Oct 16, 2017 - Market Update (May urgently in Brussels ahead of EU Summit, Austrian elections outcome a non event as no exit EU talk, ECB's QE limit at 2.5 trln?, Aramco's private shares sale instead of IPO, Volkswagen short of cobalt supplies, Tech to benefit from corporate spending but position adjustments imminent, USDJPY weekly - not great for bulls but DXY holding above lows may give a hand)

Short recap

Asia up
Europe opening higher

Governor of PBOC Zhou bullish on Chinese economy ahead of Congress

Austria turning populist to far right but no exit EU talk

To challenge Macron’s view of more Europe, tough on immigration…etc.

Catalonia ready for talks with Spain but no mentioning of declaration of independence

Iraqi military in control of Kurdish oil fields

ECB’s QE limited at EUR 2.5 trln ?  link

Fed’s Yellen monitoring inflation, economy strong, gradual hikes appropriate

Fed’s Rosengren ok with Dec hike and 3-4 more hikes next year

BoJ’s Kuroda – markets overlooking the geopolitical risks

May taking it seriously and making unannounced trip to Brussels to meet with Barnier and Juncker today  ahead of EU Summit Oct 19-20  link

Equities

Atlantia increasing offer for Abertis to EUR 17.8 bln to stretch muscles over ACS’s offer

SWIFT holding an annual meeting with focus on cyber security

Aramco may go for a private share sale instead of IPO

With sovereign wealth funds and institutional investors taking advantage

Volkswagen having issues to secure stable cobalt supply in a long run

What is another sign of strong competition in electric vehicles field

Glencore, China Molybdenum, Vale are largest producers of cobalt

Earnings

Tech companies to benefit from higher corporate spending

But are a bit overstretched after rally from Sep

May see some position adjusting ahead of next week releases

Mon – Netflix

Tue – MS, GS, IBM, J&J

Wed – American Express, Atlas Copco, eBay, P&G

Thu – Unilever, SAP

Fri – GE, Daimler

Bonds

10-yr Trys yield at 2.29%

10-yr Bund yield at 0.40%

COT report as of last Tue

Specs decreased bearish USD positions

EUR longs at 98k vs 91k previous week

JPY shorts at 101k vs 85k previous week

GBP longs at 15k vs 20k previous week

EURUSD

Dovish Draghi, hawkish Yellen, Merkel’s party loss pushed cross lower at the open

Traders noted stops below 1.1790 with bids sitting around 1.1755/65

Resistance at 1.1845 (50 DMA)1.1862 (23.6% Fibo), 1.1880 (break can open short term higher), 1.1910

Support at 1.1783 (200 HMA), 1.1780 (10 DMA), 1.1750, 1.1720 (38.2% Fibo)

USDJPY

Keeps heavy after US CPI miss on Fri

112.00 kept by expiring options

Bids sitting at 111.50 while offers above 112.10

Resistance at 111.85 (23.6% Fibo), 111.83 (200 WMA), 112.15 (50 WMA)

Support at 111.78 (200 DMA)

Weekly chart - not great from bulls perspective

but DXY is telling a different story as long as last week low holds

Data/events

EU Foreign Affairs Council

UK’s May, Davis meeting EU’s Juncker, Barnier

ECB’s Angeloni (1300 GMT)

ECB’s Lautenschlaeger (1800 GMT)

Tue

ECB’s Constancio (0800 GMT)

ECB’s Praet (0930 MT)

Fed’s Harker (1700 GMT)

Wed

ECB’s Draghi (0810 GMT)

ECB’s Praet (1145 GMT)

Fed’s Duddley (1200 GMT)

Fed’s Kaplan (1200 GMT)

ECB’s Coeure (1415 GMT)

Fed’s Hirtle

Fed’s Fischer

Thu

Fed’s George (1330 GMT)

Fri

BoJ’s Kuroda (0635 GMT)

Fed’s Mester (1800 GMT)

Fed’s Yellen (2330 GMT)

Oct 18-20  – China National Congress

Oct 19-20 – EU Summit (Brexit to be heavily debated)

Oct 22 – Japanese elections

Oct 26 – ECB

Nov 1 – FOMC

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

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