Market Roundup
- China Aug Caixin/Markit Mfg PMI, 50.6, 50.8 prev
- Trade war could force heavier hand from China on yuan
- Amid US trade war, China's Xi reiterates reform commitment
- Investors in China prepare for MSCI part-2, armed with wishlist
- Trump says Canada not needed in NAFTA deal, warns Congress not to interfere
- Japan Aug Markit/Nikkei Mfg PMI SAR 52.5, 52.3 prev
- Japan Q2 capex +12.8% yy, seasonally-adjusted +6.9% qq
- Japan Manufacturers' capex +19.8% yy, non-manufacturers +9.2%
- Wary Australian consumers dampen July retail sales, point to cautious Q3
- UK PM May stands firm on her Brexit plan, but scepticism persists
- Italians come before ratings agencies, deputy PM says
Economic Data Ahead
- (0315 ET/0715 GMT) Spain Aug Manufacturing PMI, 52.5 f'cast, 52.9 prev
- (0345 ET/0745 GMT) Italy Aug Markit/ADACI Mfg PMI, 51.1 f'cast, 51.5 prev
- (0350 ET/0750 GMT) France Aug Markit Mfg PMI, 53.7 f'cast, 53.7 prev
- (0355 ET/0755 GMT) Germany Aug Markit/BME Mfg PMI, 56.1 f'cast, 56.1 prev
- (0400 ET/0800 GMT) EZ Aug Markit Mfg Final PMI, 54.6 f'cast, 54.6 prev
- (0430 ET/0830 GMT) Great Britain Aug Markit/CIPS Mfg PMI, 53.8 f'cast, 54.0 prev
- (1901 ET/2301 GMT) Great Britain Aug BRC Retail Sales YY, 0.50% prev
Economic Events Ahead
- (0520 ET/0920 GMT)Participation by ECB's Yves Mersch on a panel "The strategy for Europe?" at Reinventing Breton Woods conference "Dialogue of Continents" in Paris
- (0900 ET/1300 GMT) German Chancellor Angela Merkel and Finance Minister Olaf Scholz meet social partners in guest house Meseberg Palace in Gransee, Berlin
FX Beat
DXY: The dollar index trimmed gain after rising to a 1-week peak earlier in the day as Trump notifies Congress of his intent to sign a bilateral deal with Mexico after talks between Washington and Ottawa soured. The greenback against a basket of currencies trades flat at 95.11, having touched a high of 95.22, its highest since August 27. FxWirePro's Hourly Dollar Strength Index stood at 4.03 (Neural) by 0500 GMT.
EUR/USD: The euro steadied as the greenback eased amid heightened fears of a prolonged trade war. On Friday, the major fell to an over 1-week low below the 1.1600 handle, after rating agency Fitch downgraded Italy's debt outlook to negative, citing concerns about the government's promises to hike spending. The European currency traded 0.1 percent up at 1.1612, having touched a low of 1.1584 on Friday, its lowest since Aug 24. FxWirePro's Hourly Euro Strength Index stood at -5.92 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone Markit manufacturing PMI, as U.S. markets remain closed on the account of labour day. Immediate resistance is located at 1.1670 (5-DMA), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1584 (21-DMA), a break below could drag it till 1.1550.
USD/JPY: The dollar eased after U.S. President Donald Trump on Saturday stated there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with the trade talks. The major was trading 0.1 percent down at 110.89, having hit a low of 110.68 on Friday, its lowest since August 23. FxWirePro's Hourly Yen Strength Index stood at 42.34 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, amid a lack of economic data from the U.S. docket. Immediate resistance is located at 111.31 (August 23 High), a break above targets 111.82 (August 29 High). On the downside, support is seen at 110.70 (August 9 Low), a break below could take it lower 110.43 (August 15 Low).
