Market Roundup
- China's record trade surplus with U.S. adds fuel to trade war fire
- Stronger U.S. economy may warrant "restrictive" rates -Boston Fed's Rosengren
- Japan PM Abe: will proceed with sales tax hike as planned
- China to fend off any "black swan" events in its financial markets
- Sweden faces political deadlock after gains by far-right party
- U.S. energy chief to meet Russian, Saudi counterparts ahead of Iran sanctions
- China Aug CPI yy, +2.3% vs poll +2.2%, prev +2.1%
- China Aug PPI yy, +4.1% vs poll +4.0%, prev +4.6%
- China Aug trade surplus, $27.91 bln vs July $28.05 bln
- Japan Q2 GDP revised to annualised +3.0% vs prelim +1.9%
- Japan Q2 Capex revised up to +3.1 pct q/q vs prelim +1.3 pct
- Australia's housing downturn unlikely to hit banking stability – RBA
- Australian govt under threat as voters punish political infighting
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jul GDP Estimate MM, 0.2% f'cast, 0.1% prev
- (0430 ET/0830 GMT) Great Britain Jul GDP Estimate YY, 1.4% f'cast, 1.3% prev
- (0430 ET/0830 GMT) Great Britain Jul Industrial Output YY, 1.1% f'cast, 1.1% prev
- (0430 ET/0830 GMT) Great Britain Jul Manufacturing Output YY, 1.5% f'cast, 1.5% prev
- (0430 ET/0830 GMT) Great Britain Jul Goods Trade Balance GBP, -11.75 bln f'cast, -11.38 bln prev
- (0430 ET/0830 GMT) Great Britain Jul Goods Trade Bal Non-EU GBP, -3.30 bln f'cast, -2.94 bln prev
- (0430 ET/0830 GMT) EZ Sep Sentix Index, 14.6 f'cast, 14.7 prev
Key Events Ahead
- (1200 ET/1600 GMT) Fed's Raphael Bostic speaks on the economic outlook at a fireside chat before the Albany Chamber of Commerce in Albany, Georgia
FX Beat
DXY: The dollar index rallied to a 5-day peak after data released on Friday showed U.S. job growth accelerated in August and wages recorded their largest annual gain in more than nine years further boosting the prospect of the Federal Reserve hiking rates a third time this year in late September. The greenback against a basket of currencies trades 0.1 percent up at 95.46, having touched a high of 95.50 earlier, its highest since September 5. FxWirePro's Hourly Dollar Strength Index stood at 39.38 (Neutral) by 0400 GMT.
EUR/USD: The euro fell to an over 2-week low as the greenback surged after data showed U.S. job growth gained momentum in August further supporting the prospect of faster rate rises by the Federal Reserve. The European currency traded 0.1 percent down at 1.1543, having touched a low of 1.1539 earlier, its lowest since Aug 24. FxWirePro's Hourly Euro Strength Index stood at -116.74 (Highly Bearish) by 0400 GMT. Investors’ attention will remain on Eurozone Sentix confidence, ahead of the U.S. consumer credit change and FOMC member Raphael W. Bostic's speech. Immediate resistance is located at 1.1600 (5-DMA), a break above targets 1.1689 (August 31 High). On the downside, support is seen at 1.1500, a break below could drag it till 1.1465.
USD/JPY: The dollar eased against the Japanese yen, after U.S. President Donald Trump threatened tariffs on another $267 billion worth of Chinese imports, in addition to the $200 billion already facing the risk of duties. In response, Beijing has warned of retaliation if Washington launches any new measures, raising concerns it could weaken the yuan or take action against U.S. companies in China. The major was trading 0.1 percent down at 110.95, having hit a low of 110.38 on Friday, its lowest since August 22. FxWirePro's Hourly Yen Strength Index stood at 150.05 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. consumer credit change and FOMC member Raphael W. Bostic's speech. Immediate resistance is located at 111.17 (10-DMA), a break above targets 111.48 (August 24 Low). On the downside, support is seen at 110.68 (August 31 Low), a break below could take it lower 110.31 (August 17 Low).
