Articles

The info from MUFG has been around, but ICYMI.

In brief:

• US dollar will likely rise initially if Trump wins election
• Trump’s remarks indicate a higher risk that he will implement inflationary tariffs more quickly than he did during his first term as president
• Given the rise of the USD during October further gains could be limited, rise being ‘priced in’
• EUR/USD likely to break under 1.05, but not below parity

This article was written by Eamonn Sheridan at www.forexlive.com.

Today’s private oil inventories might provide some support for crude.

This article was written by Adam Button at www.forexlive.com.

• US JOLTS job openings 7.443M vs 8.000M estimate
• US October consumer confidence 108.7 vs 99.5 expected
• Case Shiller August home price data +0.4% versus 0.2% expected
• US advance goods trade balance $-108.23 billion versus $-95.9 billion estimate
• US wholesale inventories or September -0.1% versus revised 0.2% last month
• Atlanta Fed final Q3 GDPNow estimate: 2.8% vs 3.3% prior
• BOC’s Macklem: We anticipate cutting further if economy follows our forecasts
• China stimulus report has the right number but the details are all wrong
• US treasury auctions off $44 billion a 7-year notes at a high yield of 4.215%
• Dallas Fed services sector outlook +2.0 vs -2.6 prior
• Video: Why the Canadian dollar will continue to struggle

Markets:

• Gold up $30 to $2772
• US 10-year yields down 1.4 bps to 2.26%
• WTI crude oil down 13-cents to $67.25
• Bitcoin up 4%, nears record
• S&P 500 up 0.2%
• GBP leads, AUD lags

The early US session maintained some of the recent themes with Treasury yields climbing to new highs, including 10s up to 4.34% with an associated climb in USD/JPY to 153.86 at the high. The euro also fell as low as 1.0770.

But the dollar strength slowly unwound. Part of that was a softer JOLTS report, including the lowest quits rate since 2015 (excluding the pandemic). The headline was also soft but was possibly impacted by hurricanes. That report outweighed consumer confidence, which posted a surprise jump.

The heavier fall in the dollar came after a strong 7-year Treasury auction. That was enough to spark some dip buying that saw 10s fall 7 bps from the highs and dragged the dollar back close to unchanged on the day.

The commodity currencies were underperformers after a Reuters report leaked 10 trillion yuan in China stimulus. That’s about the number analysts were looking for but the devil was in the details as it’s spread out over 3 years and with the majority earmarked for cleaning up local government debt and nearly all of the remainder dedicated to buying vacant properties.

That contributed to a 1% fall in US-listed Chinese ETFs and weighed on the Australian dollar.

Just outside of the FX complex, there is clearly a bid for non-monetary assets with gold surging to another all-time high and bitcoin gaining more than 5% before fading as it approached March’s all-time high. Those will be notable spots to watch on Wednesday as the market readies for ADP employment and US GDP.

This article was written by Adam Button at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

• Prior month $-94.22 billion

Advance International Trade in Goods

• International trade deficit was $108.2 billion in September, up $14.0 billion from August

• Exports of goods for September were $174.2 billion, $3.6 billion less than August exports

• Imports of goods for September were $282.4 billion, $10.4 billion more than August imports

This is likely a result of the dock workers strike expecations. Companies imported early in anticipation of the strike. That strike was solved and as a result expect lower deficits going forward. Nevertheless, the deficit was the largest going back to the pandemic and the other port strikes.

This article was written by Greg Michalowski at www.forexlive.com.

Alphabet is beating on the top and bottom line:

• EPS $2.12 versus $1.84 estimate
• Revenues $88.279 versus $86.31 billion

The shares of Alphabet is trading up $5.37 or 3.20% at $175.00

This article was written by Greg Michalowski at www.forexlive.com.

The major US stock indices are closing with mixed results. However, the NASDAQ index is closing at a new all-time record high. It is closing above the high from July at 18647.45.

The gains as AMD and Alphabet report after the close.

The final numbers are showing:

• Dow industrial average – 154.06 points or -0.36% at 42233.51
• S&P index rose 9.56 points or 0.16% at 5833.08
• NASDAQ index rose 145.56 points or 0.78% at 18712.75.

They small-cap Russell 2000-5.97.4-0.27% and 223.08

After Close today:

• AMD
• Alphabet
• Snap Inc.
• Chipotle
• Visa
• First Solar

Looking at the rest the week Microsoft, Meta, Merck, Amazon, Apple and Intel are all set to release along with others.

Today:

• AMD rose $6.33 were 3.96% at $166.25
• Alphabet rose $2.96 or 1.78% at $169.68.
• Amazon rose 1.3%
• Microsoft rose 1.26%
• Meta rose 2.62%
• Apple rose 0.12%

WednesdayBefore Open:

• Lilly
• Caterpillar
• Humana

After Close:

• Microsoft
• Meta
• Coinbase
• Robinhood

ThursdayBefore Open:

• Uber
• Peloton
• Merck
• ConocoPhillips
• SiriusXM
• Altria
• Mastercard

After Close:

• Amazon
• Apple
• Intel

FridayBefore Open:

• FuboTV
• Chevron
• ExxonMobil
• Wayfair

This article was written by Greg Michalowski at www.forexlive.com.

