November 7, 2016 / 11:37 PM / 10 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

SYDNEY, Nov 8 (IFR) - Market Briefs
    * Stocks, USD jump as FBI clears Clinton in email probe, MXN
peso rallies,  Gold, USTs sag

    * Fed survey: Banks tightened lending standards for
commercial real estate loans in Q3

    * ECB's Lautenschlaeger: Benefits of easy-money policies
decrease over time; risk increase

    * SNB's Maechler: doesn't rule out further rate cut, only if
really necessary

    * Oil mixed as election seen swinging to Clinton while OPEC
doubts weigh; producers disagree on who should reduce o/p

    * British Brexit minister Davis govt intends to trigger A50
by end of March


Macro Themes in Play
    * Markets up big on eve of election; Clinton 'rally'
essentially a bet on governmental gridlock; Congress seen
staying under Republican control, nothing gets done, country
deeply divided, Fed stays easy and investors feed on yield
crumbs

    * US short rate market has consistently predicted such an
outcome (gridlock), not optimistic over prospects for economy
and rate normalization in 2017, something less than one rate
hike seen, prospect for fiscal spending a long-shot

    * Major currency pairs all behaving as expected given big up
move in stocks except for EURCHF, new closing low on year,
looking past US election to Italian vote; AUD breaks through
.7700 behind strong base metals trade


Looking Ahead - Economic Data (GMT)
    * 00:30  AU NAB Business Conditions      Oct     8-prev

    * 00:30  AU NAB Business Confidence    Oct     6-prev

    * 23:50  JP  Foreign Reserves                  Oct    
1260.10b-prev

    * 05:00  JP  Coincident Indicator MM*       Sep    -0.1-prev

    * 05:00  JP Leading Indicator*                  Sep   
1.2-prev


Looking Ahead - Events, Other Releases (GMT)
    * 06:15  AU  RBA Head of Int'll Dept Chris Ryan speaks at
the 7th Pan Asian Regulatory Summit in HK


Currency Summaries
EUR/USD  
    * Bounce from 1.1040/50 in Europe's morning sees NY open
near 1.1070

    * Bear pressure resumes early-on as the risk rally lifts the
USD & equities

    * EUR/USD sees a steady descent, Asia's low gets taken out &
1.1027 is hit

    * Small bounce near 1.1040 seen as USD longs takes some
profit

    * EUR/USD back below 1.1035 late as the USD's bid resumes

    * Daily techs favor bears, 55 & 100-DMAs repel the recent
ascent and RSI is biased down

    * US election results loom, pair likely to be choppy as
polls & results are released


USD/JPY 
    * JPY off far and wide on FBI's latest Clinton email
announcement

    * USD/JPY & MXN/JPY leading the way higher; latter by 3-mo
highs

    * USD/JPY had a minor dip to 108.25 into NY to correct hrly
O/B readings

    * Since up by session highs & staring at local offers by 105
& 105.45-55

    * If polls/betting are correct & HRC wins, 200-DMA @106.80
is next target

    * Post-Brexit July high at 107.49 will see defense & stops
above it

    * Huge downside if Trump wins or leads exit polls Tuesday
night

    * Good CTA demand still in the 102.80-3.00 range sans a
clear result

    * EUR/JPY now clear of the Ichi config below, but Sep-Oct
highs intact

    * CAD/JPY rallied to dn TL off Oct highs at 78.45

    * GBP/JPY erases more of Oct 7 flash crash: close above 130
eyed

 
USD/CHF
    * Big CHF pullback O/N on latest FBI Clinton emails story

    * USD/CHF did best on the news, but stalled sub-0.9800,
0.9752 close

    * EUR/CHF rallied, but closed soft on Italian vote nerves,
1.0754

    * EUR/USD nearly as sensitive to US election risk as
USD/CHF 

    * Swiss Oct CPI -0.2% y/y and Rtrs poll -0.2% [ nZ8N1BP02I]

    * Disinflation still the theme here and SNB likely to turn
the heat up

    * SNB's Maechler reiterating FX intervention readiness
 

    * Modest increase in Swiss reserves in Oct 

    * Swiss Jobs data tomorrow, but all about US election for
mkts

 
GBP/USD   
    * Cable drifted steadily lower from daily pivot (1.2509)
area to end NY by 1.2400

    * 1.2524 was early Asia high, before FBI cleared Clinton
 

    * USD rallied v majors as FBI cleared Clinton in recent
email probe

    * Brexit - Govt preparing bill to trigger EU exit-Sky
, hard Brexit weighs on GBP

    * EUR/GBP ends NorAm 0.8905, day's range 0.8937-0.8856;
today's moves USD based

    * ECB's Lautenschlaeger "skeptical" of further policy easing
 


USD/CAD
    * O/N range 1.3300/3416, Noram range 1.3362/3414, close
1.3364 (NY -30 pips)

    * Surging equity futures kicked off the session and
dominated the session

    * W/E news FBI not considering criminal charges vs H.
Clinton the catalyst

    * S&P +2.1%, TSE +0.97%; Oil prices higher on election
sentiment 

    * DXY +0.76% (election sentiment) AUD/CAD 1.0311, +0.26%,
CAD/JPY 78.20 +1.68%

    * EUR/CAD 1.4751, -1.19%; Brent/WTI -1.14/-1.7%; gold
-1.75%, UST/CA 2yr spr 27.1

 
AUD/USD     
    * Choppy in Europe's morning, NY opens near 0.7675, lingers
nearby early-on

    * Bull pressure emerges on upbeat risk,  EUR slumps while
JPY rallies

    * Sees EUR/AUD slip near1.4300 & AUD/JPY  lift near 80.70

    * AUD/USD sees a steady ascent for NY, probes resistance in
0.7710/30 region

    * Few pullbacks seen and the pair sits just below 0.7720
late in the day

    * No major data to drive, US election results on Tuesday
night to give direction


NZD/USD
    * NY opens near 0.7325 after a quiet European morning,
slight bull pressure early-on

    * Rally in equities & weak JPY aid a lift near 0.7325, risk
rally persist but NZD/USD is stagnant

    * AUD/NZD rally near 1.0540 & general USD strength keep pair
from rallying on risk

    * US election and upcoming RBNZ meeting are major risk,
traders decide to keep power dry

 
LATAM
    * USD/MXN dips to 11-day low at 18.5630 After FBI clears
Clinton in Email probe

    * Pair ends NorAm by 18.64 as profit-taking slows USD
descent, oil +1.1% aids lift

    * Short-term vol dips to 37% from near 40%, hints at cont'd
elex angst

    * USD/BRL lower in sympathy w/MXN, -0.75% to 3.2080, Bovespa
+3.86%

    * Brazil inflation seen steady in '16, down in '17 from 5%
to 4.94; 

    * USD/CLP ends session -0.47% at 652.90, copper rallies 2%


Brexit is like long train journey, lots of stops
If the UK government wins its Supreme Court appeal against the
High Court Article 50 case ruling, PM May will be able to
trigger A50 in Q1 2017 as she intends. The Supreme Court has set
aside Dec 5-8 to hear the appeal: the judgment of its 11 members
might not be known until Jan (16 days passed as the High Court
judges considered the A50 case before passing judgment). If the
government loses again, it will then need the approval of a
majority of MPs and peers before triggering A50. Getting
permission from both houses via a legislative bill may take
time. The longer the parliamentary process, the greater the
probability May tries to stamp her authority on it by calling an
early general election in the hope that the Tories win an
increased Commons majority. UK judges and politicians will
therefore continue to exert major market-moving influence over
GBP through year-end. See related items: 
.

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