Daily Market Outlook, October 27, 2021

Daily Market Outlook, October 27, 2021 Overnight Headlines NZ Imports At Record For Third Month As Global Prices Rise China Industrial Profit Growth Accelerates In Sept Despite Cost Pressures China-Aus Wine Dispute: WTO To Investigate China Tariffs On Aus Wine Japan Ruling Parties May Win Stable Majority, Kyodo Survey Shows Corporate Minimum Tax Resurfaces As Democrats Hunt For Money US Pres Biden Plan Expected To Include At Least $500Bln For Climate UK Chancellor Sunak To Commit To Fiscal Discipline In Budget Mexico Economy Likely Contracted In Q3, Banxico’s Heath Says Yuan’s Rally Likely To Be Replaced With Two Way Moves - CSJ Australia April 2024 Yield Hits Highest Since RBA Curve Control Oil Edges Lower After Mixed Industry Report On U.S Inventories Coal Stockpiles Drop To Lowest Since 1997 At U.S. Power Plants Gazprom Offered Moldova Gas Deal In Exchange For Weaker EU Ties Asia Stocks Decline Wednesday Driven By Losses In Tech Sector Microsoft Beats Quarterly Revenue Estimates On Cloud Boost Alphabet Beats Sales Estimates On Google Advertisement Surge Advanced Micro Devices Forecasts Revenue Above Estimates Visa Q4 Fiscal Profit Rises On Increased Travel, Online Spending The Day Ahead Asian equity markets are lower this morning. In Australia Q3 headline CPI inflation fell to 3.0%y/y (from 3.8% in q2) but the core measure rose to 2.1%, which is back inside the central bank’s target band. GfK German consumer confidence rose unexpectedly in November to its highest level since April 2020, a sign that consumer spending will continue to pick-up. The Budget is the key economic event in the UK today. The Chancellor of the Exchequer will be able to report some positive news on the economy and public finances. The Office for Budget Responsibility (OBR) is expected to revise its economic growth forecast for 2021 from its update in March. As a partial offset it may lower its expectation for 2022, but potentially less economic scarring may point to an earlier return to pre-pandemic output levels and more favourable medium-term assumptions. Thanks mainly to the resulting stronger-than-expected tax receipts, government borrowing for 2021/22 is expected to be well below the March prediction of £234bn, and will probably be nearer £200bn, down from £320bn in 2020/21. The data will provide the Chancellor with some room for manoeuvre and there have been indications that he will make use of this. Reports point to higher capital spending, including an extra £6bn of investment spending for the NHS and £7bn for transport schemes in larger cities. He also seems set to provide some support to help offset ‘cost of living’ increases. A 6.6% hike in the national living wage and an end to the public sector pay freeze are other measures expected today. However, given that the budget deficit and debt levels are still well above where they were pre-pandemic the Chancellor is expected to be cautious. According to press reports, he may announce new fiscal rules that target a balanced current budget by the end of this parliament in 2024/25. Overall, the bottom line is that the Budget is expected to be broadly fiscally neutral. Today’s Bank of Canada policy update is likely to see a further reduction in monetary policy stimulus. The BoC has already started to taper its asset purchases and seems set to go further and potentially halve its weekly pace of asset purchases. Interest rates are expected to be left unchanged, but with markets expecting three 25bp hikes by summer 2022, a key issue is whether the BoC pushes back against these expectations.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls )EUR/USD: 1.1600 (1.5BLN), 1.1605-10 (300M), 1.1615 (557M), 1.1630 (347M)1.1650 (351M), 1.1675 (397M) 1.1685-1.1700 (1.35BLN)- GBP/USD: 1.3700-15 (364M), 1.3795-1.3815 (322M), 1.3860 (217M)- EUR/GBP: 0.8480-85 (320M), 0.8515-25 (639M)- AUD/USD: 0.7400 (1.25BLN), 0.7430 (608M), 0.7450 (604M)0.7500 (710M), 0.7530 (605M)- NZD/USD: 0.7200 (337M). USD/CAD: 1.2375-85 (622M)- USD/JPY: 113.35 (440M), 113.50-55 (1.8BLN), 113.85 (355M), 114.50 (758M)- EUR/JPY: 131.00 (396M), 132.00 (731M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.17 Bullish above Hovers around 1.1600 but remains heavy EUR/USD opened -0.13% at 1.1596 after USD mostly firmed against the majors It traded in a narrow 1.1592.1,16004 range in Asia with small volumes EUR/USD remains heavy, as ECB Thursday is expected to repeat dovish message Minor support is at the 61.8 of the 1.1522/1.1670 move at 1.1578 A break below 1.1575 targets a full retracement to 1.1522 Resistance is at the 10-day MA at 1.1616 a break eases the pressureGBPUSD Bias: Bearish below 1.37 Bullish above. Respects Tuesday's low ahead of UK budget news Cable holds above 1.3759 (Tuesday's low) pre-UK budget news from 1130 GMT Sunak to boost investment/keep grip on spending Tuesday's low was plumbed after another topside failure around 1.3831 1.3742 (Monday's low) is a support point below 1.3759 BoE is expected to raise rates by 15 bps to 0.25% next week (Nov 4) BoE hike would expose Treasury/Central Bank tangleUSDJPY Bias: Bullish above 112.50 Bearish below Eases back from o/n high with US yields, risk mood USD/JPY eases back from 114.31 high o/n, Asia 114.22 to 114.03 EBS Risk off in Tokyo, most of Asia, US yields soggy too Treasury 10s well off recent 1.705% high, @1.627%, Nikkei -0.6% @28,946 USD/JPY back below ascending 200-HMA at 114.06, 100-HMA 113.88 below Option expiries help contain - 113.50-85 $2.6 bln, 114.45-80 $1.25 bln JPY crosses mixed, AUD/JPY better bid on strong CPI, 85.53-86.05 NZD/JPY 81.56-89, GBP/JPY 156.96-157.26, CAD/JPY 91.96-92.19, all steady EUR/JPY tad heavier, 132.27-46AUDUSD Bias: Bearish below 0.75 Bullish above Moves higher after hotter Aus core CPI AUD/USD opened +0.15% at 0.7502 after moving higher on AUD/JPY flows It was around 0.7510 when Aus CPI was released and jumped to 0.7536 The focus was on the core-CPI which was hotter than expected Aus yields pushed higher as market prices in RBA rate hikes Sellers ahead of 0.7550 discouraged further gains and it settled at 0.7525 Key resistance at the 200-day MA at 0.7560 and break targets fibo at 0.7663

