens in the next few years.

The chart below shows that the investors are fully back on board with the risk on trade and three major indicies enjoyed a healthy gain yesterday

Now, that the U.S Midterm elections are firmly behind us, the focus is going to shift on the Fed policy. The dollar index is trading lower and among the G10 currencies, it's performance is lacklustre. The FOMC announcement on Thursday is something that we need to be prepared for. What is baked in the price is no change in the interest rate. We also expect the Fed to confirm their commitment towards future interest rate hike or in other words, bring the interest rates to their normal level.

The Fed hasn't been much vocal about the trade uncertainties which are created due to the ongoing war between the US and China. However, one can only turn a blind eye to something for a limited time only. Looking at the Beige Book, the picture around trade uncertainties become real. We are not saying that the U.S economy is weak, but the reality is that there has been some setback for the U.S. economy.

The weakness is around the housing market, manufacturing activity and consumer spending. All three of these are leading indicators if you want to measure the real economic health of an economy. Having said this, what is still robust is the labour market and there is some labour shortage in certain districts.

So, the overall impact of the upcoming FOMC meeting on the dollar would not be significant, because the Fed has already increased the interest rate and more importantly there is no press conference scheduled. As long as the statement remains unchanged, which we expect, we think there could be some small upward move for the dollar index.

The Euro stands at the back foot on Thursday after bulls were strongly rejected on Wednesday and the day ended in Doji with very long upper shadow. Another negative signal comes from pair's inability to register close above initial barrier at 1.1423 (Fibo 23.6% of 1.1815/1.1302/Fibo 38.2% of 1.1621/1.1302) which limited the action in past week, despite strong spikes higher.

The greenback regains traction after initial negative impact from US midterm election, which keeps the single currency under pressure.

Hawkish tone from Fed after of two-day policy meeting would add to Euro's negative outlook, but near-term action is still underpinned by 10SMA (1.1390) and sustained break here is needed to signal reversal and re-expose key supports at 1.1300 zone.

Res: 1.1439, 1.1470, 1.1499, 1.1550
Sup: 1.1411, 1.1390, 1.1353, 1.1302

Pivot (invalidation): 62.10

Our preference Short positions below 62.10 with targets at 61.20 & 60.75 in extension.

Alternative scenario Above 62.10 look for further upside with 62.50 & 63.20 as targets.

Comment The RSI lacks upward momentum.

Pivot (invalidation): 14.6500

Our preference Short positions below 14.6500 with targets at 14.4600 & 14.3700 in extension.

Alternative scenario Above 14.6500 look for further upside with 14.7100 & 14.8000 as targets.

Comment The RSI lacks upward momentum.

Pivot (invalidation): 1229.00

Our preference Short positions below 1229.00 with targets at 1223.00 & 1218.50 in extension.

Alternative scenario Above 1229.00 look for further upside with 1233.00 & 1236.50 as targets.

Comment A break below 1223.00 would trigger a drop towards 1218.50.

Pivot (invalidation): 2774.00

Our preference Long positions above 2774.00 with targets at 2830.00 & 2875.00 in extension.

Alternative scenario Below 2774.00 look for further downside with 2739.00 & 2700.00 as targets.

CommentThe RSI is bullish and calls for further upside.

Pivot (invalidation): 11480.00

Our preference Long positions above 11480.00 with targets at 11630.00 & 11780.00 in extension.

Alternative scenario Below 11480.00 look for further downside with 11370.00 & 11288.00 as targets.

Comment The RSI advocates for further advance.

Pivot (invalidation): 5.3460

Our preference Long positions above 5.3460 with targets at 5.4120 & 5.4470 in extension.

Alternative scenario Below 5.3460 look for further downside with 5.3230 & 5.2970 as targets.

Comment The RSI calls for a rebound.