Market Roundup
- Summary highlights BOJ's dilemma as board debates policy tweaks
- Fed's Powell says short-term U.S. recession risks are not high
- With anger and tears, Trump court pick denies sex assault allegation
- Britons would narrowly back remaining in the EU -poll of polls
- UK consumers worry about onset of Brexit – GfK
- Japan Aug Industrial Output prelim, 0.7%, 1.5% f'cast, -0.2% prev
- Japan Sep CPI Tokyo Ex fresh food y/y, 1.0%, 0.9% f'cast, 0.9% prev
- Japan Sep CPI Overall Tokyo, 1.3%, 1.2% prev
- Japan Aug Retail Sales y/y, 2.7%, 2.1% f'cast, 1.5% prev
- Australia Aug Private Sector Credit, 0.5%, 0.4% prev
- Australia Aug Housing Credit, 0.4%, 0.4% prev
- U.S. muni bond funds post $384.8 mln in outflows-Lipper
- Foreign CB US debt holdings +$12.473 bln to $3.438 tln Sep 26 week
- Treasuries +$12.303 bln to $3.063 tln, agencies +$302 mln to $305.742 bln
Economic Data Ahead
- (0330 ET/0730 GMT) Great Britain Q2 GDP q/q, 0.4% f'cast, 0.4% prev
- (0330 ET/0730 GMT) Great Britain Q2 GDP y/y, 1.3% f'cast, 1.3% prev
- (0330 ET/0730 GMT) Great Britain Q2 Current Account (GBP), -19.40 bln f'cast, -17.72 bln prev
- (0355 ET/0755 GMT) Germany Sep Unemployment Chg SA, -9k f'cast, -8k prev
- (0355 ET/0755 GMT) Germany Sep Unemployment Rate SA, 5.2% f'cast, 5.2% prev
- (0400 ET/0900 GMT) EU Sep HICP Flash y/y, 2.1% f'cast, 2.0% prev
- (0400 ET/0900 GMT) EU Sep HICP-X F&E Flash y/y, 1.2% f'cast, 1.2% prev
Key Events Ahead
- (0400 ET/0800 GMT) BoE Executive Director Alex Brazier gives a speech at Conference on ‘Non-bank Financial Institutions and Financial Stability' in London
- (0700 ET/1100 GMT) Riksbank General Council Meeting
- (0830 ET/1230 GMT) Federal Reserve Bank of Richmond President Thomas Barkin speaks before the "Banking and the Economy: a Forum for Minorities in Banking" in Charlotte
- (0835 ET/1235 GMT) ECB chief economist Peter Praet attends a panel discussion on "Macroprudential policy in recovering economies" at the 3rd Annual ESRB conference in Frankfurt
- (0920 ET/1320 GMT) Bank of England Deputy Governor, Markets and Banking Dave Ramsden gives a speech at Society of Professional Economists Annual Conference, London
FX Beat
DXY: The dollar index surged to an over 2-week peak after Fed Chairman Jerome Powell stated that the U.S. does not face a large chance of near-term recession and the central bank plans to keep gradually raising interest rates. The greenback against a basket of currencies trades flat at 94.97, having touched a high of 95.02, its highest since September 12. FxWirePro's Hourly Dollar Strength Index stood at 91.44 (Slightly Bullish) by 0300 GMT.
EUR/USD: The euro consolidated near a 2-week low touched earlier in the day, after Italy set its budget deficit target at 2.4 percent of gross domestic product for the next three years on Thursday, defying European Union as economy minister Giovanni Tria had initially wanted a deficit set as low as 1.6 percent next year. The European currency traded flat at 1.1643 having touched a low of 1.1633 earlier, its lowest since September 17. FxWirePro's Hourly Euro Strength Index stood at -62.85 (Bearish) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, EZ prelim consumer price index, and ECB Praet's speech, ahead of the U.S. personal consumption expenditures-price index and Michigan consumer sentiment index. Immediate resistance is located at 1.1698 (September 17 High), a break above targets 1.1757 (September 27 High). On the downside, support is seen at 1.1617 (September 17 Low), a break below could drag it till 1.1570 (September 12 Low).
USD/JPY: The dollar rallied to a 9-month peak against the safe-haven Japanese yen after data showed U.S. gross domestic product grew at a 4.2 percent pace in the second quarter, the fastest in nearly four years, reinforcing upbeat views about the U.S. economy and supporting the Federal Reserve's signal for a steady course of rate increases over the next year. The major was trading 0.2 percent up at 113.52, having hit a high of 113.63 earlier, its highest since Dec 21. FxWirePro's Hourly Yen Strength Index stood at 13.38 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. personal consumption expenditures-price index and Michigan consumer sentiment index. Immediate resistance is located at 113.71 (Nov 13 High), a break above targets 114.00 (Nov 8 High). On the downside, support is seen at 112.87 (5-DMA), a break below could take it lower 112.42 (September 21 Low).