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Dollar Edges Lower; Sterling in Focus ahead of U.K. Budget

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Shanghai Starts Trial to Clear Hidden Debt as China Cuts Risks

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China’s Regional Hinterland Suffers as Beijing Reins In Debt

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Australian Dollar Up as Prices Rise More Than Expected

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Alphabet in the spotlight

FAANG is the acronym formed by the trade names of the five largest technology companies listed on Nasdaq. Among these 5 companies is Alphabet Inc, which is listed twice  on Nasdaq (GOOG and GOOGL) and is therefore the most viable to have the biggest growth of the FAANG for this season. The FAANG currently represent around 22.9% of the total capitalization of the S&P500, and this week 4 out of 5 of these companies are reporting earnings.

 

Earnings Outlook Source: Zacks Investment Research, Inc

“We continue to rate Google as our top FAANG of 2021 given the cyclical recovery exposure versus its peers with tough comparisons” – BofA.

Alphabet Inc. (#Alphabet) is recognized worldwide for being an American multinational and mainly for being the parent company of Google which includes its main internet products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search and YouTube. In addition to encompassing Google, it also develops products and services related to the Internet, software, consumer electronics, and electronic devices, and it is a holding company that is dedicated to the business of acquisition and operation of different companies, including companies in sectors such as biotechnology, health, telecommunications and home automation such as Access, Calico, CapitalG, GV, Verily, Waymo, etc.

