Currency Zone

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EUR/USD Intraday: the downside prevails.

Pivot: 1.1485

Our preference: short positions below 1.1485 with targets at 1.1430 & 1.1395 in extension.

Alternative scenario: above 1.1485 look for further upside with 1.1520 & 1.1550 as targets.

Comment: the RSI shows downside momentum.

 

 

USD/JPY Intraday: under pressure.

Pivot: 112.85

Our preference: short positions below 112.85 with targets at 112.35 & 112.20 in extension.

Alternative scenario: above 112.85 look for further upside with 113.10 & 113.30 as targets.

Comment: the RSI shows downside momentum.

 

 

GBP/USD Intraday: the downside prevails.

Pivot: 1.3015

Our preference: short @ 1.2961 with targets @ 1.2940 & 1.2895 in extension.

Alternative scenario: above 1.3015 look for further upside with 1.3050 & 1.3090 as targets.

Comment: the RSI is mixed to bearish.

 

 

EUR/GBP Intraday: supported by a rising trend line.

Pivot: 0.8825

Our preference: long positions above 0.8825 with targets at 0.8855 & 0.8875 in extension.

Alternative scenario: below 0.8825 look for further downside with 0.8805 & 0.8790 as targets.

Comment: the RSI shows upside momentum.

 

 

USD/ZAR intraday: the upside prevails as long as 14.2730 is support

Our pivot point is at 14.2730.

Our preference: the upside prevails as long as 14.2730 is support.

Alternative scenario: below 14.2730, expect 14.1660 and 14.1030.

Comment: the RSI is above its neutrality area at 50. The MACD is above its signal line and positive. The configuration is positive. Moreover, the pair is above its 20 and 50 MAs (respectively at 14.3392 and 14.3278).

EU Economics Preview: Germany's Producer Price Data Due

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Producer prices from Germany and flash consumer sentiment from euro area are due on Tuesday, headlining a light day for the European economic news.

At 2.00 am ET, Destatis is set to publish Germany's producer prices for September. Economists forecast prices to rise at a steady pace of 0.3 percent.

In the meantime, Finland's unemployment data is due for September. The jobless rate stood at 6.8 percent in August.

At 3.00 am ET, Turkey's consumer confidence survey data is due.

At 6.00 am ET, the Confederation of British Industry is scheduled to issue Industrial Trends survey data. The order book balance is seen at 2 in October versus -1 in September.

At 10.00 am ET, European Commission releases euro area consumer sentiment survey results. The confidence index is seen at -3.2 in October versus -2.9 in September.

o2's London stock market flotation of £10bn on hold

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The £10bn stock market flotation of mobile operator o2 has been put on hold until after Brexit as parent firm Telefonica holds fire in the wake of market uncertainty and a recent spate of IPO flops.

An initial public offering had been expected in 2018 following 4G and 5G spectrum auctions in April, but people with knowledge of the matter told the Press Association that those plans are firmly on ice.

Worries over Brexit and the recent IPO failures of Funding Circle and Aston Martin, which sank on their stock market debuts earlier this month, are thought to have convinced bosses at Telefonica to sit tight.

Telefonica chief executive Jose Maria Alvarez-Pallete said earlier this year that financial markets were not yet ready for an o2 float, an opinion reinforced by subsequent events.

Its delay will cause further consternation as volatility, uncertainty and a perceived lack of investor appetite weigh on the listings pipeline.

Accountancy giant EY has previously said that Brexit uncertainty is casting a "shadow" over the London IPO market.

O2's float is one of the most hotly anticipated, with analysts valuing the UK's second largest mobile firm at up to £10bn.

The firm booked operating profit of €879m in the first half of the year.

Telefonica first revealed that it would explore a London-listing of O2 in 2016 after seeing a tie-up with rival operator Three collapse over competition concerns.

It had been awaiting the outcome of a radio spectrum sale, which eventually took place in April and saw the biggest chunk go to o2 in auction that raised over £1bn for the Government.

While the operator made no firm commitment to float this year, Telefonica has been eyeing a cash-raising on o2 as a means of driving down its circa €40bn debt pile.

However, the need to float the British mobile network to generate funds is now less pressing, with the Spanish group seeing its cash flow strengthen.

Telefonica declined to comment.

