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The DAX index has posted small gains in the Wednesday session, recovering from the sharp losses on Tuesday. In the North American session, the DAX is trading at 11,436, up 0.17% on the day. In economic news, German retail sales posted a gain of 0.1%, missing the estimate of 0.5%. In the eurozone, CPI Flash Estimate and Core CPI Flash Estimate both edged higher in October, with readings of 2.2% and 1.1%, respectively. These releases both matched the estimates. As well, the eurozone unemployment rate remained pegged at 8.1%, matching the forecast.

In Germany, retail sales remained soft, posting a gain of 0.1% in September. This ended a streak of two declines. The eurozone economy is also worrying policymakers. Economic performance has softened in the third quarter, as Preliminary Flash GDP dipped to 0.2%, down from a 0.4% gain in the second quarter. On an annualized basis, Q3 growth was 1.7%, down from 2.2% in the second quarter. Much of the slowdown can be attributed to the crisis over the Italian budget, which was rejected by the European Commission since it breached EU regulations over debt limits. Is confidence waning in the eurozone economy? European Commission reported that economic confidence fell in the eurozone for a tenth straight month. The indicator dropped sharply to 109.8, down from 110.9 points a month earlier. Confidence is lower in the manufacturing and services industries, and retail services managers reported “much grimmer views on the present and expected business situation”. Economic confidence has fallen in Germany, France and Italy, which could translate into further headwinds for the euro in the fourth quarter.

EUR/USD has ticked lower on Wednesday, after posting losses in the past two sessions. Currently, the pair is trading at 1.1334, down 0.10% on the day. On the release front, German retail sales posted a gain of 0.1%, missing the estimate of 0.5%. In the eurozone, CPI Flash Estimate and Core CPI Flash Estimate both edged higher in October, with readings of 2.2% and 1.1%, respectively. These releases both matched the estimates. As well, the eurozone unemployment rate remained pegged at 8.1%, matching the forecast. In the U.S, ADP nonfarm payrolls is expected to drop sharply to 188 thousand. The indicator kicks off a host of employment releases, highlighted by wage growth and nonfarm payrolls on Friday.

Germany is considered the bellwether of the eurozone, and recent numbers are causing some concern. German retail sales remain soft, posting a gain of 0.1%. This ended a streak of two declines. The eurozone economy is also worrying policymakers. Economic performance has softened in the third quarter, as Preliminary Flash GDP dipped to 0.2%, down from a 0.4% gain in the second quarter. On an annualized basis, Q3 growth was 1.7%, down from 2.2% in the second quarter. Much of the slowdown can be attributed to the crisis over the Italian budget, which was rejected by the European Commission since it breached EU regulations over debt limits. Is confidence waning in the eurozone economy? European Commission reported that economic confidence fell in the eurozone for a tenth straight month. The indicator dropped sharply to 109.8, down from 110.9 points a month earlier. Confidence is lower in the manufacturing and services industries, and retail services managers reported “much grimmer views on the present and expected business situation”. Economic confidence has fallen in Germany, France and Italy, which could translate into further headwinds for the euro in the fourth quarter.

German Chancellor Angela Merkel said on Monday that she would not seek re-election as chair of the Christian Democrats. Merkel made the announcement after her party had a poor result in a regional election. The news sent the euro lower briefly and pushed German bond yields higher. Merkel said she will stay on as Chancellor until her term ends in 2021, but her announcement is another dent in the Iron Lady’s authority, which has diminished as her CDU party has slipped in popularity. Eurozone confidence indicators have looked sluggish recently, and Merkel’s decision to slowly wind up her political career will not help matters.

The Bank of England’s latest policy decision will be made public at 1200 GMT on Thursday. The central bank is widely anticipated to keep rates unchanged, with the focus falling on monetary policy committee (MPC) members’ communication as expressed in the meeting minutes, as well as on the updated quarterly forecasts for GDP and inflation. Governor Carney’s press conference will also be eyed, as his remarks could prove instrumental for sterling’s direction in the aftermath of the rate decision.

