European Highlights 19 October 2016
Asia FX and News -
+ Japan FinMin Aso: need to raise wages to get economy out of deflation.
+ BBG: China Q3 GDP +6.7%, as expected. Sep IndProd at +6.1% was below consensus expectation of 6.4%.
+ Chinese consumers remain a prop with retail sales +10.7%, as expected. .
+ U.K. needs to grow trade with 10 largest partners outside EU by 37% by 2030 if it wants to stand still in trade after withdrawal from bloc, Guardian reports, citing paper circulated at Brexit cabinet committee meeting.
+ China Sep new home sales rose 61% y/y, defying efforts earlier in the year to cool the property market.
+ The softer than expected production numbers from China took the edge off recent commodity currency strength, though the dips proving minimal. USD/JPY continued to frustrate longs as it held sub 104 despite a modest positive session for the N225, while EUR/USD also stuck to familiar ground without crossing back over 1.10. GBP continued to find demand on dips as shorts took some risk off the table ahead of UK employment data later in the day.
Nikkei and JGBs -
+ N225 closed +0.21% at 16998.91. 10yr JGBs yield -0.06%.
European FX and News -
+ UK employment data was the sole focus through the European morning, the data pretty much as expected but GBP mainly better on the session as the modestly risk-off sentiment saw more shorts scaling back. Cable saw a high just shy of 1.2330, talk of big stops through 1.2325 seemingly exaggerated, but took a step back down on reports that German officials have been told to shun UK contacts ahead of formal Brexit negotiations.
+ USD/JPY remains heavy as European equities head lower, the low 103.37 but progress slow enough as not to excite any comment from the MoF.
+ EUR/USD has spent the session close to (and mainly just below 1.10), a lack of major data still encouraging the focus to move elsewhere.
+ AUD and NZD maintain the overall positive tone, AUD/USD a few points off the .7690 high as the AUD makes some modest ground against both the NZD and CAD. USD/CAD is trading below 1.31 as crude trades in positive territory (WTI and Brent both up around 75c), the BoC decision followed by EIA oil inventory data the focus there.
+ Both EUR/SEK and EUR/NOK are modestly lower, though the former with good-sized 9.70 expiries today. EUR/CHF remains in a tight range well within 1.0850/1.0900.
Bonds and Equities -
+ Some bull flattening in Bunds with periphery spreads steady, while the Gilt front end underperforms ahead of today's buybacks. Equities are modestly negative. Dax -0.25%, FTSE -0.15%.
+ Australia: Westpac-MI Leading Index (Sep) 0.06 % m/m (Prev: 0)
+ Australia: Internet Skilled Vacancies (Sep) -1.20% m/m (Prev: -0.4)
+ Japan: All Industry activity index (Aug) 0.20 % m/m (Mkt: 0.2 Prev: 0.3)
+ UK: August wage inflation (average weekly earnings including bonuses) slowed to 2.3% in 3m y/y terms after July's rate was revised higher to 2.4% from 2.3%, and this is which is consistent with market expectations.
+ UK: Claimant Count rose by 0.7k in September from +7.1k in August (revised from 2.4kk). This compares to market expectations for a 3.2k rise
+ UK: The ILO/LFS unemployment rate is at the same time unchanged at 4.9% in August. The total number of unemployed in the 3-months to August rose by 10k bringing the total to 1.656mn from 1.646mn previously (prev: -25k).
Still To Be Released -
12:30 GMT - US: Building Permits (Sep) 4cast: 1180k (Mkt: 1165 Prev: 1152)
12:30 GMT - US: Housing Starts (Sep) 4cast: 1200k (Mkt: 1175 Prev: 1142)
13:00 GMT - BE: BNB Consumer Confidence (Oct) (Prev: -10)
14:00 GMT - CA: BoC - Overnight Rate (42662) 4cast: 0.5% (Mkt: 0.5 Prev: 0.5)
Events & Auctions:
EU: EU's Vestager Speaks in Brussels
12:00 GMT - EU: EU's Juncker Speaks in Brussels
12:15 GMT - UK: Philip Hammond speaks in Parliament
12:45 GMT - US: Fed's Williams Speaks in New Jersey
13:15 GMT - UK: Finance Minister Hammond Speaks in Parliament
13:30 GMT - EU: EU's Verhofstadt Speaks in Brussels
15:00 GMT - CA: BoC interest rate announcement and monetary policy report
16:15 GMT - US: Fed's Harker Speaks in Philadelphia
17:00 GMT - UK: BoE's Haldane Speaks in London
17:30 GMT - EU: ECB's Nouy Speaks in Frankfurt
17:30 GMT - US: Fed's Kaplan Speaks in Texas
18:00 GMT - US: Fed's Release Biege Book
20:15 GMT - CA: BoC's Poloz & Wilkins Speak Before Senate Committee