GBP/USD: Sterling eased, extending losses for the previous session, amid growing concerns that Britain could leave the European Union without a deal in March 2019. The major traded flat at 1.2912, having hit a high of 1.3028 on Friday; it’s highest since August 31. FxWirePro's Hourly Sterling Strength Index stood at 13.98 (Neutral) 0400 GMT. Investors’ attention will remain on UK industrial and manufacturing production, trade balance, gross domestic product and NIESR GDP estimate, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.2982 (September 5 High), a break above could take it near 1.3043 (August 30 High). On the downside, support is seen at 1.2855 (September 3 Low), a break below targets 1.2799 (August 24 Low). Against the euro, the pound was trading 0.1 percent down at 89.42 pence, having hit a high of 89.13 on Friday, it’s highest since August 15.
AUD/USD: The Australian dollar consolidated near a 30-month low after data showed China's producer inflation cooled in August on softening domestic demand, as escalated Trump's trade war with Beijing heightened risks to the world's second-biggest economy. The Aussie trades 0.1 percent up at 0.7107, having hit a low of 0.7098 on Friday; it’s lowest since Feb 2016. FxWirePro's Hourly Aussie Strength Index stood at -89.31 (Slightly Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7070, a break below targets 0.7035. On the upside, resistance is located at 0.7160 (23.6% retracement of 0.7362 and 0.7098), a break above could take it near 0.7199 (38.2% retracement).
NZD/USD: The New Zealand dollar plunged to a 30-month low earlier in the session, as the risk of a deepening U.S.-China tariff war prompted investors to seek safety in safe-haven assets. The Kiwi trades 0.2 percent down at 0.6517, having touched a low of 0.6512, its lowest level since Feb. 2016. FxWirePro's Hourly Kiwi Strength Index was at -100.87 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6562 (23.6% retracement of 0.6727 and 0.6512), a break above could take it near 0.6593 (38.2% retracement). On the downside, support is seen at 0.6473, a break below could drag it below 0.6439.
Equities Recap
Asian shares tumbled, extending losses for the eighth straight session, amid concerns of a potentially major escalation in the U.S.-China trade conflict.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.6 percent.
Tokyo's Nikkei rose 0.2 percent to 22,350.77 points, Australia's S&P/ASX 200 index plunged 0.05 percent to 6,142.00 points, and South Korea's KOSPI gained 0.2 percent to 2,286.81 points.
Shanghai composite index fell 0.8 percent to 2,679.98 points, while CSI300 index traded 1.2 percent down at 3,239.70 points.
Hong Kong’s Hang Seng traded 1.3 percent lower at 26,635.18 points. Taiwan shares shed 1.1 percent to 10,725.80 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, as U.S. drilling for new production stalled, while investors awaited tighter conditions once U.S. sanctions against Iran's crude exports come in effect from November. International benchmark Brent crude was trading 0.3 percent up at $77.25 per barrel by 0440 GMT, having hit a low of $75.67 on Thursday, its lowest since August 27. U.S. West Texas Intermediate was trading 0.4 percent higher at $68.14 a barrel, after falling as low as $66.89 on Friday, its lowest since August 22.
Gold prices fell to a 5-day low as the dollar steadied amid expectations of a U.S. Federal Reserve interest rate hike in September and concerns of escalating trade tensions between the United States and China. Spot gold was 0.2 percent down at $1,193.03 at 0444 GMT, having touched a high of $1,126.88 on Thursday, its highest since August 31. U.S. gold futures were almost flat at $1,200.30 an ounce.
Treasuries Recap
The Japanese government bonds fell during Asian session after the country’s final gross domestic product (GDP) for the second quarter of this year cheered market participants. Investors will now wait to watch the country’s super-long 30-year auction, scheduled to be held on September 11 for further direction in the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded 1/2 basis point higher at 0.114 percent, the yield on the long-term 30-year note also remained tad higher at 0.849 percent and the yield on short-term 2-year hovered around -0.108 percent.
The Australian bonds plunged on the first trading day of the week, tracking strong rise in wages in the United States over the past week. Investors will now be eyeing the country’s employment data for the month of August, scheduled to be released by end of this week for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4 basis points to 2.588 percent, the yield on the long-term 30-year bonds climbed 3 basis points 3.084 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at 2.015 percent.
