Inflation Data Helped Euro Pares Losses. The euro jumped to a six-week high against the yen after the euro zone inflation. It also pared losses against the dollar, but was still down on the day. The drop came as German retail sales posted their biggest monthly decline in more than seven years in September, data showed on Friday. Data on Friday showed annual inflation in the euro zone rose in line with expectations in October, providing some relief but doing nothing to alter expectations that the ECB could still ease policy in coming months.
Yen Slides to Seven-Year Low After Surprise BOJ Policy Easing. The yen tumbled to its lowest level in nearly seven years against the dollar on Friday, putting it on track for its biggest losses in 18 months, after the Bank of Japan shocked markets by unexpectedly easing policy further. In a pre-emptive move to combat risks of deflation, the BoJ unleashed another round of quantitative easing. It raised its monetary base target to an annual increase of 80 trillion yen ($724.5 billion) from 60-70 trillion yen and tripled its purchase of risk assets such as exchange traded funds (ETFs) and real estate investment trusts (REITs).
Canada Dollar Falls Most in Two Weeks as Economy Shrinks. Canada’s dollar fell the most in two weeks after data showed the economy contracted in August for the first time this year, adding to bets the central bank will lag behind the Federal Reserve in raising interest rates. The currency dropped versus most major peers as the unexpected decline contrasted with a report yesterday showing the economy in the U.S., the nation’s largest trading partner, grew more than forecast in the third quarter. The Fed ended a bond-purchase stimulus program this week, moving a step closer to raising U.S. interest rates, while Canada’s central bank left its benchmark rate unchanged this month.
Eurozone Inflation Picks Up in October. Euro zone inflation ticked up in October, bringing some much needed relief for the European Central Bank (ECB), although the rate remains well below its target of around 2 percent. Consumer prices rose by 0.4 percent year-on-year in October, according to official statistics published by Eurostat on Friday. The figure met analyst expectations, and marked a slight rise from September's 0.3 percent. The annual rate of inflation in the eurozone marked its 13th straight month at less than half the rate targeted by the ECB. The ECB was first confronted by the problem of very low inflation when figures released on Oct. 31, 2013 showed a sharp slide in the annual rate to 0.7% from 1.1% in September 2013.
Japan Leads Asian Rally After BOJ Easing. Japanese shares outperformed their Asian peers on Friday following released easing measures from the Bank of Japan and positive data from the U.S that showed third-quarter gross-domestic product (GDP) on Thursday rose 3.5 percent, beating expectations. Japanese stocks soared 4.83 percent to their highest close since November 2007, while the yen skidded to near seven-year lows against the dollar on Friday, after the Bank of Japan surprised markets with fresh easing steps it called a pre-emptive move to stoke inflation. While South Korean shares reversed opening losses, with the KOSPI index closed 0.28 percent higher and rising to a new three-week high, as boosted by electronics cap with Samsung Electronics climbed over 5 percent. Hong Kong shares also ended 1.25 percent higher on Friday, reflecting strength in the Chinese market and greater risk appetite after strong U.S. growth data, leaving the market with its biggest monthly gain since July.
Europe Closes Sharply Higher as BOE News, BOJ Stimulus. European shares ended the day sharply higher on Friday, after the Bank of England outlined tougher leverage rules for banks, and the Bank of Japan (BOJ) expanded its monetary base target. The Bank of England announced plans to could increase banks' required leverage ratio, in an effort to make banks better able to withstand future market shocks. Banks have until 2019 to hit the new target - longer than expected - and banking stocks rose on the news. The FTSE 100 Index jumped 1.3 percent to 6,546.47, while France’s CAC 40 advanced 2.2 percent to 4,233.09. Germany’s DAX rallied 2.3 percent to 9,326.87
Dow, S&P Close at Record Highs. U.S. stocks surged on Friday, lifting the Dow industrials and S&P 500 to record closes, after the Bank of Japan unexpectedly expanded stimulus, increasing hopes for the global economy. U.S. equities joined a global rally as Japan’s Government Pension Investment Fund said it will put half its holdings in local and foreign stocks, double previous levels, and invest in alternative assets. The Bank of Japan raised its annual target for monetary expansion to 80 trillion yen ($724 billion) from as much as 70 trillion yen. The Dow Jones Industrial Average ended up 194.90 points, or 1.1 percent, to 17,390.32, the S&P 500 added 23.40 points, or 1.2 percent, to 2,018.05, and the Nasdaq rose 64.60 points, or 1.4 percent, to 4,630.74,
Gold Tumble to 4-Year Lows on Dollar, Shares. Gold slumped to the lowest since 2010 on Friday as the dollar and stock markets soared following a new round of quantitative easing by the Bank of Japan and U.S. data showing a robust economy. The dollar rose to a four-week high against a basket of main currencies, boosted as well by the Bank of Japan's surprise move to expand its massive monetary easing, which weakened the yen to near seven-year lows. A stronger U.S. currency makes dollar-denominated assets such as gold more expensive for other currency holders.