The quarterly CPI data is viewed as the official inflation rate. The monthly reading is a stopgap, used as an incomplete guide.

The headline y/y is expected to dip slightly under the upper end of the 2 to 3% Reserve Bank of Australia target band. There are plenty of caveats on this, the main being that the dip is expected to be the result of government subsidies cost-of-living relief measures. Still, the headline will be read as encouraging even if it expected to drift back up again when the subsidies roll off in the readings ahead.

The underlying rate of inflation, the ‘core’ trimmed mean, is expected to remain above the top of the band.

This article was written by Eamonn Sheridan at www.forexlive.com.

Gold hit a fresh record at $2775 earlier today in a series of record highs this year.

Bitcoin may finally be joining the party as it tests the March high of $73,803. The high so far is less than $300 from that level, though it should provide tough resistance.

Bitcoin is up more than 5% on the day as headlines about ETF inflows continue to drive the trend.

In the bigger picture, new highs in both speak to election uncertainty and a desire to avoid the long arm of the US dollar. For bitcoin, the rally may also signal positive risk appetite and/or bets on a bitcoin-friendly Republican administration.

This article was written by Adam Button at www.forexlive.com.

The Nasdaq is putting on a brave face as we count down to some major earnings releases. The index is at the highs of the day, up 0.8% on strength from chipmakers and Meta.

Another solid gainer is Alphabet as it rises 1.9% to the highest since August 1 as it gets set to report earnings after the bell. That’s a nice looking move above resistance ahead of the report and could reflect short covering.

It could also reflect a company that many people think will be a long-term loser in AI due to people shifting to ChatGPT for search (something I’m certainly doing). However that long-term trend is likely running into a short-term positive trend for spending on digital advertising and a decent economy that’s likely to highlight a company trading around 21x earnings and with many growth levers to pull on.

More broadly, we will be looking for signs of AI spending going forward from Google and also from tomorrow’s reports from MSFT and META, followed by Thursday’s reports from AAPL and AMZN.

This article was written by Adam Button at www.forexlive.com.

The market has been patiently waiting for news on Chinese fiscal stimulus after the finance ministry hinted it was coming following a range of moves to boost financial markets.

Today in a report from Reuters, we got a strong sense of what’s coming. The report says that after a Nov 4-8 series of meetings, that officials will announce a 10 trillion yuan ($1.4 trillion) package. That’s 8% of GDP and a number that many analysts were looking for.

Unfortunately, the details of the package are weaker than hoped. Firstly, the spending will be spread over three years 2024, 2025 and 2026. Secondly, 6 trillion yuan of that, or 60%, is earmarked for helping local governments with their debt. That raises more questions than it answers and points to deeper problems at the local level than understood.

The next 4 trillion yuan will be sued for property purchases over five years as part of the government’s plan to buy up unused properties for low-income housing.

All that’s left for consumers appears to be some kind of extension of subsidies already in place for buying new appliances.

As part of the overall fiscal spending, China is also considering
approving other stimulus initiatives worth at least one trillion yuan,
such as a consumption boost including trade-in and renewal of consumer
goods, said the sources.

If there’s any good news here it’s that the stimulus numbers could still be augmented and the report highlights that the meeting was likely moved beyond the US election in order to increase stimulus if Trump wins.

For now, the market reaction in the Australian dollar (down 30 pips today) and the MCHI ETF tell the story.

This article was written by Adam Button at www.forexlive.com.

With two trading days left in October, USD/CAD has a shot at breaking the monthly closing highs in 2016 and 2020. Much of that will depend on key US economic data on Wednesday and Thursday but even if the loonie hangs on, the outlook is worsening in part due to a new housing measure that Canadian opposition policymakers unveiled yesterday.

The key level on a monthly close is 1.4059, which was the March 2020 close but the more-important level is the two-year intraday high of 1.3977, which is withing striking distance in light of the 32 pip rise today.

Today I spoke about why the Canadian dollar is struggling and how it will be affected by the US election in an interview with BNNBloomberg:

Some of the points I touched on:

• The three pillars of 21st century Canadian growth are broken: Resource extraction, housing and population growth
• Harris win might boost CAD; Trump win could harm it through USMCA renegotiation and trade tensions.
• Potential Chinese stimulus could help CAD, but timing and details are uncertain.
• Likely negative outlook: Expected Trump win, weak Chinese stimulus, and Canada’s slowing economy suggest further CAD decline.
• Bank of Canada’s slow rate cuts may prolong economic weakness and depreciate CAD.
• Political change unlikely to rapidly improve CAD; Conservative housing policies may temporarily suppress the market.
• Strong US dollar from robust economy and anticipated Republican policies adds downward pressure on CAD.

This article was written by Adam Button at www.forexlive.com.