Analysts expect all nine monetary policy committee (MPC) members to vote in favor of maintaining the BoE’s policy rate at 0.75%, the level established in August when the Bank decided to hike rates for only the second time in more than a decade. In fact, swap markets show market participants don’t expect another 25bps rate increase until December 2019 – even that is not completely priced in – which reflects a less steep normalization path compared to just a few weeks ago. Contributing to the scaling back of expectations for a rate hike sooner rather than later were the recent patch of softer-than-projected data, as well as continued Brexit uncertainty.

In light of the fact that a rate rise is practically off the table, the meeting minutes and fresh economic projections also due at 1200 GMT will probably be those fueling positioning on sterling. For example, optimism on behalf of the BoE that portrays a more aggressive tightening cycle compared to the previous guidance for “limited and gradual” rate rises, has the capacity to boost the pound. However, a gloomier outlook that could exert selling pressure on the British currency may be more likely on offer: inflation exceeds the Bank’s annual target of 2%, but it came in weaker than expected during September, while retail sales for the same month also missed forecasts by a relatively large margin. On top of these, Brexit uncertainty remains firmly on the table as the UK’s exit from the EU in late March draws ever closer; will a deal with the EU be struck or will a disorderly Brexit take place?

Overall, worries over a no-deal Brexit, in conjunction with the recent weaker-than-expected data, suggest than a downside revision in GDP forecasts may be more likely by the Bank than an upgrade. On inflation, the risks appear roughly balanced. Softer CPIs may tilt things towards a downgrade, but a declining pound – GBPUSD is trading not far above a more than one-year nadir – poses upside risks to inflation and this is something that may be stressed by policymakers, perhaps by Carney himself during his press conference set to take place at 1230 GMT. Such a comment is likely to prove sterling-positive. Any remarks on Brexit and global trade also rank high in terms of significance, having the potential to move the pound.

In FX markets, a relatively upbeat BoE is expected to lead to long sterling positions. Given a move above a previous low at 1.2783, the attention would turn to the zone around early October’s bottom of 1.2919 as a possible resistance area. Further above, the 1.30 handle which may hold psychological importance could prove an important barrier in the event of stronger gains; the 50- and 100-day moving average lines lie not far above this mark. On the downside and in case of a pessimistic tone by the Bank, the region around August’s more-than-one-year low of 1.2660 could provide support. After that, the June 2017 trough at 1.2587 would come into view. Lower still, the April 2017 bottom of 1.2362 would increasingly come into scope. Notice that there’s negative momentum currently in place, with the pair roughly trading at its lowest since late August.

Lastly, the figures for October’s UK manufacturing PMI will also be hitting the markets ahead of the rate decision on Thursday, at 0930 GMT; construction PMI will be released on Friday, with the relevant reading on the all-important services sector due on Monday.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13724
Open: 1.13433
% chg. over the last day: -0.25
Day's range: 1.13459 – 1.13563
52 wk range: 1.1299 – 1.2557

Yesterday, the EUR/USD was showing a bearish sentiment. The currency pair is weakened after weak economic stats from the Eurozone. Right now, the EUR/USD quotes are consolidating. The local support and resistance levels are 1.13400 and 1.13650 respectively. Positions should be opened from these levels. A technical correction is possible soon.

The Economic News Feed for 31.10.2018

Customer Price Index (EU) – 12:00 (GMT+2:00);

ADP Non-farm Employment Change (US) – 14:15 (GMT+2:00).

The price fixed below 50 МА and 200 МА, which indicates a bearish sentiment.

The MACD histogram is in the red, but above the signal line, which gives a weak signal towards the sale of EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates a bullish sentiment.

Trading recommendations

Support levels: 1.13400, 1.13000
Resistance levels: 1.13650, 1.14000, 1.14400

If the price fixes below the local support level of 1.13400, we can expect a further fall of EUR/USD towards 1.13000.

Alternatively, if the price fixes above the resistance level of 1.13650, you should look for market entry points to open long positions. The movement will tend toward 1.14000-1.14400.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.27968
Open: 1.27076
% chg. over the last day: -0.66
Day's range: 1.27223 – 1.27394
52 wk range: 1.2662 – 1.4378

Yesterday, the pound started losing positions against the USD. At the moment, the GBP/USD quotes are recovering. The key support and resistance levels are 1.27000 and 1.27600 respectively. The investors are waiting for the additional drivers. Tomorrow, the Bank of England will publish their resolution regarding the key interest rate. You should open positions from the key levels. The trading instrument has some potential towards further growth.

