Hello
ECB:
At 1145GMT the ECB to announce interest rate decision is due, with
no change in policy expected. However, the ECB's 1230GMT press call
(policy meeting outside Frankfurt this month - in Llubjana, Slovenia)
will of course be the key focus for the markets. Some Eurosystem
governors have suggested that they are not yet ready to cut the Refi
rate again despite recent signs of economic weakness spreading from the
drowning periphery to the core economies. Remarks from others though
have been less clear cut, with Belgian Governor Luc Coene saying
recently that a rate cut remained very much an option. It is a question
as to recent indications of inflation pressures could be keeping ECB
hawks on hold. Mario Draghi's presser will certainly attract enough
attention. With Spain having spelled out further austerity measures the
key question will be what does it take for a country to formally qualify
for the ECB's 'OMT' bond-purchase plan. In particular - what will it
take for Spain to qualify as Premier Rajoy continues to equivocate on
his long-awaited bailout request.
EUROPE: Spain has been warned by officials that "AAA" state governments
will demand stringent conditions for any bailout, the Telegraph warns,
as both parliaments and electorates become more skeptical over bailout
deals. The paper says Spain PM Rajoy is delaying asking for a bailout
until any such terms are clearer.
GREECE: The Troika is set to ask the Greek government to find an
additional E1 bn in spending cuts for 2013 before agreeing to the next
round of fund disbursement, eKathimerini reports.
BUNDS: Dec Bunds open 2 ticks lower at 141.57.
EUROPE PRESS: Germany may agree to a Spanish request for additional
aid, to defend the euro, the Nikkei reports, citing German Finance
Minister Wolfgang Schauble. Until now, Spain has not logded application
for an aid from member countries of the euro, and Germany has not taken
a clear stance on the issue. The Spanish government deserves praise for
the "decisiveness" of its 2013 budget, which promises more spending
cuts, the finance minister was quoted as saying in an interview with the
newspaper.
UK: UK data sees the release of the Halifax house price index at
0700GMT, followed by the release of the UK September New car and
commercial vehicle registrations data at 0800GMT.
Thursday sees the
announcement of the Bank of England's Monetary Policy Committee
decision, at 1100GMT. Analysts expect the MPC to vote for no-change in
policy, with the extra QE approved at the July meeting still making its
way through the system and with its flagship credit easing measure, the
Funding for Lending Scheme, only having started Aug 1. Many analysts are
still looking to the BOE to approve a further tranche of asset purchases
in November.
UK PRESS: The latest figures from the Investment Management Assoc showed
UK investors withdrew a net stg105.7 mn in August, compared to a net
inflow of stg 144.7 mn in August last year, the Telegraph reports.
UK PRESS: Morgan Stanley is in talks to sell possibly a majority stake
of its commodities unit to the Qatar Investment Authority, The Financial
Times reports citing people familiar with the matter. The US investment
bank has for months been discussing the sale of a minority stake in the
business, which specializes in trading oil, gas and electricity. Talks
have now moved to include a majority sale to Qatar's sovereign wealth
fund, the report says. Selling the bulk of the unit would free it from
new US financial regulations like the upcoming Volcker rule, it adds.
EURO-DOLLAR: Closed in NY at $1.2907 , the rate having seen high earlier
in the day of $1.2937 before squeezing back to $1.2887. The recovery
into the close continued into Asia, the move extending to $1.2924 before
getting knocked back to $1.2910 but the dip quickly attracted fresh
demand that saw rate edging toward resistance in the $1.2930/40 area.
The move up seen driven via the crosses, demand in euro-Aussie and
euro-yen the main pairs noted. The move up in the euro seen despite
reports that the Troika is demanding that Greece increases the amount of
spending cuts. Further offers seen into $1.2950 with stops above, with
stronger interest remaining into $1.2970. Asian reserve demand is
reported in place from $1.2890, extending to $1.2865, with stops below.
Focus today on the ECB rate decision at 1145GMT ahead of the press
conference at 1230GMT. No change in rates widely expected. 
MNI EURO-DOLLAR: Fundamental levels (orders, options, technicals)
$1.3048 Friday Sep21 high/Offers to $1.3050/$1.3050 Option expiry
$1.3020 Minor offers
$1.2990/300 Medium offers/$1.3000 Option expiry
$1.2970/80 Strong offers $1.2971 Sep25 high
$1.2968 Tuesday Oct2 high
$1.2950 Medium offers/$1.2947 76.4% $1.2968-1.2878/Stops
$1.2940 Strong offers on approach
$1.2933 Int.Day high Asia
$1.2925 Option expiry
$1.2923 ***Current mkt rate 0603GMT Thursday
$1.2890 Strong demand/Asian sovereign interest extends to $1.2865/Stops
$1.2850 Medium demand
$1.2835/30 Medium demand
$1.2823 Tech 200-dma
$1.2804 Monday Oct1 low/Strong bids into $1.2800/$1.2800 expiry
CABLE: Closed in NY near intraday lows of $1.6067 after sterling
continued its recent corrective pullback following another set of
disappointing data. However, with euro-sterling holding a tight
stg0.8020/30 range through the Asian session cable tracked euro-dollar's
recovery, meeting initial resistance at $1.6100, before a bounce off
$1.6080 took it on to session highs of $1.6106 into the European open,
where it retains a firm tone. Resistance seen between $1.6115/25, a
break to open a move toward $1.6140 then $1.6160/65. Support seen back
at $1.6080 ahead of $1.6065/50. BOE MPC announcement today at 1100GMT
in focus, though no change in rate and QE expceted. Halifax house price
data at 0700GMT to provide early focus.