Alphabet was founded in 2015 by Lawrence E. Page and Sergey Mikhaylovich Brin. The company has a capitalization of $1,834.46B and has a total of 666,755,000 outstanding shares, making it the 5th largest company in the world. It has approximately 135,301 workers worldwide and its main headquarters are at 1600 Amphitheater Parkway, Mountain View CA, USA.

The World’s 100 Largest Companies by Market Capitalization in 2021 – Source: https://www.statista.com/statistics/263264/top-companies-in-the-world-by-market-capitalization/

Alphabet plans to release its quarterly report for the end of the fiscal Sep 2021 quarter on Tuesday, October 26 after market close. Estimates are expected to be exceeded as it has in the last 4 quarters. GOOGL has performed tremendously this year with 68.95% returns in 12 months and 0.59% in the last 3 months.

“Despite the addition of IDFA [Identifier for Advertising] and supply chain uncertainty in Q4, we remain constructive on stocks.” – Justin Post BofA

Alphabet Inc. is ranked #2 by Zacks (Buy) at #103 out of #251 in the Top 41% Internet-Services Industry Rank with an ESP of 7.71%, most accurate EPS estimate of $24.91 and a consensus estimate EPS of $23.13.

Seeking Alpha foresees EPS of $23.37 which would be +42.49% over the previous year with an estimated profit of $63.35B with 21 revisions up and 3 down in the last 90 days.

“Alphabet Inc. was among the biggest contributors to performance during the third quarter. Alphabet is a leading Internet search provider, benefiting from the shift in share of advertising dollars from traditional media such as television, radio, and newspapers to digital platforms. The company is a leader in the implementation of AI, autonomous vehicles and cloud computing, and owns the property of high-traffic YouTube. Alphabet contributed to performance with a strong quarterly report highlighted by revenue growth that beat consensus expectations across all segments. The company’s core search revenue has increased 10% in the last two years, and cloud computing has increased 8%. YouTube’s results also exceeded expectations. Discussing the quarterly results, Alphabet management said that retail, entertainment and travel were particularly strong end markets. The fixed cost structure of Alphabet’s search service resulted in profitability as a result of better than expected revenue growth.” -Alger Spectra Fund Investor Letter

Global Public Cloud Services End User Spending – Source: https://www.gartner.com/en/newsroom/press-releases/2020-11-17-gartner-forecasts-worldwide-public-cloud-end-user -spending-to-grow-18-percent-in-2021

Alphabet is very solid in the search sector as the search engine has been improved thanks to the introduction of the technology of unified multitasking models (MUM) backed by IA and  LaMDA, giving better results to user searches in addition to the increase of searches on mobile devices. On the other hand, there is the part about the improvement in its portfolio of advertising services, Google is increasing the ads of local services gaining ground in this area although there may be new regulatory challenges. All of this, however, promises a beneficial quarter for the company.

One point worth considering is the Google Cloud business, as it is the linchpin of Alphabet’s growth thanks to the strengthening of its Google Cloud Platform and Google Workspace cloud service offerings. Segment revenues were $4.6 billion in the second quarter representing 7.5% of total revenues. For this quarter, the Zacks Consensus Estimate for Google Cloud revenue is set at $5.01 billion, suggesting growth of 45.5% over the reported figure for the prior-year quarter. Therefore, Alphabet has the necessary elements to accelerate the growth of the cloud segment, but it should be noted that Alphabet already has a global IT infrastructure on par with Amazon and Microsoft leaders in this business segment, reports SeekingAlpha.

Alphabet has had to face several challenges including concerns with ad tracking technology and the phasing out of cookies, while  Google paid Russia more than 32 million rubles ($455,079) in fines for failing to remove content that Moscow considers illegal. Google reported via an Android post that it will cut app store fees in half for most developers. Instead of dropping from 30% to 15% after 12 months, the service fees for subscriptions in the Google Play store will be 15% from the day developers join, the company announced.