WTI Posted Fourth Consecutive Monthly Drop. Oil prices dropped on Friday and posted fourth consecutive monthly fall as another round of monetary stimulus from Japan pumped up the U.S. dollar and pounded a crude market already suffering from robust supply. West Texas Intermediate also posted the biggest monthly drop in more than two years. U.S. crude output rose to a record 8.97 million barrels a day last week, according to EIA estimates that began in January 1983. Crude inventories have increased by about 23 million barrels in the past four weeks, according to the EIA
Toshiba's Half-Year Net Profit Surges 43%. Toshiba said Thursday its half-year net profit soared about 43% from a year ago, largely owing to a weak yen and strong sales in its infrastructure business. The company said it earned 30.8 billion yen in the six months to September on sales of 3.11 trillion yen, up 3.6%. For the year to March next year, Toshiba left its forecasts unchanged, expecting a net profit of 120 billion yen on sales of 6.7 trillion yen. Despite the upbeat results, the company pointed to weakness in its TV and consumer goods businesses.
NEC Rebounds From Losses on Smartphone Exit. Japan IT firm NEC said on Thursday it had swung back to profitability in the six months to September, after it exited from the smartphone market as part of a broader restructuring. The firm posted a net profit of 12.5 billion yen in the April-September period, reversing a 26.2 billion yen loss a year earlier. Operating profit ballooned to 21.5 billion yen from a year-earlier profit of 379 million yen, as the firm cut away its money-losing smartphone unit and focused on conventional handsets. Sales were down 4.2% at 1.32 trillion yen, it added.
EUR/USD. The bias is bearish in nearest term but we need a clear break below 1.2480 area to trigger further bearish momentum aiming 1.2400 key support area. Immediate resistance is seen around 1.2570 area, another consistent break above that area would trigger further bullish correction scenario retesting 1.2640 area before continue the bearish major trend.
GBP/USD. The bias is bearish in nearest term especially if price able to make a clear break below 1.5930 area to trigger further bearish momentum aiming 1.5880 area or even lower. On the upside, only a clear break back above 1.6050 area would trigger further bullish correction scenario retesting 1.6100 resistance area.
USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 112.50 area to trigger further bullish momentum targeting 113.10 resistance area. On the downside, only a clear break back below 111.40 area would trigger further bearish correction scenario retesting 110.50 area before recovery to the upside.
USD/CHF. The bias is bullish in nearest term especially if price able to make a clear break above 0.9670 area to trigger further bullish momentum aiming 0.9700 area. Immediate support is seen around 0.9590 area, another consistent break below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.9530 region.
AUD/USD. The bias is neutral in nearest term with potential trading range seen between 0.8760 – 0.8860 area. Another consistent break below 0.8760 area would trigger further bearish pressure retesting 0.8730 area or even lower. On the upside, only a clear break back above 0.8860 area would trigger further bullish correction scenario aiming 0.8900 region.
XAU/USD. The Bias is bearish in the nearest term testing 1160 area. A clear break below that area is needed to trigger further bearish momentum to test 1153 area, before aiming 1145 area. However, a failure break below 1160 area would bring the price up as stochastic indicator is in oversold region. A consistent break above 1180 area would give a boost to the price testing 1196 area.
Hang Seng Futures. The bias is bullish in the nearest term, immediate resistance is seen around 24230 area, while immediate support around 23930 area. A clear break above 24230 area should trigger further bullish momentum aiming 24340 area. On the other side, a consistent break and movement below 23930 area would add down pressure to test 23790 area.
Nikkei Futures. The bias is bullish in the nearest term 17000 area. A clear break above that area should trigger further bullish momentum to test 17140 area. However, a failure to break above 17000 would correct the price to 16775 as stochastic indicator is in overbought region. A consistent break below that area would bring back the bias into neutral, potentially testing 16640 area.
Kospi Futures. Bias is bullish in nearest term targeting 252.00 area before testing 253.55 region. Break above 253.55 area should continue bullish outlook to test next resistance area around 257.55 region. Nearest support is found at 249.80 area, break below this area should trigger further bearish correction targeting 247.60 region. However we still prefer bullish outlook as long as prices stay above 247.60 area.