Forex - US North American Summary and Highlights 7 Nov


 21:05 (GMT) 07 Nov

  [Forex Highlights]

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Overview

US North American Summary and Highlights 7 Nov (0101-PWRH-C04)

The key story was a Chinese Commerce Ministry announcement that the US and China had agreed to a phased reduction in tariffs, seeing UST yields surge while equities and the USD advanced, particularly versus the JPY.

News highlights

- US initial claims fell to 211k from 219k vs 215k exp.

- China's Commerce Ministry said US and China agreed to lift tariffs in phases though Reuters later reported some internal US opposition.

Currencies:

US North American Summary and Highlights 7 Nov (0101-PWRH-C01)

After China's Commerce ministry said that the US and China have agreed to a phased reduction in tariffs JPY crosses were the big advancers in the European morning. After dipping in Asia on fears that a deal might be delayed, EUR/JPY traded saw highs above 121, though in the North American session, surging UST yields saw the USD gain broader based strength.

EUR/USD, after peaking at 1.1091, saw lows below 1.1050. Sep Eurozone production was slightly weaker than expected, falling 0.6% and EU forecasts for growth were cut for both 2019 and 2020.

USD/JPY pushed up 50 pips on the Chinese announcement, extending to near 109.50 after Bloomberg reported a US official confirming the story, before a late correction as Reuters reported some internal US opposition to a deal.

US North American Summary and Highlights 7 Nov (0101-PWRH-C02)

Commodity currencies benefited from trade optimism, AUD/USD in particular, moving above .69 on both the Chinese announcement and the apparent US confirmation, with a modest dip back below in between. EUR/NOK pushed well below 10.10 helped by stronger than expected Norwegian production.

The Bank of England MPC split 7-2 in favor of no change in rates, with Haskel and Saunders voting for a cut due to a deteriorating labor market. GBP fell as markets increased their pricing for a 2020 cut, but GBP/USD held support at 1.28 and a EUR/GBP bounce above .8650 was brief.

Bonds:

US North American Summary and Highlights 7 Nov (0101-PWRH-C03)

The suggestion of progressive rollback on tariffs had USTs reverse its Wed's bid and then stretch to further yield highs into NY, even nudging through the Sep peaks into the European close to gain an extra burst. Slide extends further after report US says phase 1 to include tariff rollback before some stabilization after a respectable 30 year auction. 2s +6.9bps @ 1.68%, 5s +10.9bps @ 1.74%, 10s +9.8bps @ 1.93%, 30s +8.7bps @ 2.40%.

Agency Spreads: Freddie/Fannie 5s -2.2/-1.6 bps, 10s +0.3/+1.6 bps.

Swap Spreads: 2s -0.50bps, 5s -0.32bps, 10s +0.56bps.

Equities

The Chinese announcement that the US and China agreed to remove tariffs in phases gave support at the open, though subsequent trade was subdued, and already moderate gains were trimmed on a Reuters report of internal US opposition to the deal.

Still to come -

Data

23:30 GMT - JP: labor cash earnings (Sep) % y/y (Mkt: 0.1 Prev: -0.1)

00:30 GMT - AU: Home Loans (Sep)% m/m (Mkt: 1 Prev: 0.7)

05:00 GMT - JP: Leading Indicator (Sep P) (Mkt: 92.2 Prev: 91.9)

05:30 GMT - NL: Manufacturing Production (Sep) % m/m (Prev: 0.9)

05:30 GMT - NL: Manufacturing Production (Sep) % y/y (Prev: -0.8)

06:45 GMT - CH: Unemployment (sa) (Oct) % (Mkt: 2.3 Prev: 2.3)

07:00 GMT - DE: Trade Balance (Sep) EUR bn (Mkt: 19.5 Prev: 16.4)

07:00 GMT - DE: Current Account (nsa) (Sep) EUR bn (Mkt: 19.1 Prev: 16.9)

07:45 GMT - FR: Manufacturing Production (Sep) % m/m (Mkt: 0.2 Prev: -0.8)

07:45 GMT - FR: Manufacturing Production (Sep) % y/y (Mkt: 0.1 Prev: -1.6)

07:45 GMT - FR: Trade Balance (Sep) EUR bn (Mkt: -4964 Prev: -5019)

07:45 GMT - FR: Current Account Balance (Sep) EUR bn (Prev: -2.5)

10:00 GMT - GR: HICP (Oct) % y/y (Prev: 0.2)

13:15 GMT - CA: Housing Starts (Oct) 4cast: 235k (Mkt: 220 Prev: 221.2)

13:30 GMT - CA: Unemployment (Oct) 4cast: 5.5% (Mkt: 5.5 Prev: 5.5)

13:30 GMT - CA: Employment (Oct) 4cast: 10 k (Mkt: 15 Prev: 53.7)

13:30 GMT - CA: Building permits (Sep) % m/m (Mkt: -2 Prev: 6.1)

15:00 GMT - US: Univ of Mich Sentiment (Nov P) (Mkt: 95 Prev: 95.5)

15:00 GMT - US: Wholesale Inventories (Sep F) % m/m (Mkt: -0.3 Prev: -0.3)

Events

00:00 GMT - EU: Ecofin

00:00 GMT - UK: UK sovereign debt to be rated by Moody's

00:10 GMT - US: Fed's Bostic speaks in New York on monetary policy

00:30 GMT - AU: RBA Statement on Monetary Policy

16:45 GMT - US: Fed's Daly speaks on climate change

18:30 GMT - CA: BoC's Beaudry speaks


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