The Economic News Feed for 31.10.2018 is calm.

The indicators show the sellers’ strength — the price fixed below the 50 MA and 200 MA.

The MACD histogram is in the positive zone, but above the signal line, which gives a weak signal towards a sale of GBP/USD.

The Stochastic Oscillator is around the overbought zone, the %K line is above the %D line, which gives a weak signal towards a sale of GBP/USD.

Trading recommendations

Support levels: 1.27000, 1.26600
Resistance levels: 1.27600, 1.28000, 1.28400

If the price fixes above the resistance level of 1.27600, we can expect a correction. The movement will tend toward 1.28000-1.28400.

Alternatively, the GBP/USD quotes will fall towards 1.27000-1.26750.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31303
Open: 1.31112
% chg. over the last day: -0.14
Day's range: 1.31179 – 1.31269
52 wk range: 1.2248 – 1.3387

The USD/CAD currency pair is showing an ambiguous picture. The trading instrument is still moving sidewards. Investors are waiting for additional drivers. The local support and resistance levels are 1.31100 and 1.31400 respectively. Positions should be opened from these levels.

The Economic News Feed for 31.10.2018:

GDP report (Canada) – 14:30 (GMT+2:00).

We also recommend you keep an eye on Stephen Poloz – Governor of the Bank of Canada – and his speech.

The indicators do not provide precise signals: the price is testing 50 MA.

The MACD histogram is around 0.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates a bearish sentiment.

Trading recommendations

Support levels: 1.31100, 1.30700, 1.30400
Resistance levels: 1.31400, 1.31700

If the price fixes above the 1.31400, we can expect further growth of the USD/CAD quotes. The movement will tend toward 1.31700-1.32000.

Alternatively, the price can lower to 1.30700-1.30500.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 112.355
Open: 113.076
% chg. over the last day: +0.61
Day's range: 113.029 – 113.218
52 wk range: 104.56 – 114.74

The USD/JPY currency pair is showing a positive trend. During yesterday’s and today’s trade, the quotes have grown almost by 100 points. Currently, the USD/JPY quotes are consolidating. The local support and resistance levels are 112.900 и 113.250, respectively. Positions should be opened from these levels. A technical correction is possible in the near future.

The Bank of Japan kept the key parameters of the monetary policy on the same level.

The price fixed above 50 MA and 200 MA, which indicates the buyers’ strength.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal towards buying USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates a bearish sentiment.

Trading recommendations

Support levels: 112.900, 112.600, 112.300
Resistance levels: 113.250, 113.500

If the price fixes below the mirror support 112.900, we can expect a correction of the USD/JPY quotes. The movement will tend toward 112.600-112.300.

Alternatively, the price can grow towards 113.500-113.700.

EUR/USD

Current level - 1.1352

Still bearish for 1.1300, but my outlook is counter-trend against the mentioned support, for an upswing towards 1.1430.

USD/JPY

Current level - 113.09

The upmove is approaching 113.50 resistance  and I favor a reversal, for a downswing towards 112.20.

GBP/USD

Current level - 1.2746

The downtrend is intact below 1.2776 resistance, heading for a tight test of 1.2660 low. My outlook is counter-trend against 1.2660, for a rise towards 1.2940.

BoJ remained on hold at -0.10% as was widely expected, while there was little reaction on USD/JPY upon announcement. The Bank altered its July projections slightly to the downside as was also expected, giving the event a more dovish tone. Main comments could include BoJ's intention to continue to buy JGB's at a flexible manner and that risks are skewed to the downside, regarding price and economic outlook. Despite the overall event rolling out with little surprise, we could see a bearish mood setting in for JPY.

USD/JPY rallied yesterday, breaking the 112.72 (S1) resistance line (now turned to support) and testing the 113.25 (R1) resistance level, during today's Asian session. We see the case for the pair to continue to trade in a bullish market, as an upward trendline has been forming since the 26th of October. However, we would like to see more higher troughs confirming the upward trend line. Also the RSI indicator for USD/JPY in the 4 hour chart, has reached the reading of 70, implying a rather overcrowded long position. If the bulls continue to dictate the pairs direction, we could see the pair breaking the 113.25 (R1) resistance line and aim for the 113.95 (R2) resistance level. If the bears take over, we could see the pair breaking the 112.72 (S1) support line and aim for the 112.15 (S2) support zone.

