 The theme of the markets have switched from risk aversion to selloff in European majors today. In particular, Euro leads other down after weak PMIs point to further slow down in the economy. Even worse, Markit expects that the PMI readings are now consistent with ECB easing bias. And of course, in the background, the standoff between Italy and EU on budget continues as Italian government doesn't appear to back down on the 2019 deficit target. Sterling is the second weakest on Brexit impasse while Swiss Franc is the third weakest. On the other hand, Canadian Dollar is firm, together with Dollar and Australian. BoC rate hike and the accompanying statement is the main focus ahead. The question is how BoC views the sharp slow down in CPI from 2.8% to 2.2% in September, and the impact on policy path. Yen is mixed, partly because risk aversion recedes, and partly due to sharp fall in 10 year JGB yield by -0.0151 to 0.135. Technically, both EUR/USD and GBP/USD have taken out 1.1431 and 1.2921 support to recent recent decline. EUR/USD should be heading back to 1.1300 low. GBP/USD targeting 1.2661/2784 support zone. USD/CHF also breaks 0.9980 resistance and should be target 1.0067 key level. EUR/CHF's break of 1.1392 minor support indicates completion of recent rebound from 1.1173. The focus today is whether USD/CAD would finally taken out near term falling channel resistance decisively to extend rally, or be rejected further from it. |
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