Market Roundup
- Oil recovers on U.S. crude stock build
- Gold inches up on weak U.S. data
- ECB's Draghi calls for eurozone stimulus to boost investment
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index nudged up after falling from an over 2-year peak hit in the previous session on worries about a slowing U.S. economy and the possibility of further interest rate cuts in the wake of weak U.S. manufacturing data. The greenback against a basket of currencies traded 0.1 percent up at 99.24, having touched a high of 99.67 on Tuesday, its highest since May 2017.
EUR/USD: The euro steadied after falling to near 2-1/2 year lows in the previous session on data that showed Eurozone inflation slowed in September to near a 3-year low because of cheaper energy, highlighting the challenges facing the European Central Bank. The European currency traded flat at 1.0932, having touched a low of 1.0879 the day before, its lowest since May 2017. Investors’ attention will remain on data out from the Eurozone economies, ahead of the U.S. ADP employment change and Fed Williams' speech. Immediate resistance is located at 1.0966 (38.2% retracement of 1.1109 and 1.0879), a break above targets 1.0994 (50% retracement). On the downside, support is seen at 1.0865, a break below could drag it below 1.0830.
USD/JPY: The dollar consolidated near previous session lows, as investors sentiment weakened after data released overnight showed the U.S. manufacturing sector contracted in September to its weakest level in more than a decade. The Institute for Supply Management stated that its index of U.S. factory activity declined to 47.8, the lowest reading since June 2009, indicating the domestic factory sector is contracting. The major was trading 0.1 percent up at 107.84, having hit a high of 108.46 on Tuesday, its highest since September 19. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change and Fed Williams' speech. Immediate resistance is located at 108.25 (September 13 High), a break above targets 108.47 (September 19 Low). On the downside, support is seen at 107.42 (September 26 Low), a break below could take it near at 107.18 (September 10 Low).
GBP/USD: Sterling declined, reversing most of its previous session gains as investors remained cautious ahead of Prime Minister Boris Johnson unveiling his final Brexit offer to the European Union and make clear that Britain intends to leave the European Union on October 31. The major traded 0.3 percent down at 1.2263, having hit a low of 1.2204 on Tuesday, it’s lowest since September 4. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2362 (21-DMA), a break above could take it near 1.2400. On the downside, support is seen at 1.2233 (September 9 Low), a break below targets 1.2210 (September 5 Low). Against the euro, the pound was trading 0.4 percent down at 89.13 pence, having hit a low of 89.36 the day before, it’s lowest since Sept. 13.
AUD/USD: The Australian dollar edged higher from its lowest level in a decade as the greenback declined on worries about a slowing U.S. economy and the possibility of further interest rate cuts. The Aussie trades 0.1 percent up at 0.6709, having hit a low of 0.6617 on Tuesday, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6687, a break below targets 0.6635. On the upside, resistance is located at 0.6742 (5-DMA), a break above could take it near 0.6799 (August 21 High).
NZD/USD: The New Zealand dollar consolidated near multi-year lows as yesterday's downbeat business confidence data bolstered expectations for monetary easing. The Kiwi trades flat at 0.6243, having touched a low of 0.6203 on Tuesday, its lowest level since September 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6299 (September 23 High), a break above could take it near 0.6362 (September 18 High). On the downside, support is seen at 0.6221, a break below could drag it below 0.6205.
Equities Recap
Asian shares plunged, weighed down by weak economic data in the United States and Europe.
Tokyo's Nikkei fell 0.5 percent to 21,778.61 points, Australia's S&P/ASX 200 index slumped 1.6 percent to 6,639.90 points.
South Korea's KOSPI declined 1.8 percent to 2,035.74 points and Taiwan shares shed 0.2 percent to 10,947.88 points.
Hong Kong’s Hang Seng traded 0.2 percent lower at 26,049.41 points.
Chinese markets will be shut for a week.
Commodities Recap
Crude oil prices rebounded from a near 1-month low after industry data showed a surprise decline in U.S. crude inventories. On Tuesday, American Petroleum Institute (API) data showed U.S. crude stocks fell last week by 5.9 million barrels, against expectations for an increase of 1.6 million barrels. International benchmark Brent crude was trading 0.2 percent up at $59.30 per barrel by 0430 GMT, having hit a low of $58.37 the day before, its lowest since September 12. U.S. West Texas Intermediate was trading 0.6 percent higher at $54.23 a barrel, after falling as low as $53.02 on Tuesday, its lowest since September 3.
Gold prices eased after rising as much as 1 percent in the previous session, as downbeat U.S. manufacturing data stoked fears of a sharp global economic slowdown and fanned bets of further interest rate cuts. Spot gold was trading 0.2 percent down at $1,476.33 per ounce by 0434 GMT, having touched a low of $1,458.97 on Tuesday, its lowest since August 6. U.S. gold futures were down 0.2 percent at $1,485.4 an ounce.
Treasuries Recap
The Japanese government bond prices rallied after manufacturing activity in the United States shrank to its lowest in more than a decade. The benchmark 10-year JGB futures rose 0.36 point to 154.50. The 10-year JGB yield fell 2.5 basis points to minus 0.165 percent, pulling back from a more than two-month high reached on Tuesday. The 20-year JGB yield fell 2 basis points to 0.225 percent, while the 30-year JGB yield fell 1 basis point to 0.395 percent. The five-year yield fell 2.5 basis points to minus 0.320 percent. At the short end of the curve, two-year JGB yields fell 0.5 basis point to minus 0.300 percent, retreating from a two-week high set on Tuesday.