Two thirds of businesses fail in measuring the right data

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A commissioned study conducted by Forrester Consulting on behalf of Collinson, a global leader in loyalty and benefits, reveals that the majority of organisations do not understand what is driving customer loyalty, and are therefore putting customer relationships and profitability at risk.

Surveying decision-makers in organisations with revenue exceeding US$300 million, respondents graded their programmes based on a series of measures and also shared their key goals and challenges. The study surveyed and compared the results for a multitude of countries and regions in Asia Pacific (APAC), including Hong Kong, mainland China, Singapore, Indonesia, Japan, Korea and Australia.

The research found that two thirds (65 per cent) of those surveyed markets in APAC do not understand why their customers are loyal to their organisations. Almost 7 out of 10 (67 per cent) reported that they do not have a proper framework in place to measure loyalty in the context of overall business performance. Remarkably, the research also found a misalignment between the loyalty objectives and the measurement criteria used to determine the effectiveness of their loyalty success.  

Three reasons why organisations may be struggling with customer loyalty

1. Loyalty strategy without clearly defined business objectives and appropriate metrics

Loyalty success is led by a holistic loyalty strategy with clear defined goals and measurement framework which needs to be embedded consistently across an organisation.

Less than half (49%) of the APAC respondents have clearly defined business goals and objectives to define their loyalty proposition, where Hong Kong and Japan have the highest percentage (55%) compared with 39% of respondents in Singapore. Only 40% have cohesive customer loyalty strategy that spans multiple functions and is a top strategic initiative with C-level support.

From the research, we found there is a clear discrepancy between what people are trying to achieve through their loyalty programmes and the KPIs in places to measure the performance in relation to their objectives.

The key loyalty objectives and performance metrics shared by our respondents for their customer loyalty programme in APAC are misaligned as shown below:


Key loyalty objectives

The metrics for measurement

1

Acquiring new customers (53%)

Customer satisfaction (62%)

2

Retaining existing customer (47%)

Customer engagement (59%)

3

Enriching customer relationships (46%)

Customer retention rate (57%)

4

Improving the customer experience (37%)

Loyalty programme enrolments (57%)

5

Increase customer advocacy (35%)

Sales & revenue (57%)

Without appropriate metrics, it could be difficult to know which areas need improvement and understand the impact of customer loyalty on overall business performance.

2. Without a single customer view to harness data potential

To appeal to the modern, choice-rich consumers, it is important to engage them at an individual level which means collecting all appropriate data across the customer journey.

The research found that three-fifths (60%) of respondents in APAC do not have centralised business rules to incorporate all sources of customer data into a single customer view. Less than a half (48%) collect a wide enough range of customer data to run deep analyses, where only 26% of them automate advanced data analytics to optimise their customer strategy, and 35% would use predictive modelling to identify the right existing dynamic content based on customer behaviour.

Predictive modelling enables brands to make better decisions and run more effective programmes where China has the highest percentage (47%) compared with the rest of respondents in Asia Pacific to harness the value of data for providing personalized offers for each member. It is vital to recognise each customer preference and behaviour to provide a personalised experience that stands out from the competition. This can only be done when brands continuously collect the right information about their customers and using it effectively, to understand what makes them tick.

3. Competitive differentiation

Loyalty programmes with reward, point and VIP schemes have been pervasive for years. These tactics are still frequently employed, but the effectiveness is uncertain when they are deployed without a sound loyalty strategy. From the research, we found that brands continue to see competitive differentiation as being vital, with two thirds (66%) of loyalty practitioners in APAC reporting that is a critical or high priority.

72% in Asia Pacific, 78% in Hong Kong, Indonesia and Korea respondents planned to increase funding for developing new loyalty programme benefits and rewards.  Embracing partnerships with like-minded brands, who can offer unique experiences and access to their customer base, will enhance and strengthen the member's engagement. It enables partner brands to expand their knowledge of the customer through an integrated cross analysis of buyer behaviour and preferences for personalized, curated communications to increases sales leveraged through the partnership.