“Digital subscriptions have become one of the fastest growing models for developers, but we know that subscription companies face specific challenges in customer acquisition and retention.” “We have worked with our partners in the dating industries, fitness, education and others to understand the nuances of their businesses. Our current service fee drops from 30% to 15% after 12 months of a recurring subscription. But we’ve heard that the loss of customers makes it difficult for underwriting companies to benefit from that reduced fee. So we’re keeping things simple to make sure they can.” – Sameer Samat, vice president of product management at Google

It is likely that the company’s efforts encircled companies within Alphabet such as the expansion of Nest, the push in the broadcast market of GoogleTV, the union with Cisco Systems to support interoperability among its customers and users, the expansion of the Early Rider program, which is a driverless transportation service from Waymo, as well as its strength in the development of digital payments and healthcare, affect the results of this Q3 in a beneficial way.

Technical Analysis – Alphabet H4

Alphabet has maintained a bullish rally since its inception. At the beginning of the year it entered the range after breaking its psychological support of 2000, until 2116, ending up breaking the range to the upside and managing to mark a maximum up to 2439.60 and then falling back to its support marking a minimum at the beginning of May at 2230. From this minimum the price has continued with a strong upward trend, managing to overcome and maintain the psychological level of 2500.

As of today it remains above 2700 with a current price of 2773.44, which has pushed the price up and marked a new all-time high at 2778.70. The price could continue to rise to the next psychological level at 2800, which it is already very close to, and if maintained it could rally to the next resistance that marks the FE 161.8 at 2939.54 approaching to the psychological level of 3000.

Aldo Zapien.

Market Analyst – HF Educational Office – Mexico

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Bearish Signals Mount for the European Currency

The S&P 500 hit a fresh high on Monday, despite the growing chances of policytightening by the Fed as investors focus on surprises in US corporate reportsand sliding Treasury yields. Tesla's capitalization has exceeded $ 1trillion onthe back of the news that car-sharing company Hertz ordered 100K Teslas.Despite incriminating investigations, Facebook has delighted investors with soliduser growth and an intention to buy back $50 billion in shares. The momentummay push the US market to a new high, as earnings surprises from Twitter,Alphabet and Microsoft, which are reporting today, are likely to be positive aswell.As of October 20, of the 500 companies included in the S&P 500, 67companies reported. Earnings of 86.6% of them beat expectations, 11.9%disappointed, indicating potential presence of bullish bias in the US stock market.In the FX, the dollar is trying to develop an upward movement after breakoutof a two-week bearish channel. In the last few sessions, the dollar index consolidatedclose to the upper border of the channel, in addition, three tests of thesupport zone 93.50 lacked meaningful continuation:A potential surge of optimism amid positive reporting by large US companiesthis week may nevertheless exert short-term pressure on the dollar.The weakening of the euro amid a price shock in the commodity market willlikely force the ECB to revise its short-term inflation forecast, which maybecome known at tomorrow's meeting. If the ECB does not clarify the timing ofthe curtailment of the main asset purchase program, in combination with theeconomic forecast, this could be a blow to the real yields of European bondsand lead to an additional Euro downside.Yesterday's data showed that Germany's leading indicator of economicactivity, the IFO index, declined for the fourth straight month in October:Both current situation and expectations deteriorated, which increases therisk of stagnation of the German economy in the fourth quarter. Given theslowdown in the bloc's leading economy, the ECB's bias to cut stimulus measuresor report upcoming cuts may be small right now, which is definitely a bearishEuro signal:

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VISA: Financial Reporting Expected To Remain Excellent

Visa, a financial services company based in California, USA, offers electronic funds transfer products worldwide via credit cards, debit cards and prepaid cards. Visa’s main competitors in the financial services sector are American Express, Mastercard, and Union Pay. Visa has so far dominated the number of used cards and transactions of the United States credit card network. Visa will announce its 4th quarter financial report ending September 2021 on October 26, 2021 (Tuesday) after the market closes.