GBP weakens on ongoing Brexit concerns

Ongoing Brexit concerns seem to have overshadowed a brief optimism of Hammond's recent statements for the end of austerity. The pound weakened against the USD and the EUR yesterday, as traders seem to be anxious about the ongoing Brexit negotiations. Despite the UK finance minister offering higher spending for public services and national debt, he also made it clear, that such provisions would be dependent on the agreement with the EU, regarding Brexit. Analysts point out that an agreement with the EU does not seem closer and that remains the main issue for the pound right now. Focus for GBP traders is turning to BoE's interest rate decision on Thursday, amidst a bearish sentiment.

GBP/USD tumbled yesterday, breaking the 1.2780 (R1) support level now (turned to resistance) and stabilised by testing the 1.2700 (S1) support line. We maintain a bearish outlook for the pair as downward trendline remains intact. It should also be noted that in the 4 hour chart of cable, the RSI indicator remains well below the reading of 30, intensifying worries created by a possibly overcrowded short position. Should the pair continue to be under the market's selling interest, we could see it breaking the 1.2700 (S1) support line and aim if not breach the 1.2630 (R2) support barrier. On the other hand, should the market favour the pair's long positions, we could see cable correcting and breaking the 1.2780 (R1) resistance line.

In today's other economic highlights:

In the European session we get Germany's retail sales growth rate for September, France's preliminary CPI rate for October as well as Eurozone's preliminary release of the HICP rate for October. In the American session, we get from the US the ADP employment change figure and Canada's GDP growth rate for August. As for speakers, Bank of Canada's Governor Stephen Poloz speaks. Also note, that the US EIA crude oil inventories figure will be released today and could create volatility for oil prices. Please be advised that the API weekly crude oil inventories figure were released yesterday with an injection of 5.7 million barrels. Despite the injection, oil prices rose by nearly 3 USD at the moment of the release. Should you be interested on further oil fundamentals and technical analysis, please refer to our oil weekly outlook, to be released later today.

USD/JPY H4

Support: 112.72 (S1), 112.15 (S2), 111.63 (S3)

Resistance: 113.25 (R1), 113.95 (R2), 114.55 (R3)

GBP/USD 4H

Support: 1.2700 (S1), 1.2630 (S2), 1.2565 (S3)

Resistance: 1.2780 (R1), 1.2850 (R2), 1.2920 (R3)

What worries investors

The two largest worries for investors are rising interest rates and US-China trade war. What will higher rates do to economic expansion? How will a trade war damage China’s already-weak growth and erode corporate profits? The recent US GDP acceleration was due to Trump’s deficit spending: this suggests a natural business cycle in a late stage. Investors are now drilling deep into economic reports and company reports to uncover evidence of further weakness. Risk appetite rallied back in Asia today, with equities higher across the board and even the much-maligned Shanghai Composite rising 1.35%. European futures are pointing to a higher open.

The trade war is moving to the World Trade Organization. At the WTO summit in Geneva, several countries continue to dispute the US tariffs on steel and aluminium. However, given the tone of the US administration, a WTO negative ruling would not be respected. The international community recognizes that Trump tariffs indicate a shift in American thinking. Old bilateral relationships are on the verge of collapse. Even the most active diplomacy is unlikely to regain past geopolitical status.

Japan hangs loose, yen strengthens

The Japanese economy is facing a difficult slowdown. So the Bank of Japan revised its estimates downward, starting with inflation: now not expected to reach the long-maintained target of 2% by year-end. Economic growth is now forecast at 1.40% (prior: 1.50%) and to weaken further when the country’s consumption tax rises from 8% to 10% by October 2019. Therefore, interest rates remained unchanged -0.10%. The BoJ will continue supporting the economy with purchases of Japanese government bonds at USD 710 billion per year. The Japanese yen is expected to strengthen today, approaching the 112.70 range.