Mary English, Executive Vice President, APAC of Collinson, says, "A clearly defined loyalty strategy provides the foundation to design a proposition for continuous engagement with your customers in a relevant and meaningful way. Data is the fuel for ongoing loyalty to a brand with heavy weighting on a well-structured single customer view to capture, measure, gain insights, and personalise the dialogue with their customers.  Organisations need to put loyalty back on track by becoming better aligned in terms of their objectives, what they measure, and how to differentiate their programmes. There is really no 'one size fits all'approach and each organisation must identify their brand's unique, valuable assets in formulating a strategy that is regularly reviewed and updated to the changing behaviours of their customers."

"Creating formalised processes and employing dedicated resources can be a valuable investment and demonstrate your company's commitment to loyalty. It is logical for companies to consider 'connected loyalty' as a goal of their strategy. Customers who feel connected to the organisation become fans, not just purchasers of their products and services. The latter may simply be shopping out of habit or convenience, whereas fans will go out of their way for the brands they love."

About the research:
A commissioned study conducted by Forrester Consulting on behalf of Collinson was carried out in April 2018.  635 respondents in UK, North America, Hong Kong, mainland China, India, UAE, Singapore, Brazil, Australia, France, Japan, Korea, Indonesia, Saudi Arabia, Mexico, South Africa were asked 20 questions. Participants' job function included decision makers ('manager' or above) for organisations with revenues over $300 million in the retail, travel and financial services sectors.

About Collinson
Collinson is a global leader in loyalty and benefits. We craft customer experiences which enable some of the world's best known brands to acquire, engage and retain the most demanding and choice-rich customers.

Our unique expertise and insight into high earning, frequent travellers allows our clients to deliver the smarter experiences it takes to drive deeper customer devotion.

We have 30 years' experience working with the world's leading payment networks, over 600 banks, 90 airlines and 20 hotel groups in over 170 countries to create loyalty, deliver smarter travel experiences, and protect and assist their customers in times of need. Our clients include Air France KLM, American Express, Cathay Pacific, Hackett, Hilton, Mastercard, Radisson Hotel Group, RSA, Sephora, UnionPay, Vhi and Visa.

Netflix set to issue $2bn of junk bonds

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NETFLIX is once again turning to the junk-bond market to fund new programming as the streaming-video giant seeks to maintain its subscriber growth.

The $2bn (€1.74bn) bond offering, which will be issued in dollars and euros, comes just a week after tit reported a bigger jump in subscribers than expected.

The bonds would push the cash-burning company's debt load above $10bn for the first time. Netflix's market value has soared almost 70pc this year to about $140bn.

The US portion of the 10.5-year bond may yield around 6.375pc, while the euro notes could pay 4.625pc, according to people with knowledge of the matter. Netflix paid less than 6pc when it last tapped the market in April, in part because underlying Treasury yields were lower.

Italy vows to defy EU

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Italian government bonds and stocks rallied after a credit ratings decision by Moody's Investors Service removed the immediate threat of a downgrade to junk.

Yields on 10-year securities fell to their lowest level in over two weeks following Friday's cut to Baa3 - its lowest investment-grade rating - with a "stable" outlook instead of a two-notch cut as had been expected and that was enough to tempt back investors. Italy is due to be reviewed by S&P, who have the nation two notches above junk, on Friday.

The country yesterday told the European Commission it would stick to its 2019 budget plans in defiance of EU fiscal rules, but promised not to inflate its deficit any further in the years ahead. In a letter to the commission, Economy Minister Giovanni Tria said he recognised that the budget, which is set to hike next year's deficit to 2.4pc of gross domestic product (GDP), was not in line with the EU Stability and Growth Pact.

However, looking to silence growing alarm from EU allies, he said the government had to respond to years of anaemic growth in the eurozone's third-largest economy. "(The budget) was a hard, but necessary decision in light of Italy's delay in catching up to pre-crisis levels of GDP and the desperate economic conditions in which the most disadvantaged citizens find themselves," Mr Tria wrote.

The commission sent Rome a warning letter about the budget last week - the first formal step of a procedure that could lead to Brussels rejecting the package and imposing fines. An EU spokesman said the commission would decide today its next step.

Underscoring the tensions, German Finance Minister Olaf Scholz said Italy had to be "careful" over its debt, while Austrian Chancellor Sebastian Kurz called on the commission to reject the budget unless changes were made.