MNI Cable: Fundamental levels (orders, options, technicals)
$1.6310 Friday Sep21 high (2012 high)/Medium offers/Stops
$1.6273 Friday Sep28 high/Offers to $1.6280
$1.6250 Minor offers
$1.6200/10 Medium offers
$1.6188 Tuesday Oct2 high
$1.6160/65 Medium offers
$1.6140/50 Medium offers
$1.6126 Recovery high off $1.6084
$1.6106 Int.Day high Asia
$1.6100 **Current market rate 0613GMT Thursday
$1.6080 Medium demand
$1.6077/67 $1.6077 Int.Day low Asia/$1.6067 NY low
$1.6050 Medium demand on approach
$1.6035/30 Medium demand
$1.6000 Strong demand on approach/Stops below
DOLLAR-YEN: Dollar-yen closed in NY at Y78.50 just off the intraday high
of Y78.58. The pair ground lower in early Asian trade to Y78.42 before
dip demand recovered and settled in a tight range with many on the
sidelines ahead of the BOJ interest rate decision tomorrow. Leverage
demand bounced to Y78.60 and the rate extended in tandem with euro-yen
to print highs of Y78.71, later easing on profit take sales ahead of
Europe. Key tech resistance seen at Y78.84/88 (100 dma, Ichimoku cloud
base), through here opens strong offers at Y79.00 with stops set.
Euro-yen closed in NY at Y101.30 having bounced off earlier lows of
Y100.72. The cross traded flat with dollar-yen through the Tokyo fix
before the same leverage demand lifted to Y101.60, flushing CTA stops on
the move. Rate extended to Y101.78 on reported US names/model funds,
later easing to Y101.60. The pair remains in consolidation mode ahead of
the ECB interest rate decision where no change in rates is widely
expected. On the topside tech resistance seen at Y101.74 from the 200
dma, a break opens strong offers into Y102.00 with stops set.
JAPAN STOCKS CLOSE: Japan's benchmark stock indices ended Thursday's
session higher. The Nikkei 225 was higher by 77.72 points, or 0.89%, at
8824.59. Just ahead of the close, the broader-based TOPIX was higher by
8.62 points at 735.91. Preliminary volume in the Nikkei stocks totalled
1.0432 bn shares, with 188 issues higher, 30 lower and 7 unchanged.
JAPAN's STOCKS: Japan's Nikkei 225 Stock Average Closes up 0.89% AT
8,824,59
GOLD: Spot gold prices are trading moderately higher Thursday extending
its gains from the previous day. Spot gold ended Wednesday's session
$3.30 higher at $1778/oz despite a sharp move lower in oil prices stoked
by growth concerns surrounding China. Precious metal prices remain firm
despite some sluggish demand in the physical market and some thin
trading interest as China remains closed for a week long public holiday.
Gold prices are expected to remain in a narrow trading range ahead of
central bank announcements due later today from the ECB and Bank of
England, with market participants also more focused on this Friday's US
employment report which will no doubt prove to be the next catalyst to
move the precious metal away from its current trading range. Spot gold
tentatively edged its was back higher this morning from lows of
$1777.80/oz to post an intra-day high of $1782.70/oz. Metals brokers
report no significant flows so far in quiet trade, with the precious
metal currently trading $1780.80 a troy ounce, up $2.80 on the session.
OIL: November Nymex WTI prices are trading moderately higher Thursday
after suffering some sharp declines during the previous session.
November WTI futures ended Wednesday's session $3.75 lower, or 4.1%, at
$88.14 a barrel. The move lower followed fears of a slowdown in China
after a reading of China's service sector showed less expansion in
September compared to August, whilst consumer sentiment in the country
fell for the third consecutive month. In terms of supply, EIA data last
night showed US crude oil stocks fell 482,000 barrels to 364.698 million
barrels in the week ended Sept. 28, against expectation of an increase
of 1.5 million barrels, Platts notes. Despite the modest decline, US
crude stocks remain ample, sitting 10.46% above the EIA's five-year
average, Platts says. "Last week's decline is likely in part a result of
increased gross inputs to US refineries, which rose 149,000 barrels per
day (b/d) to 15.202 million b/d, pushing refinery utilization rates 0.8
percentage point higher to 88.2% of capacity." November WTI has picked
up from lows of $87.91 to trade an intra-day high of $88.43, now $88.30.
