Citi

European Open

As we head into a new week, themes remain mostly the same. USD traded flat on the Asian morning following a beat in NFP last week. Chinese export data on Sunday also beat, exports grew 27.1%YoY in USD terms, only slowing modestly from the 28.1% YoY achieved in September, far above market expectations (vs consensus 22.7%). Over in NZD, we saw Prime Minister Ardern announce easing of restrictions in Auckland, which sent NZD tick 0.3% higher. THB gained 0.7% as Covid deaths fell and INR gained 0.5%, following a long weekend.

Looking ahead, we have a light day of data. EUR sees Sentix Investor Confidence survey at 09:30 GMT, while TWD sees trade balance at 08:00 GMT. CLP sees CPI MoM & YoY at 11:00 GMT and Trade balance at 11:30 GMT. Lastly, BRL sees FGV – IGP-DI Inflation at 11:00 GMT. The highlight of the day will be the slew of Fed speakers lined up for the day - We start with Clarida (neutral) at 14:00 GMT, followed by Fed Chair Powell (neutral/dove) at 15:30 GMT, Fed’s Harker (neutral/hawk) 17:00 GMT, Fed’s Bowman (neutral) at 17:00 GMT and lastly Fed’s Evans (dove) 18:50 GMT. Naturally Fed Chair Powell and Vice Chair Clarida will garner the most attention. We also see some speeches from ECB speakers, although we do not expect them to be too market moving.

Lastly, we flag that times have changed for the US, as US Daylight savings ended on Sunday, November 7, with clocks going back one hour. The time zone difference between New York and London returns to five hours.

An eye on the US

USD traded flat on the morning of the new week. Last Friday saw several notable events as follows:

–US October NFP came in stronger than expected at 531K (450Ke, 312Kp). The participation rate did not rise as expected, coming in at 61.6% (61.7%e, 61.6%p), but the unemployment rate dropped down to 4.6% (4.7%e, 4.8%p) - continuing to highlight the tightness in the labor market.

JP Morgan

EUR

Struggling to translate narratives into compelling, lasting trends in currencies right now. The dollar trades overall well, but that has been the case for a few months now without us really breaking to new levels, the noise in rates markets and communication issues that have shrouded many central banks doesn’t go away, if anything became more pronounced last week. Standing back, the US data is showing signs of improvement, payrolls was a solid print on Friday across the board, aside from positioning adjustments in US rates I am not sure yields can come off too far. Whilst equities stay supported, this still points to having some long dollar exposure, mainly against the jpy and some against the euro, I was surprised by how hard cross jpy sold off at the back end of last week but I guess positioning is being cleaned out there too. I still think over time cad will outperform, the BOC seem to be one of the more lucid central banks right now, and if the US economy is going to start to reaccelerate Canada should be a beneficiary. Elsewhere added to czk longs as the currency finally starts to perform a bit, the discussion around FX by the CNB and its inability to appreciate suggests they either have to do more on rates or it does finally start to perform, either way it should be a somewhat more fertile environment despite well-advertised headwinds.

The euro made new lows for the year Friday, but in keeping with the recent move couldn’t sustain, but the focus remains lower in pain staking fashion. Whilst below 1.1610-20 area shorts will feel fairly comfortable.