Market Roundup
- Japan Sept Services PMI, 51.0 vs 51.6, lowest in 11 months
- Japan Sept Composite PMI, 51.7 vs 51.9
- BOJ's Nakaso says revenues could slip when it ends easy policy - paper
- Puigdemont says Catalonia to declare independence in 'matter of days' –BBC
- Vowing not to give up, Britain's May tries to stamp authority on party
- Boris Johnson gives PM May advice on Brexit while parading loyalty
- Germany's Schaueble confident three-way coalition will come off
- EU to reform sales tax, prepares changes to rates
- World Bank raises 2017, 2018 East Asia growth forecasts, sees geopolitical risks
Economic Data Ahead
- (0315 ET/0715 GMT) Spain Sep Services PMI, 55.50 eyed, last 56.00
- (0345 ET/0745 GMT) Italy Sep Markit/ADACI Svcs PMI, 54.90 eyed, last 55.10
- (0350 ET/0750 GMT) France Sep Markit Comp PMI, 57.20 eyed, last 57.20
- (0350 ET/0750 GMT) France Sep Markit Serv PMI, 57.10 eyed, last 57.10
- (0355 ET/0755 GMT) Germany Sep Markit Services PMI, 55.60 eyed, last 55.60
- (0355 ET/0755 GMT) Germany Sep Markit Comp Final PMI, 57.80 eyed, last 57.80
- (0400 ET/0800 GMT) EU Sep Markit Comp Final PMI, 56.70 eyed, last 56.70
- (0400 ET/0800 GMT) EU Sep Markit Serv Final PMI, 55.60 eyed, last 55.60
- (0430 ET/0830 GMT) Great Britain Sep Markit/CIPS Serv PMI, 53.20 eyed, last 53.20
- (0500 ET/0900 GMT) EU Aug Retail Sales, 0.3% m/m, 2.6% y/y eyed; last -0.3%, 2.6%
Key Events Ahead
- N/A ECB Governing Council meeting
- (0600 ET/1000 GMT) Italy E2.0 bln for 9-year auction
- (0630 ET/1030 GMT) Germany E3.0 bln for 10-year auction
- (1215 ET/1615 GMT) ECB's Draghi speaks in Frankfurt
- (1430 ET/1830 GMT) BoE Deputy Gov Woods speaks in London
- (1515 ET/1915 GMT) Fed's Yellen speaks in St. Louis
FX Beat
DXY: The dollar eased across the board on speculation U.S. President Donald Trump's choice for the next Fed Chair may be a more dovish candidate than previously expected. The greenback against a basket of currencies traded 0.2 percent down at 93.42, having touched a high of 93.92 on Tuesday, its highest since Aug. 17. FxWirePro's Hourly Dollar Strength Index stood at -18.29 (Neutral) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains, amid ongoing weakness seen in the U.S. dollar and Treasury yields, in the wake of Fed leadership talks and uncertainty over Trump’s fiscal reforms. The European currency traded 0.2 percent up at 1.1765, having touched a low of 1.1696 in the previous session, its lowest since Aug. 17. FxWirePro's Hourly Euro Strength Index stood at 41.83 (Neutral) by 0400 GMT. Investors’ attention will remain on the Eurozone final services PMI and retail sales data, ahead of the U.S. ADP jobs and ISM non-manufacturing PMI figures. Immediate resistance is located at 1.1815 (61.8% retracement of 1.2005 and 1.1696), a break above targets 1.1892 (21-DMA). On the downside, support is seen at 1.1696 (Previous Session Low), a break below could drag it near 1.1662.
USD/JPY: The dollar eased after rising for three consecutive sessions, following reports that U.S. Treasury Secretary Steven Mnuchin favors Fed governor Jerome Powell over former governor Kevin Warsh for the Chair position at the Fed. The major was trading 0.2 percent down at 112.64, having hit a high of 113.25 last week, its highest since mid-Jul. FxWirePro's Hourly Yen Strength Index stood at 81.24 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. ADP jobs and ISM non-manufacturing PMI for further momentum. Immediate resistance is located at 113.00, a break above targets 113.40. On the downside, support is seen at 112.37 (10- DMA), a break below could take it near 112.00.
