Market Roundup
- Oil falls as U.S., China add more tariffs in trade dispute
- Gold gains as new U.S.-China tariffs add to growth risks
- Yen rises, yuan pares losses
- The Caixin/Markit factory PMI was 50.4 in August
Economic Data Ahead
- (0345 ET/0745 GMT) Italy Markit Manufacturing PMI (August)
- (0350 ET/0750 GMT) France Markit Manufacturing PMI (August)
- (0355 ET/0755 GMT) Germany Markit Manufacturing PMI (August)
- (0400 ET/0800 GMT) EZ Markit Manufacturing PMI (August)
- (0430 ET/0830 GMT) UK Markit Manufacturing PMI (August)
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index rose, hovering towards an over 2-year peak hit in the previous session after U.S. President Donald Trump said Washington and Beijing would still meet for talks later this month. The greenback against a basket of currencies traded 0.1 percent up at 98.87, having touched a high of 99.02 on Friday, its highest since May 2017.
EUR/USD: The euro consolidated near its lowest levels in more than two years recorded in the previous session on expectations that the European Central Bank will cut interest rates at its next monetary policy meeting on September 12. The European currency traded 0.1 percent down at 1.0989, having touched a low of 1.0963 earlier, its lowest since May 2017. Investors’ attention will remain on a series of Markit PMI's out of Eurozone economies, as the U.S. markets remain closed on account of labour day. Immediate resistance is located at 1.1010 (23.6% retracement of 1.1163 and 1.0963), a break above targets 1.1039 (38.2% retracement). On the downside, support is seen at 1.0970, a break below could drag it below 1.0900.
USD/JPY: The dollar declined, extending previous session losses, after the United States and China launched fresh tariffs on each other’s goods, escalating prolonged trade war and heightening fears over a global downturn. Washington began imposing 15 percent tariffs on a variety of Chinese goods on Sunday, as Beijing began imposing new duties on U.S. crude. The major was trading 0.05 percent down at 106.19, having hit a low of 104.44 last week, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, as the U.S. markets remain closed for the Labor Day Holiday. Immediate resistance is located at 106.73 (August 23 High), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.65 (August 28 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling retreated from a 10-day low as investors braced for a tense opening to the British parliament this week. Last week, the opposition Labour Party stated that it would trigger an emergency parliamentary debate this week to try to stop Johnson taking Britain out of the European Union without a withdrawal deal. The major traded flat at 1.2164, having hit a low of 1.2139 earlier, it’s lowest since August 22. Investors’ attention will remain on the development surrounding Brexit, amid a lack of data from the U.S. docket. Immediate resistance is located at 1.2210 (5-DMA), a break above could take it near 1.2273 (August 22 High). On the downside, support is seen at 1.2108 (August 22 Low), a break below targets 1.2064 (August 20 Low). Against the euro, the pound was trading flat at 90.31 pence, having hit a high of 90.16 on Tuesday, it’s highest since July 29.
AUD/USD: The Australian dollar steadied after China’s factory activity unexpectedly expanded in August as production edged up. The Caixin/Markit factory Purchasing Managers’ Index rose to 50.4 in August, better than the 49.8 estimates and 49.9 in July. The Aussie trades 0.05 percent up at 0.6731, having hit a low of 0.6689 last week, it’s lowest since August 7. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6677 (August 7 Low), a break below targets 0.6630. On the upside, resistance is located at 0.6799 (August 2 1 High), a break above could take it near 0.6822 (August 8 High).
NZD/USD: The New Zealand dollar consolidated near a 4-year low after China’s State Council announced more measures to support its economy on Sunday. The Kiwi trades 0.05 percent up at 0.6303, having touched a low of 0.6289 on Friday, its lowest level September 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6340 (5-DMA), a break above could take it near 0.6409 (August 23 Low). On the downside, support is seen at 0.6265, a break below could drag it below 0.6210.
Equities Recap
Asian shares traded in a mixed session as the latest round of U.S. and China tariffs came into effect over the weekend, while investors digested better-than-expected Chinese manufacturing activity.
MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.
Tokyo's Nikkei fell 0.4 percent to 20,620.19 points, Australia's S&P/ASX 200 index declined 0.4 percent to 6,579.40 points and South Korea's KOSPI rose 0.1 percent to 1,969.19 points.
Shanghai composite index rose 1.3 percent to 2,924.11 points, while CSI 300 index traded 1.2 percent up at 3,848.32 points.
Hong Kong’s Hang Seng traded 0.7 percent higher at 25,539.60 points. Taiwan shares shed 0.2 percent to 10,634.85 points.
Commodities Recap
Crude oil prices steadied despite new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude. International benchmark Brent crude was trading 0.4 percent lower at $59.10 per barrel by 0606 GMT, having hit a low of $58.88 on Friday, its lowest since August 27. U.S. West Texas Intermediate was trading 0.3 percent up at $55.15 a barrel, after falling as low as $54.53 earlier, its lowest since August 27.
Gold prices rose, as safe-haven demand surged after the United States and China launched fresh tariffs on each other’s goods, escalating a prolonged trade war and adding to fears of a global economic slowdown. Spot gold was trading 0.1 percent higher at $1,523.93 per ounce by 0609 GMT, having touched a low of $1,516.76 on Friday, its lowest since August 23. U.S. gold futures were up 0.4 percent at $1,535.10 an ounce.
Treasuries Recap
The Japanese government bond prices declined and their yields pulled back from multi-year lows. The benchmark 10-year JGB yield was 1 basis point higher at minus 0.270 percent after easing to a 3-year low of minus 0.290 percent on Thursday. A drop below minus 0.300 percent would take the 10-year yield to a record low. The 20-year yield rose 1.5 basis points to 0.060 percent following a descent to 0.040 percent last week, its lowest since July 2016.
