Market Roundup
- Oil prices still elevated after attacks on Saudi facilities
- Gold steady as investors await Fed outlook
- China's home price growth at weakest in nearly a year
Economic Data Ahead
- (0500 ET/0900 GMT) Germany ZEW Survey- Economic Sentiment September
- (0500 ET/0900 GMT) Germany ZEW Survey- Current Situation September
- (0500 ET/0900 GMT) Eurozone ZEW Survey- Economic Sentiment September
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index rose as investors widely expect a quarter-point rate cut when the Fed issues its next policy statement later on Wednesday, which would be the central bank’s second such cut after lowering rates in July for the first time since 2008. The greenback against a basket of currencies traded 0.1 percent up at 98.73, having touched a low of 97.86 on Friday, its lowest since August 26.
EUR/USD: The euro steadied above the 1.1000 handle after easing in the previous session on doubts over whether the European Central Bank’s new stimulus measures can boost a sluggish economy. The European currency traded 0.1 percent up at 1.1012, having touched a high of 1.1084 on Thursday, its highest since August 29. Investors’ attention will remain on German ZEW Survey and Eurozone Economic Sentiment, ahead of the U.S. capacity utilization, industrial production and NAHB housing market index. Immediate resistance is located at 1.1050 (21-DMA), a break above targets 1.1116 (August 27 High). On the downside, support is seen at 1.0963 (August 30 High), a break below could drag it below 1.0925 (September 3 High).
USD/JPY: The dollar rose to a 1-1/2 month peak, ahead of the Federal Reserve's policy meeting, where it is expected to cut interest rates by 0.25 percentage point. The BoJ will also hold its regular policy meeting, where it is likely to keep policy on hold and prepare to lower short-term rates further into negative territory in the coming months. The major was trading 0.1 percent up at 108.02, having hit a high of 108.37 earlier, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. capacity utilization, industrial production and NAHB housing market index. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.99 (July 10 High). On the downside, support is seen at 107.29 (10-DMA), a break below could take it lower at 106.71 (21-DMA).
GBP/USD: Sterling eased, extending previous session losses after British Prime Minister Boris Johnson following a meeting with European Commission President Jean-Claude Juncker in Luxembourg stated that a Brexit deal is not yet secured. The major traded 0.1 percent down at 1.2411, having hit a high of 1.2504 on Friday, it’s highest since July 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2481 (July 23 High), a break above could take it near 1.2522 (July 24 High). On the downside, support is seen at 1.2322 (10-DMA), a break below targets 1.2251 (21-DMA). Against the euro, the pound was trading 0.2 percent down at 88.61 pence, having hit a high of 88.48 earlier, it’s highest since June 6.
AUD/USD: The Australian dollar plunged to an 11-day low after data showed China’s new home prices grew at their weakest pace in nearly a year in August as a cooling economy and existing curbs on speculative buying dented the overall demand. The Aussie trades traded 0.5 percent down at 0.6830, having hit a low of 0.6831 earlier, it’s lowest since September 6. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6820, a break below targets 0.6807 (September 6 Low). On the upside, resistance is located at 0.6916 (July 31 High), a break above could take it near 0.6955 (July 26 High).
NZD/USD: The New Zealand dollar tumbled to a 2-week low as Chinese regulators vowed to refrain from stimulating the real estate sector. China's average new home prices in 70 major cities rose 8.8 percent in August from a year earlier, compared with a 9.7 percent gain in July and the weakest pace since October 2018. The Kiwi trades 0.2 percent down at 0.6330, having touched a low of 0.6324 earlier, its lowest level since September 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6387 (10-DMA), a break above could take it near 0.6429 (August 20 High). On the downside, support is seen at 0.6304 (August 29 Low), a break below could drag it below 0.6269 (Sept. 3 Low).
Equities Recap
Asian shares eased after data showed China's home price grew at weakest in nearly a year, while the threat of military action over the attacks on Saudi oil facilities dented investor risk appetite.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.6 percent.
Tokyo's Nikkei rose 0.05 percent to 22,001.32 points, Australia's S&P/ASX 200 index rallied 0.3 percent to 6,695.30 points and South Korea's KOSPI surged 0.05 percent to 2,062.33 points.
Shanghai composite index declined 1.7 percent to 2,980.23 points, while CSI 300 index traded 1.6 percent down at 3,894.37 points.
Hong Kong’s Hang Seng traded 1.4 percent lower at 26,734.90 points. Taiwan shares shed 0.2 percent to 10,874.50 points.
Commodities Recap
Crude oil steadied after rising by more than 10 percent in the previous session after an attack on Saudi Arabian crude facilities cut the kingdom’s production in half and fanned fears of retaliation in the Middle East. International benchmark Brent crude was trading 0.5 percent higher at $68.39 per barrel by 0506 GMT, having hit a high of $69.64 on Monday, its highest since May 30. U.S. West Texas Intermediate was trading 0.4 percent up at $62.06 a barrel, after rising as high as $63.33 on Monday, its highest since May 21.
Gold prices steadied as most traders stayed on the sidelines ahead of a widely expected rate cut by the U.S. Federal Reserve later this week. Spot gold was trading flat at $1,498.05 per ounce by 0516 GMT, having touched a low of $1,483.22 last week, its lowest since August 13. U.S. gold futures were down 0.4 percent at $1,505.4 per ounce.
Treasuries Recap
The Australian government bonds jumped during Asian trading session after the release of the Reserve Bank of Australia’s (RBA) September monetary policy meeting minutes, while investors keep a close eye on the country’s employment report for the month of August, scheduled to be released today by 01:30GMT for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 6 basis points to 1.135 percent, the yield on the long-term 30-year bond also slumped nearly 6 basis points to 1.715 percent and the yield on short-term 2-year suffered nearly 4 basis points to 0.887 percent.
The Japanese government bonds closed nearly flat ahead of the Federal Reserve and Bank of Japan’s (BoJ) monetary policy meetings, scheduled for later this week amid an otherwise muted trading session that witnessed data of little economic significance. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, edged tad up to -0.152 percent, the yield on the long-term 30-year hovered around 0.346 percent and the yield on short-term 2-year also gained slightly to -0.240 percent.
