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News & Views: Friday, November 7

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What you need to know for today's trading day.

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This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time.

Ukraine Says 32 Tanks Cross Border as Tensions Intensify (Bloomberg)

Things to Watch in the October Jobs Report (WSJ)

Home Depot says about 53 million email addresses stolen in breach (Reuters)

Bank of America Takes $400 Million Legal Charge for Currency Inquiry (NYTimes)

Yuan Fixing Cut Most Since March This Week Amid Dollar Advance (Bloomberg)

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The Russian Ruble (RUB) is top performing asset overnight on a risk-adjusted basis. Local bank VTB Capital said this morning that the 30% drop year-to-date is now a financial stability risk and will cause the Bank of Russia to step up and make "sizable" FX interventions. Separately, Russian armored vehicles have crossed the Ukrainian border, presumably to help the separatists fight off any advance by government forces. Ukraine's government forces are now closing in on the Luhansk airport.

The South Korean Won (KRW) is the weakest performing asset overnight on a risk-adjusted basis. This is due to comments by the Bank of Korea's Governor Lee that said the central bank won't just do nothing on the weakening yen. Presumably that is another rate cut, active FX interventions, or financing lines.

The People's Bank of China (PBoC) lowered its yuan fixing by 0.06% today, and the cut this week is the largest since March, in an attempt to try and offset the rally in the dollar. It is the second worst performing currency overnight behind the drop in the Won. This move is ultimately no different from what the Bank of Korea is trying to accomplish by weakening its currency.

Small ranges for most risk assets overnight in anticipation of the US jobs report. Interestingly, the Italian FTSEMIB and Spanish IBEX are respectively showing the largest negative risk-adjusted return in equities for the second straight day. These two countries' indices are largely made up of bank stocks, which would benefit the most from a further easing of financial conditions by the ECB.

Data:
- Swiss unemployment rate up to 3.1% vs 3.1% expected, prior 3.0%
- German trade balance (Sep) widens to 21.9B EUR vs 19B exp, prior 14B
- German industrial production MoM (Sep) up 1.4% vs 2.0% exp, prior -3.1%
- UK trade balance (Sep) widens -4B GBP vs -3.7B exp, prior -3.7B

Twitter: @MichaelSedacca

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No positions in stocks mentioned.

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