US DATA: Max mtg index -3.9% to 157.9 in Oct 29 week, and Calif Max
-2.5%. See MNI Main wire.
Commodities have come off the boil in the wake of the ISM data despite signs of life from the US economy.
Because so much of the bull run in commodities has been based on financial speculation linked to quantitative ease and very little has been related to supply/demand dynamics.
We’ve seen this pattern before (remember July 2008 anyone?). Commodities soared and the dollar slide as the market correctly priced in easing from the Fed as far as the eye could see. What they did not anticipate was a full-scale global financial panic.
Too early to say what the catalyst will be this time (less aggressive Fed?) but the bubble is eerily similar if not quite as large.
EUR/USD has dipped to fresh session lows in the 1.3870s after dipping below 1.3880 support. 1.3705/10 is next support of note.
EUR/USD is working its way lower, now in the mid 1.3880s as US yields firm after the ISM data. From overnight lows of 2.55%, US 10-yr notes have risen to 2.63%.
The buck is getting a boost across the board as traders expect the Fed to be somewhat less aggressive than prior to the data.
Modest support is at 1.3880 with small stops below that level. 1.3805/10 is next support if 1.3880 gives way.
FRANKFURT (MNI) – The European Central Bank again sat on the
sidelines and failed to purchase any Eurozone bonds on the secondary
market last week, the bank announced Monday.
This comes after the ECB surprised observers by settling no
purchases in the weeks ending October 15 and October 22.
On Tuesday, the ECB will reabsorb E63.5 billion in cumulative
purchases of government bonds via a quick tender to collect one-week
term deposits, the central bank said.
The total is equivalent to the number of bonds purchased through
the Securities Market Program, the formal name of the bank’s
bond-purchase program, and settled as of last Friday, rounded to the
nearest half billion.
“As no SMP transactions were settled last week, it happens that the
rounded settled amount – and the amount for absorption accordingly –
remains unchanged at E63.5 billion” the ECB said.
The operation, to be conducted on Tuesday at 10:30 GMT, will be in
the form of a variable-rate tender with a maximum bid rate of 1.00%, the
The liquidity will be held for one week at the bank as a term
deposit. These fixed-term deposits can be used as collateral for the
Eurosystem’s credit operations, the ECB said. The central bank said it
intends to hold another liquidity-absorbing operation next week.
–Frankfurt bureau: +49 69 720 142; email: firstname.lastname@example.org —
According to the White House, the US does not expect a resolution of currency issues with China at the upcoming G20 head of states meeting in Seoul.
Looks like the status quo will prevail with Asian countries intervening to keep their currencies weak against the dollar and in-line with the Yuan.
By Mark Pender
NEW YORK (MNI) – MNI’s U.S. retail trade index rose four tenths in
the Oct. 30 period to 60.2 pointing to a solid 0.5% gain for October
retail sales, according to Market News International’s weekly survey
Total sales are at an on-year +4.1%, one full point higher than the
prior period and the best reading since June. Same-store sales rose five
tenths to +2.4% for the best since mid September.
Chains are generally exceeding still cautious guidance which calls
for slowly decelerating on-year comparisons into the low positive single
digits through the holiday season.
Strength is broad based across components led by clothing &
accessories and food & beverage. General merchandise is also strong.
Income is at +9%. Sample size in the latest period is 142 chains
making up 119,400 retail locations.
Editor’s Note: MNI compiles its retail trade index based on a
weekly sample of company news and data.
** Market News International New York Newsroom: 212-669-6430 **
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