Notes/Observations

• BOJ announced its Bond purchases for month of Nov which saw its 3rd straight month of tweaks. Increased the amounts to purchase in 1-5 year range but cut back on the number of days of purchases (move seen to aid JGB functionality)
• Germany Sept Retail Sales misses expectations (trend of softer EU data continues)
• France Oct Preliminary CPI registers a slight miss but stays above the ECB target
• Italy Unemployment misses expectations (climbs back above the 10% level)
• Spain Q3 Preliminary GDP bucks the trend and meets expectations and keeps pace steady compared to prior quarter

Asia:

• Australia Q3 CPI saw its annual pace below the RBA target range (Q/Q: 0.4% v 0.5%e, Y/Y: 1.9% v 1.9%e). Softer inflation was anticipated by the RBA some months back
• China Oct Manufacturing PMI barely hangs onto expansion for its lowest level in two year; (50.2 v 50.6e v 50.8 prior; Non-manufacturing PMI: 54.6e v 54.9 prior; Composite PMI: No est v 54.1 prior
• South Korea Sept Industrial Production registers its largest decline since 2013 (Y/Y: -8.4% v -5.1%e)
• Japan Sept Preliminary Industrial Production misses expectations (M/M: -1.1% v -0.3%e; Y/Y: -2.9% v -2.1%e)
• (JP) BOJ Quarterly Outlook for Economic Activity and Prices trims its inflation outlook but maintains its overall assessment of economy
• (JP) BOJ keeps policy steady (as expected) with Interest Rate on Excess Reserves (IOER) unchanged at -0.10%; maintained its policy framework of "QQE with Yield Control" around 0.00% and asset purchases at annual pace of ¥80T

Europe:

• Italy Treasury: EU Commission has requested clarification on debt reduction plans; to respond by Nov 13th
• EU Commission letter reiterated that Italy's public debt was still a key vulnerability and a concern for the entire Euro Zone

Americas:

• Bank of Canada (BOC) Gov Poloz: The policy rate would need to rise to neutral to achieve our inflation target. Neutral rate seen between 2.5-3.55 area (rate currently at 1.75%)

Energy:

• Weekly API Oil Inventories: Crude: +5.7M v +9.9M prior

Macro

• (JP) Japan: The BoJ unexpectedly cuts its inflation projections again following its latest review of monetary policy and quarterly forecast update. The short-term rate remained at -0.1% and 10Y rates at near 0%. Core consumer inflation projection for the current fiscal year ending March 2019 was trimmed to 0.9% from 1.1% prior, and to 1.4% from 1.5% for fiscal 2019-20. BoJ monetary stimulus, alongside government fiscal stimulus, isn't having much of an impact, as the pick-up in core CPI leaves the growth rate well short of the 2% inflation desired by the BoJ. Of course, a lack of wage growth remains a barrier to the BoJ's reflationary goal.
• (FR) France: HICP inflation held steady at 2.5% y/y in October, with prices up 0.1% m/m. The national rate came in at 2.2% y/y, also unchanged from September. Core inflation, remains way below the ECB's definition of price stability, giving the ECB ammunition to argue that the Eurozone still needs a substantial degree of stimulus.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +1.5% at 360.8, FTSE +1.5% at 7138, DAX +1.4% at 11441, CAC-40 +2.1% at 5083, IBEX-35 +1.5% at 8943, FTSE MIB +0.9% at 19160, SMI +1.1% at 8948, S&P 500 Futures +0.6%]

Market Focal Points/Key Themes:

Equities

• European Indices trade sharply higher across the board following on from gains in the US and Asia overnight. US futures build upon yesterdays gains pointing to another strong open. Positive earnings from a number of names have helped underpin gains. French CAC components Airbus, Air France, L'Oreal and Sanofi all trade higher after positive results; In Spain banking giant Santander and Telecom name Telefonica also trade higher after Q3 results. In the UK Standard Chartered followed HSBC with strong earnings with shares rising over 4%, meanwhile Next declines Next Retail sales fell more than expected. In the US Facebook shares rise in the pre market after a profit beat, however MAUs fell slightly short of forecasts; Electronic Arts trading lower after cutting its outlook. Looking ahead notable earners include Anthem, Kellogg, Bunge, General Motors and Sprint among others.
• Consumer discretionary: L'Oreal [OP.FR] +6% (earnings), Air France-KLM [AF.FR] +4% (earnings; progress on negotiations with cabin crew), Next PLC [NXT.UK] -3.5% (reports sales growth; affirms outlook), Mr Green & Co [MRG.SE] +48%, William Hill [WMH.UK] +7% (Mr Green & Co to be acquired by William Hill), Wolters Kluwer [WKL.NL] -2.5% (earnings), Societe Television Francaise 1 [TFI.FR] +11.5% (earnings)
• Financials: Banco Santander [SAN.ES] +4% (earnings; affirms outlook), Standard Chartered [STAN.UK] +6% (earnings), Sydbank [SYDB.DK] -12% (earnings; outlook cut), NEX Group [NXG.UK] +3.5% (CME received clearance for acquisition)
• Healthcare: Sanofi-Aventis [SAN.FR] +4% (earnings; partial outlook raise), Mithra Pharmaceuticals [MITRA.BE] +4.5% (agreement with Adcock Ingram)
• Industrials: Airbus [AIR.FR] +0.5% (earnings; partial outlook cut), Nokian Renkaat [NRE1V.FI] -13.5% (earnings; outlook cut)
• Technology: Dialog Semiconductor [DLG.DE] +8% (earnings; commences buyback program), RIB Software [RSTA.DE] +10% (earnings; raises Rev outlook)
• Telecom: Telefonica [TEF.ES] +3.5% (earnings; outlook raise), Eutelsat [ETL.FR] -11.5% (earnings; outlook cut)

Speakers

• ECB's Hansson (Estonia): Reiterates temporary factors affecting Euro-Area growth; wage growth increasing confidence on achieving the inflation target
• Italy govt said to argue that the effective deficit to be nearer to 2%
• Italy Fin Min Tria reiterated stance that the domestic economy would not grow without stimulus
• Turkey Central Bank Gov Cetinkaya Quarterly Inflation Report press conference stated that it saw a marked deterioration in pricing behavior and reiterated to maintain tight monetary policy stance until inflation outlook improved. The tight stance to stay for the long term
• Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raise the inflation outlook for the 2018 thru 2020 period markedly. Raised 2018 CPI from 13.4% to 23.5%; 2019 CPI from 9.3% to 15.2% and 2020 CPI from 6.7% to 9.3%.
• BOJ Gov Kuroda post rate decision press conference reiterated that the price momentum towards the 2% inflation target was maintained; risks were skewed to the downside for both the economy and prices. Reiterated its forward guidance to keep extremely low rates for an extended period. Would adjust monetary policy if risks materialized. Options included additional easing options include rate cuts, expansion of monetary base and asset purchases. BOJ was not thinking about widening the margin of yield movements or changing the zero percent target
• BOJ announced its Bond purchases for month of Nov which saw its 3rd straight month of tweaks. Increased the amounts to purchase in 1-5 year range but cut back on the number of days of purchases.
• India Finance Ministry Statement noted that it respected the RBI's autonomy. Independence was essential and accepted governance requirement for the central bank. Govt would continue to consult with RBI. Govt placed its assessment of issues and suggesteds possible solutions and would continue to do so
• China State Council: Country has achieved overall economic stability; performance has been in proper range in the first three quarters of the year
• Iraq Oil Min Ghadhban: Current oil prices seen as fair
• Russia Oct oil production seen at 11.41M bpd (record level) v 11.36M bpd m/m

Currencies/ Fixed Income

• FX markets were generally quiet despite another rash of EU data. Market participants await the Euro Zone flash CPI data later today to gauge how core inflation is performing.
• EUR/USD was little changed around the 1.1350 area ahead of the Euro Zone inflation data. The pair still facing technical headwinds with sell-stops orders said to be lurking below the 1.1300 area
• USD/JPY moving back into its early Oct range with 115 seen as psychological resistance. BOJ made no surprises at the rate decision but did tweak its JGB bond buying program for November for the 3rd straight month in a move to aid JGB market functionality.