GBP/USD: Sterling slumped to a 1-week low as investors continue to remain nervous about the outcome of negotiations on the terms of Britain's planned exit from the European Union. The major traded flat at 1.3083, having hit a low of 1.3072 earlier; it’s lowest since September 21. FxWirePro's Hourly Sterling Strength Index stood at -2.41 (Neutral) 0400 GMT. Investors’ attention will remain on UK gross domestic product, business investment figures, current account, and BoE Ramsden's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3139 (10-DMA), a break above could take it near 1.3193 (September 25 High). On the downside, support is seen at 1.3055 (September 21 Low), a break below targets 1.3026 (September 13 Low). Against the euro, the pound was trading flat at 89.01 pence, having hit a high of 88.84 on Thursday, it’s highest since September 21.
AUD/USD: The Australian dollar steadied after falling to a 10-day low earlier in the session, amid divergent monetary policy outlook between the Federal Reserve and the Reserve Bank of Australia. The Fed is likely to raise interest rate at least three more times, while no move from the RBA is expected until early 2020. The Aussie trades 0.1 percent up at 0.7212, having hit a low of 0.7202 earlier; it’s lowest since September 18. FxWirePro's Hourly Aussie Strength Index stood at -47.99 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7175 (August 31 Low), a break below targets 0.7144 (September 18 Low). On the upside, resistance is located at 0.7250 (5-DMA), a break above could take it near 7292 (September 30 High)
NZD/USD: The New Zealand dollar plunged to an over 1-week trough as the Reserve Bank of New Zealand reiterated its intention to keep rates at a record low of 1.75 percent until 2020, while the Federal Reserve tightened monetary policy and stuck to its intention of hiking interest rates at a steady pace. The Kiwi trades 0.1 percent down at 0.6606, having touched a low of 0.6598, its lowest level since September 19. FxWirePro's Hourly Kiwi Strength Index was at -16.36 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6647 (5-DMA), a break above could take it near 0.6727 (August 28 High). On the downside, support is seen at 0.6593 (September 3 Low), a break below could drag it below 0.6561 (September 18 Low).
Equities Recap
Asian shares advanced following gains on Wall Street overnight as news of robust U.S. economic growth supported Federal Reserve’s plans to steadily tighten monetary policy.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.
Tokyo's Nikkei rallied 1.3 percent to 24,098.92 points, Australia's S&P/ASX 200 index rose 0.7 percent to 6,224.10 points, and South Korea's KOSPI fell 0.4 percent to 2,345.81 points.
Shanghai composite index surged 1.03 percent to 2,819.85 points, while CSI300 index traded 1.1 percent up at 3,439.51 points.
Hong Kong’s Hang Seng traded 0.6 percent higher at 27,876.44 points. Taiwan shares shed 0.3 percent to 11,006.34 points.
Commodities Recap
Crude oil prices declined, as investors tried to gauge the potential impact on supply from looming U.S. sanctions on Iran's crude exports. International benchmark Brent crude was trading 0.2 percent down at $81.42 per barrel by 0421 GMT, having hit a high of $82.52 on Tuesday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.1 percent up at $72.22 a barrel, after rising as high as $72.73 on Tuesday, its highest since July 11.
Gold prices nudged up after falling to near 6-week lows in the previous session, as the dollar surged after upbeat U.S. economic data supported the Federal Reserve's resolve for steady interest rate hikes over the next year. Spot gold was 0.2 percent up to $1,184.53 by 0425 GMT, having hit a low of $1181.80 on Thursday, its lowest since August 17 and was about 1.3 percent down for the week, on track for its fourth weekly decline in five. U.S. gold futures were flat at $1,187.30 an ounce.
Treasuries Recap
The Japanese government bond prices fell on the last trading day of the week after the country’s retail sales for the month of August beat market expectations and the unemployment rate also came in lower than previous, adding to gains in debt yields, as investors shifted away from safe-haven assets. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1/2 basis point to 0.129 percent, the yield on the long-term 30-year note climbed nearly 1-1/2 basis points to 0.907 percent and the yield on short-term 2-year remained flat at -0.112 percent.
The Australia government bonds surged during Asian session amid a silent trading session that witnessed domestic data of little economic significance. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.675 percent, the yield on the long-term 30-year bond plunged 2-1/2 basis points to 3.160 percent and the yield on short-term 2-year too traded nearly 2 basis points lower at 2.042 percent.
The Canadian government bond prices were mixed across the yield curve, with the 10-year rising 1 Canadian cent to yield 2.415 percent.
