Data boosts U.S. stocks but drags down oil prices

Good morning,

- RBA: Board judged leaving cash rate unchanged was appropriate, supervisory measures helping contain housing risks. What’s more, $AUD adjusting to significant declines in commodity prices, sees inflation consistent with target next 1-2 years. To assess whether current policy will foster growth, inflation outlook may afford scope for policy easing. All in all, Inflation outlook may afford scope for policy easing, inflation low and should remain so.

- $AUD was the best performing major vs $USD on Monday with +0.11% spot-returns while $NZD was the worst performing with -0.49% returns.

- US Equities Close: DJIA 17828.22 (+0.93%); S&P500 2103.94 (+1.18%); NASDAQ 5127.145 (+1.45%). Important notice: NASDAQ 100 closes at 15-year high, up 1.2%.

- EUR ECB's Villeroy: French growth to be slightly above 1% in 2015; French economy isn't growing fast enough…Today's US ISM manufacturing figure was stagnant, but the US is a services economy; and that sector is still buoyant.

- U.S. stocks climbed on Monday after mixed U.S. economic data and slightly stronger-than-expected German factory activity helped European stocks, even as weak Chinese data pushed down Asian markets and crude oil prices. While data showed U.S. manufacturing activity slowed in October for a fourth month to a 2-1/2-year low, a rise in new orders offered hope. Also, construction spending rose in September to the highest in 7-1/2 years. U.S. stocks were led by energy and healthcare sectors as investors bought up more risky investments and some short sellers were forced to cover bets, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

- New Zealand Employment Change is released on a quarterly basis. It is one of the most important New Zealand indicators and an unexpected reading can have a strong effect on the movement of NZD/USD. A reading which is higher than the market forecast is bullish for the New Zealand dollar. But bear in mind that while the New Zealand economy is in good shape, the RBNZ certainly prefers a weaker New Zealand dollar, and the growing possibility of a December rate hike by the Fed, along with the prospect of a rate cut by the RBNZ could send the kiwi to lower levels. So, the overall sentiment is bearish on NZD/USD towards this release. In case, the release is announced within expectations, the cross could show some slight fluctuation, but it is likely to remain within range, without breaking any levels. A sharp rise in employment numbers could propel NZD/USD upwards, and a first/second resistance line could be broken while a lower than expected reading could pull the pair downwards, with one support level at risk. In case of a very negative reading in negative territory, will likely hurt confidence in the kiwi, and NZD/USD could break through a second support level.

- USD Treasury's Dynan: Job market improving, economy has "favorable fundamentals"; consumer spending showed noteworthy gains. Furthermore, he added that ‘US to grow at a "solid, above-trend pace" in near term; external sector may remain drag on US growth.’

- Profit-taking drove the dollar down on Thursday as markets pulled back one day after a hawkish statement from the U.S. Federal Reserve that pushed the greenback up sharply against other major currencies. The Fed's hint that it was likely to raise interest rates in December remained supportive of the dollar's long-term future. Still, the euro, British pound and Swiss franc all gained against the greenback with markets consolidating as traders awaited further U.S. economic data. "I think it's just kind of a one-day thing," said Mark McCormick, FX strategist at Credit Agricole CIB, of the dollar's Thursday tumble.

- George Osborne is expected to set out five of the UK's key economic demands in its renegotiation with the European Union. In a speech to business leaders in Germany, the Chancellor will warn Brussels that the British people do not want an "ever closer union" with Europe. Mr Osborne - who is taking a lead role in negotiations ahead of an EU referendum before the end of 2017 - will argue that further integration is putting a "strain" on Britain's relationship with Europe. He is also expected to outline five key demands for the Government as it seeks to change Britain's relationship with the EU before the in/out referendum takes place in 2017.

- Communist Party of China's proposal on 2016-2020 development plan issued by Xinhua news agency. ‘’Will develop transparent healthy capital market , will deepen fiscal, tax reforms , improve energy reserve system, accelerate opening up of power and telecom sectors, deepen rural land reforms, while aiming to boost grain output capacity. What’s more, will strengthen farmland protection, setting up green development fund.’’ As the world watches and waits to see if China can get back on track let's see how these pan out.

- Major news for today: US Factory Orders, US Light Vehicle Sales, Spain Unemployment.

Have a great day!