GBP has continued to outperform this morning (GBPUSD 1.6355, EURGBP 0.9125) on a combination of chatter regarding M&A activity and rumours that the BoE will not be increasing QE in November. GBP-crosses have looked oversold for some time now, and this correction has brought us within reach of some key technical levels; the high so far in GBPUSD has been 1.6400, a break of 1.6468 opens up next target above 1.6700, meanwhile EURGBP’s pivotal support lies at 0.9070.

  The Asian session was light in terms of significant data releases, however AUD was given a boost by hawkish rhetoric from RBA Governor Glenn Stevens that they cannot be “too timid” in raising rates; AUDUSD traded to a high of 0.9720 on the news, and after breaking up out of its rising wedge in the past few days and managing to hold above the upper trend line on the re-test, price action looks extremely bullish.

  This morning’s data highlights will be Swiss Retail Sales, expected to increase 0.8% YoY in Aug (from 1.0% last month); a strong number is likely to increase the likelihood that we see USDCHF march onward towards parity (currently 1.0160), however EURCHF has so far remained wary of retesting intervention territory below 1.5130 and we expect the market to continue to respect this boundary given the conviction with which the SNB has defended it in the past few months.

Canadian CPI (Sep) is also due out today (exp. 0.1% MoM, 0.0% prior); contrary to the theme across other major pairs, USDCAD rallied yesterday and is marginally higher again today (currently 1.0340). We believe that positioning in this trade is now becoming a drag on further gains for CAD, and considering the comments from the BoC about their discomfort with the strength of the currency, this may indicate we have reached a bottom for the near-term and a further correction higher is due. The US session also sees the release of Net TIC Flows, Industrial Production and U. Mich Consumer Confidence, while the earnings focus turns to General Electric, Merrill Lynch, Bank of America, and troubled financial firm CIT Group Inc.

G10 Advancers and Decliners vs USD
Global Indexes Current Level % Change
Nikkei 225 Index10'257.56+ 0.18
Hang Seng Index22'025.71+ 0.12
Shanghai Index2'950.10- 1.00
FTSE 100 Index5'222.95- 0.63
DAX Index5'830.77- 0.40
SMI Index6'383.19- 0.35
S&P future1'091.40+ 0.15
 World Markets Current Level % Change
Gold1'047.91- 0.22
Silver17.29- 0.40
VIX21.72- 4.99
Crude wti77.87+ 0.37
USD Index75.55+ 0.09
 Todays Calender Estimates Previous Country / GMT
Adjusted real retail sales, % y/y Aug0.81.0CHF/07:15
Trade balance, € bn (sa) Aug4.96.8EUR/09:00
Consumer Price Index, % m/m (y/y) Sep0.1 (-0.9)0.0 (-0.8)CAD/11:00
Net long-term TIC flows, $ bn Aug30.015.3USD/13:00
Industrial production, % m/m (y/y) Sep0.2(-7.0)0.8(-10.3)USD/13:15
Capacity utilization, % Sep69.869.6USD/13:15
University of Michigan consumer sentiment, Oct73.373.5USD/13:55
Currency Tech

R 2: 0.9475
R 1: 0.9345
CURRENT: 0.9190
S 1: 0.9125
S 2: 0.8985

R 2: 1.0400
R 1: 1.0360
CURRENT: 1.0350
S 1: 1.0127
S 2: 1.0055

R 2: 136.90
R 1: 136.10
CURRENT: 135.50
S 1: 132.50
S 2: 131.60

R 2: 13.330
R 1: 13.184
CURRENT: 13.095
S 1: 12.980
S 2: 12.750