Italian Prime Minister Giuseppe Conte dismissed Mr Kurz's criticism as "incautious" and reiterated that Rome wanted to have "constructive dialogue" over the budget, which includes tax cuts, welfare hikes and a rolling back of tough pension reform. Conte also stressed that his government had no intention of abandoning either the euro currency or the EU.

"Read my lips. There is no way Italy will leave the euro," he said. However, he added that the EU was damaging itself by not meeting the needs of ordinary people.

Italy's economy is still some 6pc smaller than it was at the start of 2008, hobbled by a slew of long-standing problems, including a national debt mountain at around 131pc of GDP - the second-highest in Europe after Greece. Mr Conte predicted that growth would "take off" once government reforms were enacted. To help fund its expansionary programme, the Treasury sharply hiked the deficit goal from a targeted 1.8pc this year. "For us, 2.4pc is the ceiling," Mr Conte said.

Asian Markets In Negative Territory

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Asian stock markets are in negative territory on Tuesday following the lackluster cues overnight from Wall Street amid rising geopolitical tensions around the world and on worries about Italy's budgetary woes as well as Brexit. Investors are also cautious as they focus on several major upcoming corporate earnings results due this week.

The Australian market is extending losses from the previous session, with stocks lower across the board.

In late-morning trades, the benchmark S&P/ASX 200 Index is losing 47.90 points or 0.81 percent to 5,857.00, off a low of 5,853.90 earlier. The broader All Ordinaries Index is down 44.00 points or 0.73 percent to 5,962.20. Australian markets fell notably on Monday.

The big four banks are notably lower. ANZ Banking, Commonwealth Bank, Westpac and National Australia Bank are down in a range of 1.1 percent to 1.4 percent.

Commonwealth Bank, which is selling its 80 percent stake in an Indonesian life insurance business for A$426 million, said it will make a post-tax profit of about A$140 million on the sale. The bank's shares are declining 0.3 percent.

The major miners are also weak despite higher iron ore and copper prices. Fortescue Metals is losing almost 2 percent, BHP is declining almost 1 percent and Rio Tinto is down 0.3 percent.

Among oil stocks, Woodside Petroleum is declining more than 2 percent and Santos is lower by more than 1 percent, even as crude oil prices edged higher overnight.

Shares of Oil Search are down more than 3 percent despite the company reporting that its revenue for the September quarter nearly doubled from the preceding quarter on higher oil prices and an uptick in production that helped offset the impact of an earthquake in Papua New Guinea earlier this year.

Gold miners are mixed after gold prices declined overnight. Evolution Mining is lower by more than 1 percent, while Newcrest Mining is adding 0.2 percent.

Private equity firm BGH Capital and AustralianSuper have renewed their takeover attempt for Healthscope with a A$4.1 billion bid, five months after the private hospitals operator rejected their offer. Shares of Healthscope, which said it will assess the proposal, are gaining more than 20 percent.

In the currency market, the Australian dollar is lower against the U.S. dollar on Tuesday. The local currency was quoted at $0.7078, down from $0.7109 on Monday.

The Japanese market is notably lower, tracking the mixed cues from Wall Street and a stronger safe-haven yen amid rising geopolitical tensions. Investors are also cautious as they focus on several upcoming corporate earnings results due this week.

The benchmark Nikkei 225 Index is losing 396.09 points or 1.75 percent to 22,218.73, after falling to a low of 22,202.89 earlier. Japanese shares eked out modest gains on Monday.

Among the major exporters, Canon is declining more than 2 percent, Mitsubishi Electric is losing more than 1 percent, Panasonic is lower by almost 1 percent and Sony is down 0.5 percent.

Among auto makers, Honda is lower by more than 1 percent, while Toyota is rising almost 1 percent. In the banking sector, Mitsubishi UFJ Financial and Sumitomo Mitsui Financial are declining more than 1 percent each.

In the oil space, Japan Petroleum is down almost 2 percent and Inpex is losing almost 3 percent after crude oil prices edged higher overnight.

In the tech sector, Advantest is lower by almost 2 percent and Tokyo Electron is declining more than 2 percent.

Among the worst performers, Toto is falling more than 6 percent, while Kawasaki Kisen Kaisha, Daiwa House Industry and Toyo Seikan Group are losing more than 5 percent each. Screen Holdings is lower by almost 5 percent.

In economic news, Japan will release September figures for supermarket sales as well as department store sales, and final September numbers for machine tool orders today.