GBP/USD: Sterling slumped after the European Union's chief Brexit negotiator Michel Barnier stated that he is strongly opposed to the U.K. government's Chequers proposals on future trade and warned European manufacturers that the streamlined system of imports and exports between the UK and the rest of Europe would come to an end. The major traded 0.3 percent down at 1.2913, having hit a high of 1.3042 on Thursday; it’s highest since August 3. FxWirePro's Hourly Sterling Strength Index stood at 9.86 (Neutral) 0500 GMT. Immediate resistance is located at 1.3083 (July 19 High), a break above could take it near 1.3159 (July 24 High). On the downside, support is seen at 1.2856 (21-DMA), a break below targets 1.2799 (August 24 Low). Against the euro, the pound was trading 0.4 percent down at 89.88 pence, having hit a high of 89.38 on Friday, it’s highest since August 17.
AUD/USD: The Australian dollar rebounded after falling to an 8-month low earlier in the session, as investors remained wary of emerging market currencies. The Aussie trades 0.1 percent up at 0.7194, having hit a low of 0.7166 earlier; it’s lowest since Dec. 29. FxWirePro's Hourly Aussie Strength Index stood at -74.50 (Bearish) by 0500 GMT. Immediate support is seen at 0.7150, a break below targets 0.7100. On the upside, resistance is located at 0.7213 (23.6% retracement of 0.7362 and 0.7166), a break above could take it near 0.7241 (38.2% retracement).
NZD/USD: The New Zealand dollar declined to a 2-week low amid strains in emerging market currencies and the lingering threat of a U.S.-China trade war. The Kiwi trades 0.1 percent down at 0.6614, having touched a low of 0.6593, its lowest level since August 17. FxWirePro's Hourly Kiwi Strength Index was at -78.01 (Slightly Bearish) by 0500 GMT. Immediate resistance is located at 0.6658 (21-DMA), a break above could take it near 0.6701 (August 23 High). On the downside, support is seen at 0.6579 (August 17 Low), a break below could drag it below 0.6519.
Equities Recap
Asian shares slumped, weighed down by unstable emerging market currencies and worries over the further escalation of the U.S-China trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.8 percent.
Tokyo's Nikkei declined 0.7 percent to 22,707.38 points, Australia's S&P/ASX 200 index plunged 0.1 percent to 6,310.90 points, and South Korea's KOSPI eased 0.7 percent to 2,307.03 points.
Shanghai composite index fell 0.2 percent to 2,720.73 points, while CSI300 index traded 0.4 percent down at 3,321.82 points.
Hong Kong’s Hang Seng traded 0.8 percent lower at 27,661.79 points. Taiwan shares shed 0.9 percent to 10,964.22 points.
Commodities Recap
Crude oil prices slumped, weighed down by concerns over rising supply from OPEC and the United States. International benchmark Brent crude was trading 0.3 percent up at $77.42 per barrel by 0507 GMT, having hit a high of $78.19 on Monday, its highest since July 11. U.S. West Texas Intermediate was trading 0.4 percent lower at $69.60 a barrel, after rising as high as $70.47 on Thursday, its highest since August 8.
Gold declined to an over 1-week low below the $1,200 level, as the dollar strengthened on worries over the potential for more tariffs between the United States and China. Spot gold was 0.05 down percent at $1,199.96 an ounce at 0511 GMT, having touched a low of $1,195.60, its lowest since August 24. U.S. gold futures were down 0.2 percent at $1,204.30 an ounce.
Treasuries Recap
The Japanese government bonds suffered during late Asian session even as investors’ risk sentiments dented following the return of trade war worries over NAFTA negotiations during the weekend. The yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped nearly 1-1/2 basis points to 0.116 percent, the yield on the long-term 30-year note also surged close to 1-1/2 basis points to 0.857 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.107 percent.
The New Zealand bonds closed tad lower Monday amid a muted trading session that witnessed data of little economic significance ahead of the GlobalDairyTrade (GDT) price auction, scheduled to be held on September 4 for added direction in the debt market. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.545 percent, the yield on the long-term 20-year note remained tad higher at 2.870 percent and the yield on short-term 2-year too closed nearly 1/2 basis point up at 1.658 percent.
The Australian bonds gained on the first trading day as investors moved into safe-haven buying on worries of over further escalation of the U.S-China trade conflicts. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 2-1/2 basis points to 2.504 percent, the yield on the long-term 30-year bond also dipped 3 basis points to 3.022 percent and the yield on short-term 1-year slumped 1 basis point to 1.956 percent.