While most companies struggled following the outbreak of the Covid-19 pandemic, Visa was seen not so badly affected with annual sales in fiscal 2020 reported at $21.2 billion, only down slightly from $23.0 billion in fiscal 2019. In 2021, Visa continued to report encouraging financial reports in the first 3 quarters, where it reported sales and earnings per share that exceeded market projections. In a statement when announcing its financial report last July, Visa CEO Alfred Kelly was quoted as saying that the reopening of the economic sector and the easing of movement restrictions helped boost Visa’s revenue.

In addition, Visa continues to innovate in the area of financial services by exploring new branches in Fintech and cryptocurrencies. On July 7, Visa reported consumers spent more than $1 billion in cryptocurrencies on goods and services in the first half of 2021 and this number is expected to increase in the second half of 2021. However, Visa is still struggling to break into the national market of developing countries (emerging markets).

Sumber: https://money.cnn.com/quote/forecast/forecast.html?symb=V

For the 4th quarter report, market analyst Zacks projects Visa sales revenue at $6.48 billion , a 27.07% increase over the same quarter last year, while earnings per share (EPS) is expected at $1.53 per share, an increase of 36.61% over the same quarter last year. Based on the reports of the previous 3 quarters, Visa is expected to continue to post financial reports that exceed market projections for this quarter as well.

Visa shares (MT5: #Visa) show a post-Covid-19 recovery, in line with gains in the Dow Jones (US30) and S&P 500 (US500). It posted the highest price in history last July at $252.63 before returning a slight slip and is now trading at $231.13 (Friday 23 Oct closing price). It is currently above the weekly MA-50 which is the nearest support near the 23.6% fibo retracement at $224.60.

In the daily chart, $216.94 (September low) is the closest support if #Visa continues to decline, followed by the 38.2% fibo retracement level at $207.25. $233.40 is the nearest resistance, near Top BB, and it is the highest price recorded in October. The RSI-14 is in the neutral area around 50 while the daily MACD line signal is also close to the 0 reading and an ascending histogram is starting to form. Based on the daily candlestick movement since September, the #Visa price is now seen in the horizontal range as seen in the horizontal Bollinger Bands situation.

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Tunku Ishak Al-Irsyad

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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BTCUSD bearish breakout | 26th Oct 2021

TypeBearish ReversalPivot: 63679.07Resistance: 66781.83Support: 59497.32Preference:Price broke out of an ascending trendline, signifying a bearish momentum. We can expect price to drop from the pivot level in line with 61.8% Fibonacci retracement and 61.8% Fibonacci projection towards the 1st Support level in line with 61.8% Fibonacci projection.Alternative Scenario:Alternatively, price could push all the way up to the 1st Resistance in line with 100% Fibonacci projection.

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An investment trust that gives exposure to frontier markets

An investment trust investing in small, illiquid emerging markets has disappointed, but deserves another chance, says Max King

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Coca-Cola Company Q3 2021 Earnings Preview

Coca-Cola

The Coca-Cola Company (#Coca-Cola) is the world’s largest beverage manufacturer and distributor. It has interests in manufacturing, retailing and marketing of nonalcoholic beverage concentrates and syrups and operates in more than 200 countries and territories around the world. Headquartered in Atlanta, Georgia and traded on the NYSE, the $234.77 billion in market cap Company along with its bottling partners in different parts of the world employs over 700,000 people and has over 200 brands, some of which are worth billions of dollars. The multinational company is expected to report its earnings for the fiscal quarter ending September on Wednesday, October 27, 2021 before market open.

