Market Roundup
- Dollar consolidates as caution prevails ahead of Fed, BOJ
- Gold eases as trade hopes boost risk appetite
Economic Data Ahead
- (0500 ET/0900 GMT) EZ trade balance s.a. July
- (0500 ET/0900 GMT) EZ trade balance n.s.a. July
Key Events Ahead
- (0300 ET/0700 GMT) EZ EcoFin Meeting
FX Beat
DXY: The dollar index consolidated within narrow ranges as financial markets fully priced in a rate cut at the Federal Reserve’s September 17-18 policy meeting. The greenback against a basket of currencies traded flat at 98.28, having touched a low of 97.86 on Wednesday, its lowest since August 2
EUR/USD: The euro rose, extending previous session gains, following the European Central Bank’s surprise decision to resume government debt purchases from November to support a flagging economy. On Thursday, the ECB approved a fresh stimulus package as expected, cutting its deposit rate to a record low -0.5 percent from -0.4 percent and will restart bond purchases of 20 billion euros a month from November to support eurozone growth. The European currency traded 0.1 percent at 1.1070 in the prior session, having touched a high of 1.1087 on Thursday, its highest since August 29. Investors’ attention will remain on a series of data out from the Eurozone economies and EZ trade balance, ahead of the U.S. retail sales, import and export price index and business inventories. Immediate resistance is located at 1.1098 (August 28 High), a break above targets 1.1153 (August 23 High). On the downside, support is seen at 1.1037 (5-DMA), a break below could drag it below 1.0963 (August 30 High).
USD/JPY: The dollar rallied to a fresh 1-1/2 month peak as optimism about a resolution to the U.S.-China trade war continued to push Treasury yields higher. However, the upside appears limited as the U.S. Federal Reserve is widely expected to cut interest rates next week. The major was trading 0.1 percent up at 108.20, having hit a high of 108.25 earlier, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. retail sales, import and export price index and business inventories. Immediate resistance is located at 108.37 (July 16 High), a break above targets 108.75 (July 25 High). On the downside, support is seen at 107.51 (5-DMA), a break below could take it lower at 106.92 (10-DMA).
GBP/USD: Sterling advanced, hovering towards a 6-week high hit earlier in the week as investors weighed up Britain's chances of securing a divorce deal with the European Union ahead of its scheduled departure from the bloc on October 31. The major traded 0.2 percent down at 1.2349, having hit a high of 1.2384 on Monday, it’s highest since July 26. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2384 (September 9 High), a break above could take it near 1.2456 (July 17 High). On the downside, support is seen at 1.2279 (September 6 Low), a break below targets 1.2252 (10-DMA). Against the euro, the pound was trading flat at 89.65 pence, having hit a high of 88.85 on Thursday, it’s highest since June 21.
AUD/USD: The Australian dollar steadied after rising to a 1-1/2 month peak in the previous session, as China's rate cut eased pressure on the Reserve Bank of Australia to do more, while the fading U.S.-China trade tensions boosted risk-appetite. The Aussie trades traded 0.1 percent up at 0.6873, having hit a high of 0.6894 on Thursday, it’s highest since July 31. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6848 (September 10 Low), 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 rose, halting a 2-day losing streak on signs the United States and China were narrowing their differences over trade. The Kiwi trades 0.05 percent up at 0.6407, having touched a low of 0.6397 earlier, its lowest level since September 6. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6429 (August 20 High), a break above could take it near 0.6471 (August 13 High). On the downside, support is seen at 0.6381 (21-DMA), a break below could drag it below 0.6325 (September 4 Low).
Equities Recap
Asian shares surged as hints of progress in U.S.-China trade talks and aggressive stimulus from the ECB eased worries about a global economic slowdown.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
Tokyo's Nikkei rose 1.1 percent to 22,004.61 points, Australia's S&P/ASX 200 index rallied 0.2 percent to 6,669.20 points.
Hong Kong’s Hang Seng traded 0.5 percent higher at 27,224.00 points.
China, South Korea and Taiwan markets were closed for public holidays.
Commodities Recap
Crude oil prices declined as optimism over an end to the U.S.-China trade war faded, leaving prices set for a weekly loss. International benchmark Brent crude was trading 0.3 percent lower at $60.17 per barrel by 0435 GMT, having hit a low of $58.89 on Thursday, its lowest since September 4. U.S. West Texas Intermediate was trading 0.3 percent down at $54.83 a barrel, after falling as low as $55.94 on Thursday, its lowest since September 4.
Gold prices edged lower as improved risk appetite amid signs of a thaw in the U.S.-China trade war drew investors away from the safe-haven metal. Spot gold fell 0.1 percent to $1,497.25 per ounce by 0502 GMT, having touched a low of $1,483.22 on Wednesday, its lowest since August 13 and was down about 0.6 percent this week, putting it on course for its third straight weekly drop. U.S. gold futures dipped 0.2 percent to $1,504.40 per ounce.
Treasuries Recap
The Japanese government bond yields jumped across the curve, with the key 10-year yield hitting the highest level in six weeks. The 10-year JGB yield climbed 5 basis points to minus 0.165 percent, its highest since Aug. 1. In the super long zone, the 20-year yield rose 4.5 bps to 0.200 percent, while the 30-year and the 40-year yields jumped 5 bps each to six-week highs of 0.340 percent and 0.370 percent, respectively. Benchmark 10-year JGB futures fell 0.57 point to 154.07.
