Chinese Data Preview:
Analysts from TD Securities give their impressions about the possible numbers from the next Chinese economic reports that include retail sales, industrial production and inflation.
USDJPY:
So far, today’s decline should be considered a bearish correction. Last week it gained almost 300 pips and broke medium term resistance levels. Technical indicators show overbought conditions favoring a correction, but as long as the price remains above 121.70 – 122.00, the outlook is likely to continue to favor the upside.
FUTURES MARKET
Analysts at BBH offered their observations on the Speculative Positioning in the
Futures Market.
Key Quotes:
"1. There were three
significant speculative gross position adjustments among the currency futures in
the Commitment of Traders reporting week ending November 3. They were all
expanding the gross short positions. Speculators added 30.9k contracts to lift
the gross short euro position to 207.2k. It has risen by 69k contracts in the
past two weeks. The bears increased the net short yen position by 14.9k
contracts to 85.3k. In the past two weeks it has increased by nearly 33k
contracts. The gross short Swiss franc position doubled to 24.8k contracts. This
is the biggest jump in more than four years.
2. The jump in the gross
short franc position was sufficient to swing the net position from long 1.5k
contracts to short 7.0k contracts. Speculators were net long for two weeks. In
contrast, speculators remain net long sterling futures, albeit marginally so
(0.2k contracts). However, given sterling’s sharp slide in recent days, many
likely wished they had sold more.
3. Speculators added to gross short
currency positions with minor exceptions in the Canadian and New Zealand
dollars. Given the newfound dollar bullishness, this is not surprising. What is
surprising is that speculators also added to gross long currency futures
positions. There were two minor exceptions, sterling and the Canadian dollar,
where both slipped by a little more than 2k contracts. The gross long peso
position rose less by less than 20 contracts, which we rounded to
zero.
4. The bears made a significant stand in US Treasury futures. The
gross short position jumped by 87.3k contracts, the most since March 2011, to
570.9k. The bulls pared back, cutting 10% of gross long position or 41.3k
contracts to 406.6k. Since the end of the reporting period, the December 10-year
note fell a full point. The net short position jumped to 164.3k contracts from
-35.6k. It is the third week of net shorts. In the middle of October,
speculators were carrying a net long position (17.7k contracts).
5. Speculators in the oil market pulled back. Both longs and shorts were trimmed. The longs were shaved by 6.2k contracts, leaving 493.4k. Almost 16k gross short contracts were covered. The bears are holding on to 247.2k short contacts. The net long position increased by 9.6k contracts to 246.2k."
GBPUSD:
GBP/USD is attempting a minor recovery as the greenback gives way a little following the sell-off in cable last week post the Nonfarm Payrolls data released on Friday in the US shift that arrived with the largest rise this year at 271k while offering a 2.5% year-over-year increase in average hourly earnings - this was the most in six years. GBP/USD dropped from the 1.5380 resistance level that it had accumulated leading into the numbers until bears scored territory deep into the 1.50 handle marking a low of 1.5027.
Analysts at Brown Brothers Harriman explained how Sterling's 2.5% slide against the dollar last week was its worst performance in eight months and noted how the divergence theme was in play with a dovish BoE. "The BOE may be further behind the Federal Reserve in raising rates than many had anticipated. The Bank of England's Quarterly Inflation Report prompted investors to push out in time when it could raise interest rates."
EURUSD:
"The euro's 50-day moving average crossed below the 200-day moving average in early October for the first time since July 2014.
The turning of the so-called Golden Cross is a function of roughly a six-month consolidation after a nine-month slide. With some conservative assumptions, the cross can turn higher over the next couple of weeks."