In the currency market, the U.S. dollar is trading in the upper 112 yen-range on Tuesday.

Elsewhere in Asia, South Korea is losing almost 2 percent, while New Zealand, Hong Kong and Taiwan are all down more than 1 percent each. Shanghai and Singapore are both lower by almost 1 percent each. Indonesia and Malaysia are modestly lower. The markets in Thailand are closed on Tuesday for Chulalongkorn.

On Wall Street, stocks closed mixed on Monday for a second straight session as traders expressed some uncertainty about the near-term outlook for the markets following recent volatility. A lack of major U.S. economic data also kept some traders on the sidelines ahead of the release of reports on new home sales, durable goods orders, and consumer sentiment in the coming days.

While the Nasdaq rose 19.60 points or 0.3 percent to 7,468.63, the Dow slid 126.93 points or 0.5 percent to 25,317.41 and the S&P 500 fell 11.90 points or 0.4 percent to 2,755.88.

The major European markets moved to the downside on Monday. The U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index fell by 0.3 percent and the French CAC 40 Index slid by 0.6 percent.

Crude oil prices edged higher on Monday as investor focus returned to impending U.S sanctions against Iran. WTI crude for November added $0.05 or 0.07 percent to close at $69.17 a barrel on expiration day.

10 things you need to know in markets today

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Here's what you need to know in markets on Monday.

1. Chinese stocks are trading sharply higher on Monday, adding to mammoth gains achieved on Friday that were fueled by a wave of supportive measures rolled out by Chinese policymakers. After jumping 2.76% on Friday, the benchmark Shanghai Composite Index has risen by a further 4.17%, putting the index on track to record its largest two-day percentage gain since early August 2015.

2. Foreigners sold a net 4.01 billion riyals ($1.07 billion) in Saudi stocks in the week ending October 18, exchange data showed on Sunday — one of the biggest selloffs since the market opened to direct foreign buying in mid-2015. The selloff came during a week when investors were rattled by Saudi Arabia's deteriorating relations with foreign governments following the disappearance of journalist Jamal Khashoggi.

3. Over the weekend, Saudi Arabia admitted that Khashoggi died inside their consulate. The Saudi foreign minister denied Crown Prince Mohammed bin Salman had prior knowledge, but many are skeptical of the Kingdom's account.

4. Turkey vowed to expose the "naked truth" about the events surrounding Jamal Khashoggi's death. Turkish President Recep Tayyip Erdogan also cast doubt onto Saudi Arabia's narrative on the incident.

5. US National Security Adviser John Bolton is in Moscow for high-tension talks over plans to withdraw from a nuclear weapons treaty. President Donald Trump said Russia violated terms of the treaty, though Russia has repeatedly denied the allegations.

6. Trump has no intention of de-escalating trade tensions with China, according to Axios, with the president believing instead that more time is required to make "Chinese leaders to feel more pain from his tariffs." According to Axios, one source told them that Trump "wants them to suffer more" from tariffs.

7. U.S. Treasury Secretary Steven Mnuchin dismissed concerns that China's weakest economic growth since the global financial crisis could spill into other emerging markets and destabilize U.S. financial markets. "I am not concerned about that destabilizing our markets," Mnuchin said in an interview with Reuters in Jerusalem at the start of a Middle East visit.

8. BlackRock is betting on the explosive growth of exchange-traded funds, an asset class that has already propelled the firm to become the world's largest asset manager. The ETF market, which includes $4.7 trillion worldwide in assets, could jump to $12 trillion in the next five years, CEO Larry Fink said on the firm's earnings call last week.

9. Goldman Sachs has named veteran banker Todd Leland as its investment banking head for Asia Pacific excluding Japan, according to an internal memo seen by Reuters. The move adds to leadership changes at the bank with CEO David Solomon taking over this month. Leland, an American who joined Goldman in 1992, will replace Andrea Vella and Kate Richdale who were appointed co-heads of the unit in 2015.

10. The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists who said the U.S.-China trade war and tightening financial conditions would trigger the next downturn. At the start of 2018, optimism about a robust global economic outlook was almost unanimous among respondents. But Reuters polls of more than 500 economists taken this month showed a downgrade to the outlook for 18 of 44 economies polled.