openmust SocGen US 10y cash yield touched 1.80%, the 200d ma and swaps hit a 1.8625% high in Asia as equities push on

trading ranges and outlook from SocGen:

MARKET REVIEW - FOREX

EUR/USD 1.3088-1.3131 overnight range. Quiet in a narrow range overnight as we await EU summit headlines. The 1.3140 high keeps spot within reach of the 1.3172 high of September. Merkel speech also in focus. 1mth RR climb above -0.20.

USD/JPY 78.76-79.22 overnight range. Big push higher overnight with follow through buying linked to hope of further BoJ easing, government stimulus and China data. Resistance 79.40, the 200d ma. EUR/JPY approaching 103.85, the Sep high.

GBP/USD 1.6124-1.6159 overnight range. MPC minutes keep QE on the table for November meeting, but more polarised views make a split vote possible. Retail sales due this morning, but profit taking could be in the offing. Support 1.6104.

AUD/USD 1.0366-1.0397 overnight range. The surge through the 50d/200d ma leaves bulls contemplating further upside backed by China data and AUD buying for corporate tax purposes (payment due 22 Oct). GBP/AUD in corrective mood.
MARKET REVIEW - RATES

EU 10y swaps touched a 1.9070% high overnight, extending the move since Monday to 17bp. EU summit headlines and the Spanish auction will set the tone today. Post EU summit disappointment is not unusual and could see stronger receiving interest emerge. Support 1.80%. 10y swap spread tightens to 23bp, -6bp since Monday.

US 10y cash yield touched 1.80%, the 200d ma and swaps hit a 1.8625% high in Asia as equities push on. Busy data ahead features initial claims (correction from last week's drop to 339k?) and the Philly Fed. Support swaps at 1.7765%.
TO WATCH OUT FOR TODAY

Outlook

The question now is whether risk appetite will continue after the summit. Has everything really been pre-announced? If no new measure is presented, whether on Greece, Spain, the banking union project or a economic/budgetary union, risk-on strategies could quickly lose steam. Let's just hope that in this event the ongoing hope that Spain will ask for aid over the next few weeks will stem the decline of the EUR/USD and EUR swap rates. The EUR/USD will have to break the 1.28/1.3175 range for us to have better visibility. For 10Y EUR swap rates, the levels to follow stand at 1.97% and 1.66%, respectively.

Today the pickup in UK retail sales should add to the list of positive surprises published recently in the UK. Will the same be true of the USA? Initial claims and the Philly Fed will be all the more important as 10Y US swap rates are close to a resistance level at 1.82% (200DMA).