NATURAL GAS: Nymex November natural gas prices are trading in positive
territory Thursday after breaking a run of six consecutive up sessions
the previous day. November natural gas futures ended Wednesday's session
down 13.6 cents, or 3.9%, at $3.395 per million British thermal units
(Btu) after posting an intra-day low of $3.354 per mln Btu. The recent
strong advance in natural gas futures has seen open interest jump by
more than 76,000 contracts, indicating that new positions have helped
drive some of the recent upside. Prices became subject to some profit
taking during Wednesday's session as technical studies remained in
overbought territory. Market attention now turns to today's EIA Natural
Gas storage report, due to be published at 1430GMT, with analysts
expecting stocks to have gained by around 71bcf. November natural gas
futures have advanced from their intra-day low of $3.393 to session
highs of $3.438, with the market remaining firm currently seen trading
$3.436 per mln Btu.
OPTIONS: Expiries for today's 1000ET cut,
* Euro-dollar; $1.2900, $1.3000
* Dollar-yen; Y78.80, Y78.50, Y78.35, Y78.15
* Euro-yen; Y100.00, Y102.00
* Euro-sterling; stg0.8000, stg0.8050
* Aussie; $1.0400, $1.0450
* Aussie-kiwi; NZ$1.2575
EUROZONE ISSUANCE: Both Spain and France come to the sovereign bond
issuance market Thursday. Spain will be first to the market with a tap
of 3-year benchmark 3.75% Oct 2015 Bono, tap of a 2-year 3.30% Oct 2016
Bono and tap of a 5-year 5.50% Jul 2017 Obligacion, for an indicative
amount of E3.0bln to E4.0bln. France will then tap, 4.25% Oct 2018 OAT,
issue new 10-year benchmark 2.25% Oct 2022 OAT and tap 40-year benchmark
4.50% Apr 2041 OAT for between E7.0 and E8.0bln. To re-cap, on Tuesday
Austria sold E500mln of 1.95% Jun 2019 RAGB at average yield 1.326% and
covered 4.05 times, and sold E700mln of 3.15% Jun 2044 RAGB at average
yield 2.88% and covered 2.0 times. On Wednesday Portugal completed
E3.757bln in an exchange offer were is bought 5.45% Sep 2013 OT and sold
3.35% Oct 2015 OT.
SPAIN AUCTION PREVIEW: Spain re-open 3-year benchmark 3.75% Oct
2015 Bono and tap off-the-run 3.30% Oct 2014 Bono and 5.50% Jul 2017
Obligacion Thursday for between E3.0bln to E4.0bln. This will be the
first tap of the 3.75% Oct 2015 Bono, after being launched back on Sep
20, where the Tesoro sold E3.94bln at average yield of 3.845% and
covered 1.56 times. Spanish yields have ben choppy especially in the
front end, as PM Rajoy continues to hold off on requesting aid from
EFSF/ESM. Mid-yield on the 3-year Bono is seen at 3.888% after hitting
high of 4.24% last week. The 3.30% Oct 2014 Bono trades 3.209% mid-yield
and was last sold on July 19 were E1.359bln as allotted at average yield
5.204% and covered 1.9 times. As for the 5.50% Jul 2017 Obli this trades
at 4.715% mid-yield and was also last sold on Jul 19 were E1.074bln was
allotted at average yield 6.459% and covered 2.06 times.
Auction results
due around 0840GMT.
FRANCE AUCTION PRVIEW: The Agence France Tresor (AFT) issue new
10-year benchmark 2.25% Oct 2022 OAT and also tap off-the-run 4.25% Oct
2018 OAT and 4.50% Apr 2041 OAT for between E7.0bln to E8.0bln
indicative size on Thursday. In the grey market, the new 10-year
benchmark 2.25% Oct 2022 OAT trades around 2.309%. For comparison the
old 10-year benchmark OAT was last tapped on Sept 6 where E2.998bln was
sold at average yield of 2.21% and covered 2.1 times. As for the
off-the-runs, the 4.25% Oct 2018 OAT trades 1.309% mid-yield and was
last sold back in February and therefore not comparable. The 4.50% Apr
2041 OAT trades 3.193% mid-yield and was last sold on Apr 5 and again
not comparable. The 2041 OAT will be the longest maturity bond the AFT
have tapped since re-opening of 4.50% Apr 2041 OAT% Apr 2060 OAT back in
June.
Auction results are due shortly after bidding closes at 0850GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- Oct -- Possible Moody's Spain ratings action (due anytime October)
- Oct 4 ECB meeting, press conference (Llubjana, Slovenia)
- Oct 4 Spain, France bond auction
- Oct 5 Italy dollar bond redemption for $2.5bln
- Oct 8 Slovenia Presidential elections
- Oct 8 Eurogroup meeting in Luxembourg
- Oct 9 EcoFin Meeting in Luxembourg
- Oct 10 German BOBL auction
- Oct 10 Spain Rajoy to meet France Hollande in Paris
- Oct 12 Greek T-bill redemption for E1.3bln
- Oct 15 Italy T-bill redemption for E7.0bln
- Oct 15 Italy BTP redemption for E18.373bln
- Oct 16 Spain T-bill auction (12-/18-month)
- Oct 17 German Shatz auction
- Oct 18 EU Leaders Summit, Brussels