Zack’s current EPS estimate sits at $0.58, beating its year ago quarter by 5.45% whilst maintaining a positive earnings ESP (Expected Surprise Prediction) of 0.75% which shows upward revisions in recent earnings estimates by analysts (the idea is that more recent information could be more accurate and can be a better predictor). Considering the fact that the company has beat every quarter earnings estimates since the start of 2020, currently maintaining a $2.25 current year estimate (up from $1.95 in 2020 and the highest over the last 6 years), it can be argued that a potential beat may once again be on the cards. Zack’s Q3 revenue estimate is $9.95 billion, up from $8.65 billion (10.9% growth) in the year ago quarter whilst maintaining a $37.80 billion estimate for the full year, up around 14.9%, earning it a #3 Hold rating on Zacks’ rank.

Annual Earnings History and Projections

 

Although the resurgence of COVID-19 cases in the third wave that started in Q3 could have impacted Coca-Cola sales as a result of renewed restrictions, which was perhaps why there are lower earnings estimates when compared to Q2, 2021 which printed at $0.68, the outlook for the beverage giant is still very much positive. After releasing a solid Q2 report, the company improved its earning guidance from $2.09–$2.20 to $2.20–$2.24 for the year 2021 and said “Our business is rebounding faster than the overall economic recovery led by our accelerated transformation”. The Chairman and CEO, James Quincey, went further to say “We are executing against our growth plans and our system is aligned. We are better equipped than ever to win in this growing, vibrant industry and to accelerate value creation for our stakeholders.” The Coca-Cola Company recently declared a dividend of 42 cents per share payable on December 15, 2021 to the shareholders of the company. Inasmuch as there could be stock price reaction from either a beat or miss in the earnings and revenue report, we should also take into consideration the comments from the company’s executives to determine the sustainability of such moves.

Technicals

Since falling from $57.50 in mid-August, #Coca-Cola has maintained a downward trend for most of Q3 but still trades within an overall range since April, 2021 between $53.50 and $57.50 only briefly trading below it once between late September and early October. Although the stock now trades above the 20-day Moving Average, it is yet to recover from the death cross early in mid-September and still trades below the 50-day Moving Average. RSI could make a case for the bulls as it trades just above the midway point but considering that it has stayed glued to the halfway line almost all through the month, indecision is a more obvious call. MACD seems to be showing signs of life for #Coca-Cola at it approaches the zero line from negative territory but until the earnings report where a good beat or miss will give investors more to chew on, it might just remain in indecisive territory. $54.90 serves as the next overhead resistance if there is a beat in earnings after which $55.50 would be the next call. Alternatively, a miss could see the stock price head lower, revisiting the $53.50 support level and if cleared, $52.40 would be the next support level.

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Market Update – October 26 – Bonds and stocks rallied to start the week

• USD (USDIndex 93.89) – first rate hike was pushed up to June, with two quarter point tightenings priced in for 2022. Wall Street firmed too on the back of strong earnings with more new record highs on the USA500 and the USA30. Also underpinning sentiment are expectations that the fiscal package will make it out of Congress.
• Fed Chair Powell warned that inflation could be higher and more persistent than previously expected.
• US Yields – 10yr backed up 0.9 bp overnight to 1.64%.
• Equities mixed – USA100 paced the advances though, climbing 0.9% amid support from the slip in yields – 4582 .  USA100 bounced to 15602.
• Facebook reported mixed third quarter earnings on Monday, slightly missing revenue estimates but continuing to grow its user base. FB +2%.
• TSLA (+12.6%) joins the the $1 trillion market cap group after 11 yrs – took AMZN 22 yrs). It’s bigger than the combined value of the next 9 biggest car makers but it sells less than 1% of world car sales. $36BN to his net wealth yesterday alone. UBS beats on revenue – but sales are mixed. 
• USOil holds up again on supply concerns & trades close to 7-year highs at $82.50
• Gold spiked at $1808.
• FX markets – EURUSD 1.1600, Cable bounced 1.3778, &   USDJPY – reversed from 113.97 highs to PP at  113.86.

