Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.

SOFT CHINA CPI BOOST STOCK MARKETS, USD CONSOLIDATES POST-NFP

  •  EURUSD may consolidate post Draghi losses at 1,2358/1,2415
  •  Deflationary fears in commodity markets should keep pressures tight on AUD
  •  Chinese data boosted dovish bets after PBoC confirmed liquidity injection in 3Q
  •  USDJPY may go down on expectations Abe would proceed with second round of tax hike in 2Q

The USD made a soft start to the week amid Friday’s job report failed to boost Fed hawks. The US economy added 214K new nonfarm jobs (vs. 235K expected, September figures were revised up from 248K to 256K). The unemployment rate improved from 5.9% to 5.8% for a slightly better participation rate of 62.8% (vs 62.7% last). The average earnings remained soft, in line with expectations. The US 10-year yields remained capped at 2.40%, the DXY index made a comeback from 88.190, fresh four year high. All G10 and EM currencies traded higher at first trading hours of the week. We have light US data flow this week, traders will monitor retail sales on Friday. We expect consolidation in USD.

In Australia, home loans retraced by 0.7% on month to September, investment lending expanded by 3.7%, the owner-occupied home value increased by 1.4%. AUD/USD remained capped at 0.8683 on soft Chinese data. The PM Abbott said AUD is at “more comfortable” levels after the recent fall and added that “the iron ore prices can go down, it can go up as well […] shouldn’t assume the price is stuck at $75 a ton”. The iron core delivered to China is heading towards $75 for the first time since 2009 amid largest weekly decline in five months over the last week. Deflationary fears in commodity markets should keep the pressures tight on AUD.

China’s trade surplus increased from 30.94 to 45.41 billion dollars in October, yet exports grew at slower pace of 11.6% on year to October (vs. 15.3% a month ago), the CPI remained unchanged at 1.6%, the PPI decelerated at faster pace of 2.2% (vs -2.0% exp. & -1.8% last) mostly due to falling oil prices. Data boosted dovish bets especially after the PBoC confirmed liquidity injection in 3Q in a report released last week. The Chinese stocks kick-started the week (Hang Seng +1.40, Shanghai’s Composite +2.30%), USD/CNY trades range-bound with offers trailing below 6.1250/6.1264 (optionality / Fib 38.2% on January-April rally). Bids abound at 6.10+.

USD/JPY opened at 114.52 and legged down to 113.87 on expectations that the PM Abe would proceed with the second round of sales tax hike in 2015. We see resistance at 114.90/115.00 (30d upper Bollinger band / psychological level), large vanilla bids dominate above 115.00 for today expiry.

EUR/USD consolidates post-Draghi losses below 1.2500 this Monday. Trend and momentum indicators are comfortably bearish, option barriers sit at 1.2475/1.2500/1.2550 for today expiry. Support zone has shifted to 1.2358/1.2415 (post-Draghi reaction low / 30-day lower Bollinger band). EUR/GBP offers remain solid at 0.7885/0.7925 (21&50-dma & option barriers).

The economic calendar of the day: Norwegian October CPI and PPI m/m & y/y, Italian September Industrial Production m/m & y/y, Canadian October Housing Starts, US October Labor Market Conditions Index.

Quotes:

Peter Rosenstreich – Head of Market Strategy:

“With major central banks still pushing to keep liquidity loose through balance sheet expansions, risky assets should remained buoyant in the near term. Yes, global growth faces challenges, as the US and China, both engine of expansion, face headwinds. Yet there is growth and despite warnings of geopolitical risk derailing the fragile recovery, this has not occurred. USD and US asset will remain in demand but don’t expected high-beta currencies to collapse. Investors are yield starved and will increasingly take an extra risk for a speck of return. In addition, should the US and UK backtrack from the urgency of tighten we could see a sudden reversal of capital flow back the much maligned EM FX segment.”

“In addition, in China, reports over the weekend showed solid export growth at 11.6% in October, illustrating that the negative sentiment around Chinese growth could change.”

Ipek Ozkardeskaya – Market Analyst:

“Soft Chinese CPI and PPI, combined to developing bear market in oil clearly hints at more easing from the PBoC. The PBoC has no reason to refrain from more liquidity injection given its macro fundamental situation. The USD/CNY trades soft above 6.10 support, we expect a bounce back toward 6.15 (Fib 50% on January – April rally) as the divergence between Fed/PBoC deepens.”

Luc Luyet, CIIA – Senior Market Analyst:

“Gold rose sharply on 7 November. Given the recent overextended decline, a short-term rebound seems likely. However, the longer term technical picture continues to favour further weakness towards the May 2010 low at $1045. Resistances to monitor for a resumption of the underlying decline can likely be found at $1194 (50% retracement of the October-November decline) and $1217 (30/10/2014 high).”

For the full Daily Snapshot report please visit: http://en.swissquote.com/fx/news-and-live-signals/daily-forex-analysis/2014/11/10