Market Roundup
- Oil eases as demand worries revive
- Gold plunges as dollar rises on Fed's upbeat economic view
Economic Data Ahead
- (0500 ET/0900 GMT) EZ Consumer Price Index (MoM)(Aug)
- (0500 ET/0900 GMT) EZ Consumer Price Index (YoY)(Aug)
- (0500 ET/0900 GMT) EZ Consumer Price Index - Core (YoY)(Aug)
- (0500 ET/0900 GMT) EZ Consumer Price Index - Core (MoM)(Aug)
- (0500 ET/0900 GMT) EZ Construction Output w.d.a (YoY)(Jul)
- (0500 ET/0900 GMT) EZ Construction Output s.a (MoM)(Jul)
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index jumped to a 1-week peak, after the Federal Reserve said it would keep rates near zero until inflation moderately exceeds the U.S. central bank’s 2 percent inflation target. The new economic projections showed policymakers now see the economic growth dropping 3.7 this year, far less than the 6.5 percent decline projected in June. The greenback against a basket of currencies traded 0.3 percent up at 93.42, having touched a high of 93.59 earlier, its highest since September 9.
EUR/USD: The euro plunged to an over 1-month low as focus remains on dovish comments from European Central Bank officials after the bank delivered a more hawkish than expected message after its policy meeting last week. The European currency traded 0.5 percent down at 1.1759, having touched a low of 1.1737 earlier, its lowest since August 12. Investors’ attention will remain on a series of data from the Eurozone economies and EZ consumer price index and construction output data, ahead of the U.S. building permits, housing starts, unemployment benefit claims and Philadelphia Fed Manufacturing Survey. Immediate resistance is located at 1.1829 (21-DMA), a break above targets 1.1863. On the downside, support is seen at 1.1710, a break below could drag it below 1.1680.
USD/JPY: The dollar rebounded from a 1-1/2 month low recorded in the previous session, after the Federal Reserve kept interest rates pinned near zero and said it expects the U.S. economic recovery from the coronavirus crisis to accelerate with unemployment declining faster than the central bank expected in June. The major was trading 0.1 percent higher at 105.27, having hit a low of 104.79 on Wednesday, its lowest since July 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits, housing starts, unemployment benefit claims and Philadelphia Fed Manufacturing Survey. Immediate resistance is located at 105.28, a break above targets 105.54. On the downside, support is seen at 104.68, a break below could take it near at 104.51.
GBP/USD: Sterling declined, hating a 3-day rally as investors focus on the fraught trade talks between Britain and the European Union. Investors now await the Bank of England’s policy meeting later in the day, where it is likely to keep interest rates on hold and not expected to change the limit of its quantitative easing. The major traded 0.3 percent down at 1.2928, having hit a high of 1.3007 the day before, it’s highest since September 10. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3035, a break above could take it near 1.3064. On the downside, support is seen at 1.2860 (5-DMA), a break below targets 1.2814. Against the euro, the pound was trading 0.1 percent up at 91.00 pence, having hit a high of 90.94 on Wednesday, it’s highest since September 10.
AUD/USD: The Australian dollar slumped after rising to a 2-week peak in the prior session, after the Federal Reserve pledged to keep interest rates low for a long time but stopped short of offering further on stimulus to boost the U.S. economy. The major initially surged following surprisingly robust jobs data, but soon fell back as the greenback rallied across the board. Australia’s unemployment rate unexpectedly slipped from a 22-year high in August to 6.8 percent, while employment surged by 111,000 in August. The Aussie trades 0.4 percent down at 0.7274, having hit a high of 0.7345 on Wednesday, it’s highest since September 2. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7335, a break above could take it near 0.7366. On the downside, support is seen at 0.7240, a break below targets 0.7209.
NZD/USD: The New Zealand dollar tumbled from a near 2-week high, as the U.S. dollar advanced after the U.S. Federal Reserve announced no new aggressive easing measures at the end of its policy meeting. The Kiwi traded 0.6 percent lower at 0.6691, having touched a high of 0.6759 on Wednesday, its highest level since September 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6760, a break above could take it near 0.6789. On the downside, support is seen at 0.6659 (21-DMA), a break below could drag it below 0.6632.
Equities Recap
Asian shares declined as the dollar surged after the Fed's new economic projections showed most policymakers see interest rates on hold through to at least 2023.
MSCI’s broadest index of Asia-Pacific shares outside Japan tumbled 0.8 percent.
Tokyo's Nikkei fell 0.6 percent to 23,333.27 points, Australia's S&P/ASX 200 index dropped 1.1 percent to 5,889.80 points. South Korea's KOSPI eased 1.1 percent to 2,409.51 points.
Shanghai composite index declined 0.1 percent to 3,280.18 points, while CSI 300 index traded 0.2 percent down at 4,650.01 points.
Hong Kong’s Hang Seng traded 1.4 percent lower at 24,388.65 points. Taiwan shares shed 0.8 percent to 12,872.74 points.
Commodities Recap
Crude oil prices declined after rising to a 1-week peak in the prior session amid renewed concerns about weak fuel demand after Hurricane Sally passed through the Gulf of Mexico into the southeastern United States. International benchmark Brent crude was trading 1.4 percent down at $41.68 per barrel by 0448 GMT, having hit a high of $42.41 on Wednesday, its highest since September 4. U.S. West Texas Intermediate was trading 1.4 percent lower at $39.57 a barrel, after rising as high as $40.32 the day before, its highest since September 4.
Gold prices slumped more than 1 percent as the dollar surged after the U.S. Federal Reserve painted a favourable economic recovery picture but stopped short of offering concrete signals on further stimulus. Spot gold was trading 1.05 percent down at $1,941.20 per ounce by 0451 GMT, having hit a high of $1973.78 on Wednesday, its highest since September 2. U.S. gold futures eased 1 percent to $1,951.30.
Treasuries Recap
The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.677 percent.
The Australian government bond futures were flat at the longer end, with the 10-year contract steady at 99.08, while the 3-year bond contract declined 1 tick to 99.725.
The New Zealand government bonds extended previous session rally, with the yield on 10-year debt falling 1.3 basis points to 0.595 percent and 5-year yields edged down to a record-low 0.028 percent.