Economic data

• (DE) Germany Sept Retail Sales M/M: 0.1% v 0.5%e; Y/Y: -2.6% v +1.0%e
• (DK) Denmark Sept Unemployment Rate: 3.1% v 3.2%e; Gross Unemployment Rate: 3.9% v 3.9%e
• (FI) Finland Aug Final Trade Balance: -€0.4B v -€0.4B prelim
• (TR) Turkey Oct Economic Confidence: 67.5 v 71.0 prior
• (TR) Turkey Sept Trade Balance: -$1.9B v -$1.9Be
• (TH) Thailand Sept Current Account Balance: $2.4B v $1.2Be; Overall Balance of payment (BOP): $1.0B v $0.2B prior; Trade Account Balance: $2.0B v $0.6B prior; Exports Y/Y: -5.5% v +5.8% prior; Imports Y/Y: % v 24.2% prior
• (FR) France Oct Preliminary CPI M/M: 0.1% v 0.2%e; Y/Y: 2.2% v 2.3%e
• (FR) France Oct Preliminary CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 2.5% v 2.6%e
• (TW) Taiwan Q3 Preliminary GDP Y/Y: 2.3% v 2.5%e
• (ES) Spain Q3 Preliminary GDP Q/Q: 0.6% v 0.6%e; Y/Y: 2.5% v 2.5%e
• (ES) Spain Aug Total Mortgage Lending Y/Y: 10.3% v 14.0% prior; House Mortgage Approvals Y/Y: 6.8% v 14.6% prior
• (AT) Austria Q3 Preliminary GDP Q/Q: 0.4% v 0.3% prior; Y/Y: 2.4% v 2.7% prior
• (HU) Hungary Sept PPI M/M: +0.1% v -0.1% prior; Y/Y: 6.7% v 8.1% prior
• (ES) Spain Aug Current Account Balance: €1.8B v €0.1B prior
• (CH) Swiss Oct Credit Suisse Expectations Survey: -39.1 v -30.8 prior
• (IT) Italy Sept Preliminary Unemployment Rate: 10.1% v 9.9%e
• (NO) Norway Central bank (Norges) Bank Daily FX Purchases: -350M v -450M prior
• (IS) Iceland Sept Final Trade Balance (ISK): -14.1B v -15.1B prior
• (PL) Poland Oct Preliminary CPI M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.8%e
• (CZ) Czech Sept M2 Money Supply Y/Y: 4.3% v 5.0% prior
• 05:30 (SL) Sri Lanka Oct CPI Y/Y: 4.0%e v 4.3% prior
• (PT) Portugal Oct Preliminary CPI M/M: 0.0% v 1.1% prior; Y/Y: 1.0% v 1.4% prior
• (PT) Portugal Oct Preliminary CPI EU Harmonized M/M: 0.0% v 1.5% prior; Y/Y: 0.9% v 1.8%e

Fixed Income Issuance

• (IN) India sold total INR vs. INR150B indicated in 3-month, 6-month and 12-month bills