European Open  The December 10-year Bund future is down -20 ticks at 168.45, underperforming versus US futures, although in cash markets the US 10-year rate is down from overnight highs, but still up 0.4 bp at 1.63%, as a 0.5% gain in the USA100 is leading US stock futures higher. GER30 and UK100 are posting gains of 0.2% and 0.1% at the moment, after a somewhat mixed session across Asia.

Today – Upcoming central bank decisions will remain in focus, with ECB and BoJ set to announce their decisions on Thursday. Earnings: Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Twitter, General electric, UBS, Robinhood. Today’s economic calendar will be of interest as well, and features October consumer confidence and September new home sales.

Biggest FX Mover @ (06:30 GMT) NZDJPY (-0.28%)  Reversed  overnight gains from 81.88 high tp currently 81.50 area. Faster MAs, RSI  & Stochastic turned lower, while in contrast MACD signal line & histogram keep rising,  implying to a potential limited pullback.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Dollar Edges Higher; Key Data in Focus Ahead of Fed Meeting

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Daily Market Outlook, October 26, 2021

Daily Market Outlook, October 26, 2021 Overnight Headlines Manchin Sees Framework In Reach As Democrats Inch Toward Deal Japan Service Prices Rise For 7th Straight Month On Freight Cost Gains South Korea's Q3 GDP Grows At Slower Pace, Misses Forecast PBoC’s Liquidity Injections Dim Prospects For RRR Cut, CSJ Says China NDRC Studying Mechanism To Stabilise Coal Prices Over Long-Run China To Create Rare-Earths Giant By Joining Three State Companies Aus PM Morrison: Australia Sets Target For Net-Zero Emissions By 2050 KiwiBank Now Sees RBNZ Raising OCR To 2% By November 2022 US Dollar Steadies As Traders Look To Central Banks For Guidance Bonds Are Set To Reap $5 Billion In Month End Pension-Rebalance Shift Oil Takes A Breather On Tuesday After Latest Charge Amid Tight Market SEC Gets Path To Rein In Stablecoins As U.S. Weighs New Rules Asia Stocks Catch Wall Street Cheer Tuesday But China Caps Gains Chinese Developer Modern Land Misses Payment On Dollar Bond Facebooks Rises On User Growth For Family Of Apps, Buyback Canadian Stocks Add $191 Billion Of Value In Longest Rally EverThe Day Ahead Asian equity markets are mixed this morning with a majority up but Chinese indices down on the day. Meanwhile, the Brent crude oil price moved above $86bbl. Talks continue in the US over President Biden’s fiscal package. Biden is reported to want things settled this week before he flies to Europe for the UN climate conference in Glasgow. However, Congress seems to still be divided on some substantive issues. In the UK, reports suggest that the national living wage will be raised by 6.6% in Wednesday’s Budget, taking it to £9.50 an hour for workers aged 23 and over, and that the pay freeze on public sector staff will be ended. Yesterday, Bank of England policymaker Tenreyro again made clear her objections to an early hike in interest rates citing various uncertainties. In an otherwise quiet week for UK data, today’s CBI retail report will provide one of the first indications for consumer spending in October. This survey has been particularly volatile of late surprising significantly on the upside in August before dropping by much more than expected in September. The official retail sales outturn also fell in September, for the fifth successive month. Moreover, the GFK consumer confidence measure has declined sharply over the past two months to its lowest since February. With the important pre-Christmas spending period fast approaching markets will be hoping for some more positive signs from the retail sector. US consumer confidence also appears to be under pressure. The Conference Board’s indicator dropped to its lowest level since February last month. That potentially reflects concerns about rising inflation and the pick-up in US Covid cases through the summer. As an alternative gauge of consumer sentiment the University of Michigan survey fell in