UK DATA: Air fares, food, small energy contributions drive the surprises
Nov-19 07:23
Only real notable surprise seems to be in air fares and passenger transport - that accounts for the downside services surprise and may not be permanent. Core goods a little stronger. Food as mentioned above was an upside surprise to consensus but downside to the BOE - and that with some small energy impacts probably helped the marginal headline upside surprise.
- Electricity, gas and other fuels contributed -0.23ppt to the change in headline CPI - that was expected at around -0.25ppt so broadly in line and driven by the Ofgem price cap, but saw the marginal upside bias that we had expected and pointed out that the sellside wasn't fully accounting for fixed price tariffs here, That was also a 2 hundredth upside surprise for the BOE.
- Fuels and lubricants added 0.07ppt - that was a hundredth higher then the BOE forecast.
- Air fares contributed -0.03ppt to the change in headline CPI (around -0.06ppt to services). Analyst expectations had been for around -0.03ppt to +0.05ppt to headline CPI (-0.06ppt to +0.10ppt services) - so as we noted above that is the bottom of the expected range. We don't know what the BOE was expecting here.
- Passenger transport by sea and railway were also softer - the wider transport services knocked 0.07ppt from headline CPI (of which the 0.03ppt was air fares).
- Accommodation services had expected to soften - and they did knocking 0.06ppt off headline CPI. Broadly as expected.
- Restaurants and cafes picked up above their 3.9-4.2%Y/Y range they had been in since February - but only to 4.4%Y/Y. This contributed +0.03ppt to headline CPI. May not have been fully expected.
- Educations contributed 0.02ppt (tuition fees and largely expected).
- Cultural services contributed 0.04ppt - we had pencilled in 0.03ppt from some reversal of last month.
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FOREX: USD Broadly Flat Having Found a Base Last Week
Oct-20 07:20
- The dollar is largely flat against broader G10 FX as markets await the delayed US CPI print on Friday. The early best performer is SEK, up 0.3% through the European open, extending its status as the best performer YTD, up 17.5% since January 1st. Initial support remains at 9.4000, although USDSEK did print a 9.3958 low on Friday.
- JPY saw another volatile 82 pip session overnight. Politics remains the key driver as Japan's LDP and Ishin parties announced the formation of a coalition, which should pave the way for Takaichi to become the new PM.
- The USD received a mild mid-APAC boost as Trump repeated that the US and China will be fine, however most G10 crosses have settled back to near mid-traded ranges early Monday.
SILVER TECHS: Trading Above Support
Oct-20 07:10
- Trading Above SupportRES 4: $56.153 2.500 proj of the Aug 20 - Sep 16 - 17 price swing
- RES 3: $55.444 2.382 proj of the Aug 20 - Sep 16 - 17 price swing
- RES 2: $55.00 - Round number resistance
- RES 1: $54.567 - 2.236 proj of the Aug 20 - Sep 16 - 17 price swing
- PRICE: $51.753 @ 08:10 BST Oct 20
- SUP 1: $48.736 - 20-day EMA
- SUP 2: $44.692 - 50-day EMA
- SUP 3: $41.135 - Low Sep 17
- SUP 4: $40.404 - Low Sep 4
Trend signals in Silver remain bullish. The metal traded to a fresh cycle high again, on Friday. The move higher confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. Sights are on $54.567, a Fibonacci projection, and the $55.00 handle. Note that the trend is in overbought territory, a deeper pullback would allow this condition to unwind. Support to watch is $48.736, the 20-day EMA.
EGBS: OATs Open Lower, Need to Push Back to 123.17 to Close Gap
Oct-20 07:06
- Some notable early flow across EGBs and especially in OATs following S&P's rating downgrade on Friday. The French 10yr gapped lower at the open and would need a push back to 123.17 to close it.
- German PPI came in below expectations, helping the Bund a few ticks higher but price action remains short of the initial resistance of 130.18. Initial support in Bunds is unchanged at 129.13.
- The 2yr part of the curve is leading in early trade as Schatz volumes are already higher relative to the 5yr Bobl.
- There are no tier data releases left for the session today, with UK CPI on Wednesday, prelim PMIs and the US CPI on Friday the main focus on the data front.
Speakers today include ECB's Schnabel, Nagel & Vujcic. The FOMC have entered their pre-meeting media blackout period.