Looking Ahead

• (NO) Norway Central Bank (Norges) Gov Olsen
• 05:50 (EU) ECB allotment in 7-day USD Liquidity Tender
• 06:00 (EU) Euro Zone Oct Advance CPI Estimate Y/Y: 2.2%e v 2.1% prior; CPI Core Y/Y: 1.1%e v 0.9% prior
• 06:00 (EU) Euro Zone Sept Unemployment Rate: 8.1%e v 8.1% prior
• 06:00 (IT) Italy Oct Preliminary CPI (including tobacco) M/M: +0.2%e v -0.4% prior; Y/Y: 1.7%e v 1.5% prior
• 06:00 (IT) Italy Oct Preliminary CPI EU Harmonized M/M: 0.4%e v 1.7% prior; Y/Y: 1.8%e v 1.6% prior
• 06:00 (BE) Belgium Sept Unemployment Rate: No est v 6.5% prior
• 06:00 (GR) Greece Aug Retail Sales Value Y/Y: No est v 2.5% prior; Retail Sales Volume Y/Y: No est v 4.0% prior
• 06:00 (EU) Daily Euribor Fixing
• 06:00 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 06:30 (EU) ECB Long-Term Refinancing Operation Result
• 06:30 (GR) Greece Debt Agency (PDMA) to sell €875M in 26-week bills
• 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills - 07:45 (US) Daily Libor Fixing
• 07:00 (US) MBA Mortgage Applications w/e Oct 26th: No est v +4.9% prior
• 07:00 (IE) Ireland Oct Unemployment Rate: no est v 5.4% prior
• 07:00 (IL) Israel Aug Manufacturing Production M/M: No est v 2.5% prior
• 07:00 (IL) Israel Sept Unemployment Rate: No est v 4.0% prior
• 07:00 (IN) India Sept Fiscal Deficit( INR Crore): No est v 51.0B prior
• 07:00 (SE) Sweden Central bank (Riksbank) Ingves at Bank of Portugal)
• 08:00 (ZA) South Africa Trade Balance (ZAR): 4.2Be v 8.8B prior
• 08:00 (CL) Chile Sept Manufacturing Production Y/Y: 0.8%e v 4.0% prior; Industrial Production Y/Y: -0.6%e v -1.8% prior; Total Copper Production: No est v 465.9K tons prior
• 08:00 (CL) Chile Sept Unemployment Rate: 7.2%e v 7.3% prior
• 08:00 (IN) India Sept Eight Infrastructure Industries (Key Industries): No est v 4.2% prior
• 08:00 (RU) Russia to sell combined RUB20B in 2021 and 2029 OFZ bonds
• 08:15 (US) Oct ADP Employment Change: +187Ke v +230K prior
• 08:30 (US) Q3 Employment Cost Index: 0.7%e v 0.6% prior
• 08:30 (CA) Canada Aug GDP M/M: 0.1%e v 0.2% prior; Y/Y: 2.4%e v 2.4% prior
• 08:30 (CA) Canada Sept Industrial Product Price M/M: No est v -0.5% prior; Raw Materials Price Index M/M: No est v -4.6% prior
• 08:30 (US) Treasury Quarterly Refunding Announcement
• 09:05 (UK) Baltic Dry Bulk Index
• 09:45 (US) Oct Chicago Purchasing Manager: 60.0e v 60.4 prior
• 10:00 (MX) Mexico Aug Gold Production: No est v 6.9K oz prior; Silver Production: No est v 304.6K oz prior; Copper Production: no est v 430.0K prior
• 10:30 (BR) Brazil weekly Currency Flow data
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 11:00 (MX) Mexico Sept Net Outstanding Loans (MXN): No est v 4.303T prior
• 11:00 (CO) Colombia Sept National Unemployment Rate: No est v 9.2% prior; Urban Unemployment: 10.0%ev 10.1% prior
• 12:00 (NZ) New Zealand Oct QV House Prices Y/Y: No est v 4.6% prior
• 13:15 (CH) SNB President Jordan in Bern
• (BR) Brazil Central Bank (BCB) Interest Rate Decision: expected to leave Selic Target Rate unchanged at 6.50% (no set time)

WTI oil bounced to $66.98 on Wednesday after long-legged Doji on Tuesday signaled indecision.

Bears cracked key near-term support at $65.73 (23 Oct low) but failed to sustain break, showing nervousness ahead of start of US sanctions on Iran next week.

Lower than expected build in US crude stocks (API report on Tuesday showed build of 5.7 mln bls vs last week's 9.88 mln bls build) added to reduction of negative momentum. The price may hold in extended consolidation before continuing towards targets at $64.66/43 (weekly cloud top/16 Aug low) , as overall bears remain intact are reinforced by formation of 10/200SMA death-cross on daily chart.

EIA weekly crude stocks report is in focus today (4.11 mln bls build f/c vs 6.34 mln bls build previous week) and could boost recovery if crude inventories rise less than expected or possibly fall into negative territory.

Conversely, stronger than expected build would increase pressure on oil prices.

Res: 66.98, 67.50, 67.93, 68.58
Sup: 66.26, 65.73, 65.32, 64.66

During Tuesday's session, the currency rate passed through the support of the monthly S2 at 1.1359 to end the trading day at 1.1340. On Wednesday morning, the European Single Currency was trying to recover itself to trade near the monthly S2 at the 1.1350 mark.

In regards to the near-term future, most likely, the currency rate will trade downside towards the weekly S1 at 1.1310. The monthly S2 resistance level will retrace the rate from the surge during the trading day on Wednesday.

However, today's fundamental news could break the predictions for the currency exchange pair to push the rate to sure upwards to 1.1380. Watch out for the news!