October; it seems likely that the Conference Board’s measure may slip further. Look for a decline to 109.0 in October from 109.3. Also of interest in the US will be September new home sales and the Richmond Fed’s manufacturing index for October. With the European Central Bank’s monetary policy update just two days away today’s speeches from ECB Governing Council members De Cos and Villeroy are not expected to say anything about the immediate policy outlook. Instead, both are set to talk about what contribution central banks can make to combating climate change. As the US Federal Reserve and the Bank of England are also now in the pre-announcement silent period no further comments are expected from either on policy before next week’s announcements.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls ) EUR/USD: 1.1600-10 (1.5BLN), 1.1700 (272M), 1.1720-30 (849M) GBP/USD: 1.3800 (278M). AUD/USD: 0.7400 (772M) USD/CAD: 1.2300 (370M), 1.2400 (1BLN), 1.2500 (258M), 1.2550 (651M) USD/JPY: 113.55-60 (626M), 113.85-114.00 (1BLN), 114.20-25 (500M) 114.50 (1.1BLN)Technical & Trade ViewsEURUSD Bias: Bearish below 1.17 Bullish above Maintains heavy tone through Asian session EUR/USD opened 0.30% lower at 1.1611 as market prices for dovish ECB It remained heavy in Asia after completing bearish outside day on Monday Heading into the afternoon it is just above the session low at 1.1598 A close below the 21-day MA at 1.1600 would add technical pressure It appears a top is forming at the 38.2 of 1.1909/1.1522 move at 1.1670 Recent soft EZ data is hardening the view the ECB will remain dovish EUR/USD may start making tracks towards the Oct 12 trend low at 1.1522GBPUSD Bias: Bearish below 1.37 Bullish above. Solid 1.3830/35 resistance, as the bounce falters Steady, at the top of a 1.3758-1.3769 range with only modest interest UK's Sunak to unfreeze public sector wages in the budget... Budget's major components appear to have all been given to the press Charts; 10 & 21 day moving averages climb, 21 day Bollinger bands expand Daily momentum studies conflict - bullish setup while 1.3750 10 DMA holds Close below 1.3750 would target a test of 1.3653 21 day moving average 1.3831, 50% of 2021 fall capped last week - break to test 1.3913 Sep high Sterling vulnerable as the good news is priced inUSDJPY Bias: Bullish above 112.50 Bearish below USD/JPY back into 113.68-91 hourly Ichi cloud after swoon to 113.42 Friday Some choppiness on ratchet up to 113.68-83 EBS today, looks better bid Japanese importers continue to support the bid, investor interest too Fresh USD buys from Japanese investors as well as asset hedging interest Base in place? Jury still out, eyes to remain on moves in US yields Risk on, Nikkei already +1.7% on day after TSE open to @29,073 USD/JPY and JPY complex led by AUD/JPY higher in Asia, risk on Nikkei surges in early TSE action, still bid, +1.75% @29,100 Bounce in Australia, other yields behind fresh JPY weakness AUD/JPY 85.08 to 85.52, through top of 85.41-52 hourly Ichi cloud Resistance 85.50-60 double top Friday-Monday but break above bullish Would target 86.00 again, 86.24 spike high last Thursday USD/JPY up too with US yields up again, 113.68 to 113.95 EBS Also through top of 113.70-91 hourly Ichi cloud, 100-HMA 113.94 above Option expiries today supportive? $1.3 bln between 113.55-85 strikes That said, $2.4 bln+ above between 114.00-50 strikes, also caution pre-BoJ Yield on US Tsy 10s firm, from 1.620% to 1.647% in Asia, now @1.636% EUR/JPY 131.99-132.20 EBS, GBP/JPY 156.53-84, both steadyAUDUSD Bias: Bearish below 0.75 Bullish above AUD well bid in Asia, AUD/JPY through Ichi cloud AUD well bid in Asia today, both AUD/USD and AUD/JPY strong AUD/JPY from 85.08 to 85.52, through top of 84.93-85.41 hourly Ichi cloud Looking to test resistance between 85.50-60? 85.54 high Friday Break above 85.50-60 projects re-test of 86.00, 86.24 spike high Thursday Base of sorts now at 84.55-65, double low Friday-yesterday (84.57, 84.61) Firm Aussie yields behind AUD strength, government 10s @1.803%

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