EQUITIES: Earnings Season Concludes; Reports Seen Supportive of Headline Indices
The trend structure in Eurostoxx 50 futures remains bullish. This week’s fresh cycle highs reinforces a bull theme and the move higher maintains the rising price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant medium-term uptrend. Sights are on 5777.41, a Fibonacci projection. First support lies at 5646.82, the 20-day EMA. The trend condition in S&P E-Minis remains bullish and the latest pullback appears corrective. The fresh cycle high this week confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. Sights are on 6974.04 next, a Fibonacci projection point. Initial firm support to watch lies at 6748.48, the 20-day EMA. Key pivot support lies at 6783.25, the 50-day EMA.
- Japan's NIKKEI closed higher by 1085.73 pts or +2.12% at 52411.34 and the TOPIX ended 31.04 pts higher or +0.94% at 3331.83.
- Elsewhere, in China the SHANGHAI closed lower by 32.111 pts or -0.81% at 3954.79 and the HANG SENG ended 376.04 pts lower or -1.43% at 25906.65.
- Across Europe, Germany's DAX trades lower by 78.84 pts or -0.33% at 24042.58, FTSE 100 lower by 32.75 pts or -0.34% at 9727.45, CAC 40 down 5.65 pts or -0.07% at 8152.04 and Euro Stoxx 50 down 8.76 pts or -0.15% at 5690.78.
- Dow Jones mini up 16 pts or +0.03% at 47691, S&P 500 mini up 44.75 pts or +0.65% at 6900.25, NASDAQ mini up 304.25 pts or +1.18% at 26187.
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FOREX: USDJPY Extends Lower as Shutdown/Tankan Weigh
- USDJPY has extended this week’s bearish theme overnight, extending the pullback from last week’s highs to around 2%. Today’s price action has resulted in a break of 147.60, the 50-day EMA, with the pair sliding back below 147.00 in recent trade. This places the focus back on pivot support at 145.49, the Sep 17 and post-Fed low.
- US government shutdown concerns have been one of the major drivers this week, and given the expectations that NFP will now be pushed back, there will be heightened significance on today’s ADP employment release and the ISM manufacturing PMI report.
- Additionally, domestic tailwinds may be playing their part in the renewed optimism for the Japanese yen. First of all, Wednesday’s Tankan survey indicated solid business sentiment and earnings in September. The survey is likely to support a rate hike and increase the odds of an October move, although final decisions will depend on incoming data, with BOJ Governor Kazuo Ueda’s upcoming speeches closely watched for any shifts in the Bank’s “no-rush” stance, MNI understands.
- Separately, frontrunner to win the LDP leadership election Koizumi says that "It is important for the government and the BOJ to share the same overall direction", and that "the government's economic policy and the Bank of Japan's monetary policy will work together to realise a virtuous cycle in the economy."
FOREX: FX OPTION EXPIRY
Of note:
EURUSD 3.12bn at 1.1750/1.1775.
EURUSD 2.85bn at 1.1785/1.1800 (thu).
AUDUSD 1.87bn at 0.6600 (thu).
AUDUSD 1.6bn at 0.6600 (fri).
EURUSD 1.02bn 1.1750 and 1.69bn at 1.1820 (tue).
- EURUSD: 1.1700 (1.74bn), 1.1710 (619mln), 1.1735 (350mln), 1.1750 (1.51bn), 1.1760 (797mln), 1.1775 (811mln), 1.1791 (460mln), 1.1800 (1.17bn).
- USDJPY: 146.50 (1.09bn), 146.85 (286mln), 147.50 (687mln).
- USDCAD: 1.3900 (489mln).
- AUDUSD: 0.6600 (869mln).
EURIBOR OPTIONS: Calendar Call Spread
ERM6/H6 98.31/98.43cs calendar, bought the June for 1.25 in 5k.