GBP/USD: Sterling rebounded after falling to a three-week low in the previous session on data showing a surprise contraction in the construction sector, which stoked worries about economic uncertainty surrounding Britain's exit from the European Union. The major traded 0.2 percent up at 1.3260, having hit a low of 1.3222 on Tuesday, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at -57.73 (Bearish) by 0400 GMT. Investors’ focus will remain on UK Markit Service PMI, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3343 (21-DMA), a break above could take it near 1.3400. On the downside, support is seen at 1.3222 (Previous Session Low), a break below targets 1.3183. Against the euro, the pound was trading flat at 88.73 pence, having hit a low of 88.81 pence the day before, its lowest since Sept. 19.
AUD/USD: The Australian dollar rose, extending gains from the previous session, as U.S. dollar eased amid speculation about who might be the next chair of the Federal Reserve. The Aussie trades 0.3 percent up 0.7858, having hit a low of 0.7785 in the previous session, it’s lowest since Jul. 14. FxWirePro's Hourly Aussie Strength Index stood at 116.64 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7785 (Previous Session Low), a break below targets 0.7750. On the upside, resistance is located at 0.7919 (10-DMA), a break above could take it near 0.7963 (21-DMA).
NZD/USD: The New Zealand dollar retreated from a 1-month low, amid broad-based U.S. dollar weakness. The major was also supported by upbeat ANZ commodity price data, which rose 0.8 percent in September, reversing previous months 0.8 percent decline. The Kiwi trades 0.3 percent up at 0.7177, having touched a low of 0.7146 earlier in the session, its lowest level since Sept. 4. FxWirePro's Hourly Kiwi Strength Index was at -133.08 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7230, a break above could take it near 0.7277 (Sept. 26 High). On the downside, support is seen at 0.7146 (Session Low), a break below could drag it till 0.7130.
Equities Recap
Asian shares rallied, led higher by Japanese and Hong Kong share markets, while the greenback eased from a 1 1/2-month high against a basket of currencies on speculation U.S. President Donald Trump's choice for the next Fed Chair may be a less hawkish candidate than previously expected.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
Tokyo's Nikkei fell 0.1 percent to 20,600.34 points, Australia's S&P/ASX 200 index eased 0.9 percent to 5,652.10 points and Hong Kong’s Hang Seng was trading 0.7 percent higher at 28,363.58 points.
China, South Korea, and Taiwan markets closed for public holidays.
Commodities Recap
Crude oil prices declined, extending losses for the seventh straight session, over caution that a price rally that lasted for most of the third quarter would not extend through the last three months of the year. International benchmark Brent crude was trading 0.2 percent down at $55.61 per barrel by 0423 GMT, having hit a low of $55.48 on Monday, its weakest since Sept. 20. U.S. West Texas Intermediate was trading 0.3 percent down at $50.00 a barrel, after falling as low as $49.89, its lowest since Sept. 19.
Gold prices edged up after hitting a 7-week low in the previous session, as the dollar eased from a 1-1/2-month high against a basket of currencies. Spot gold gained 0.4 percent to $1,275.26 an ounce by 0429 GMT, having hit its lowest since mid-August at $1,268.21 on Tuesday. U.S. gold futures for December delivery were also up 0.3 percent at $1,278 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.317 percent lower by 0.014 bps, while 5-year yield was 0.013 bps down at 1.909 percent.
The Japanese government bond yields declined as investors poured into safe-haven assets, following heightened disparity over the possible selection of Fed Chair after serving head Janet Yellen steps down. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2 basis points to 0.06 percent, the yield on long-term 30-year slipped nearly 1 basis point to 0.87 percent and the yield on short-term 2-year traded 1 basis point lower at -0.12 percent.
The Australian bonds gained following firmness in U.S. Treasuries as investors remained cautious ahead of the fresh triggers for trades from President Donald Trump's pending decision on the leadership of the Federal Reserve. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 3 basis points to 2.82 percent, the yield on the 15-year note dipped 2-1/2 basis points to 3.10 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at 1.95 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year gaining 2 Canadian cents to yield 1.523 percent and the 10-year rising 12 Canadian cents to yield 2.113 percent.
