Market Roundup
- Oil prices gain on stimulus support
- Gold hits near 2-week high on dollar weakness
Economic Data Ahead
- (0500 ET/0900 GMT) Italy Consumer Price Index (YoY)(Aug) PREL
- (0500 ET/0900 GMT) Italy Consumer Price Index (EU Norm) (MoM)(Aug) PREL
- (0500 ET/0900 GMT) Italy Consumer Price Index (MoM)(Aug) PREL
- (0500 ET/0900 GMT) Italy Consumer Price Index (EU Norm) (YoY)(Aug) PRE
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index slumped an over 2-year trough as the U.S. Federal Reserve’s new policy framework suggested that interest rates would remain lower for longer. The greenback against a basket of currencies traded percent down at 92.32, having touched a low of 92.15 earlier, its lowest since May 2018.
EUR/USD: The euro rallied to a near 2-week peak, as investors continued to cheer on last week's upbeat data, showing Euro zone’s economic sentiment grew in August for the fourth consecutive month after a record slump caused by COVID-19 lockdowns in March and April. The new pick-up confirmed the gradual rebound from May, driven mostly by higher optimism in the service sector, while the employment expectations indicator continued to improve for the fourth straight month. The European currency traded 0.05 percent higher at 1.1905, having touched a high of 1.1929 earlier, its highest since August 19. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of Fed Clarida's speech and Dallas Fed Manufacturing Business Index. Immediate resistance is located at 1.1942, a break above targets 1.1998. On the downside, support is seen at 1.1868, a break below could drag it below 1.1835 (5-DMA).
USD/JPY: The dollar steadied as risk sentiment improved after data released earlier showed activity in China’s services sector expanded at a much faster pace in August, as demand across the economy continues to recover from a coronavirus-induced slump. On Friday, the pair slumped nearly 1.2 percent to a 1-1/2 week trough as demand for yen surged after Japanese Prime Minister Shinzo Abe announced his resignation. Japan’s Chief Cabinet Secretary Yoshihide Suga is expected to succeed Abe as prime minister. The major was trading 0.3 percent up at 105.62, having hit a low of 105.20 in the prior session, its lowest since August 19. Investors’ will continue to track the broad-based market sentiment, ahead of Fed Clarida's speech and Dallas Fed Manufacturing Business Index. Immediate resistance is located at 106.03 (21-DMA), a break above targets 106.21. On the downside, support is seen at 106.00 (21-DMA), a break below could take it near at 105.74.
GBP/USD: Sterling rallied to an 8-month peak on the greenback’s weakness in the aftermath of Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole, which stoked expectations of lower interest rates for longer. The British pound remained relatively steady against the euro, as most traders remained on the sidelines amid Brexit uncertainty. The major traded at 1.3338, having hit a high of 1.3333 earlier, it’s highest since December 2019. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3392, a break above could take it near 1.3422. On the downside, support is seen at 1.3301, a break below targets 1.3267. Against the euro, the pound was trading 0.1 percent down at 89.23 pence, having hit a high of 89.08 on Friday, it’s highest since May 15.
AUD/USD: The Australian dollar plunged from an over 1-1/2 year peak scaled earlier in the session despite better-than-forecast China PMI data. China's non-manufacturing Purchasing Managers’ Index (PMI) rose to 55.2 from 54.2 in July, while August composite PMI, which includes both manufacturing and services activity, rose to 54.5 from July’s 54.1. The Aussie trades 0.3 percent lower at 0.7344, having hit a high of 0.7381 earlier, it’s highest since December 2018. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7410, a break above could take it near 0.7453. On the downside, support is seen at 0.7323 (23.6% retracement of 0.7135 and 0.7381), a break below targets 0.7287 (38.2% retracement).
NZD/USD: The New Zealand dollar jumped to an 8-month peak as the U.S. dollar consolidated near multi-year lows against a basket of currencies after Federal Reserve Chair Jerome Powell outlined an accommodative shift in the U.S. central bank’s approach to inflation. The Kiwi trades at 0.6735, having touched a high of 0.6751 earlier, its highest level since December 2019. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6776, a break above could take it near 0.6790. On the downside, support is seen at 0.6700, a break below could drag it below 0.6682.
Equities Recap
Asian shares surged to an over 2-year high as investors wagered monetary and fiscal policies globally would stay super stimulatory for a protracted period, while an upbeat reading on China’s service sector also boosted investor risk appetite.
MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 0.2 percent to reach its highest since March 2018.
Tokyo's Nikkei surged 1.2 percent to 23,163.27 points, Australia's S&P/ASX 200 index fell 0.1 percent to 6,068.00 points. South Korea's KOSPI plunged 0.8 percent to 2,334.38 points.
Shanghai composite index rose 0.7 percent to 3,427.81 points, while CSI 300 index traded 0.6 percent up at 4,871.64 points.
Hong Kong’s Hang Seng traded 0.8 percent higher at 25,621.61 points. Taiwan shares shed 1.1 percent to 12,591.45 points.
Commodities Recap
Crude oil prices surged as global stimulus measures underpinned prices even as demand struggles to return to pre-COVID levels in a well supplied market. International benchmark Brent crude was trading 0.5 percent up at $46.07 per barrel by 0440 GMT, having hit a high of $46.14 earlier, its highest since August 5. U.S. West Texas Intermediate was trading 0.5 percent up at $43.13 a barrel, after rising as high as $43.75 on Wednesday, its highest since March 6.
Gold prices rose, hovering towards a 1-1/2 week peak scaled last week as the dollar weakened and the U.S. Federal Reserve’s new policy framework suggested that interest rates would remain low for some time. Spot gold was trading 0.3 percent higher at $1,971.43 per ounce by 0443 GMT, having hit a high of $1977.18 on Thursday, its highest since August 19. However, gold was sill down 0.2 percent so far this month. U.S. gold futures rose 0.2 percent to $1,978.70.
Treasuries Recap
The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.723 percent.
