Market Roundup
- Fitch affirms Australia at "AAA", outlook stable
- Gold consolidates as U.S.-China trade tensions ease
- Oil steadies as Russia reaffirms commitment to output cuts
Economic Data Ahead
- (0500 ET/0900 GMT) EZ M3 Money Supply 3M September
- (0500 ET/0900 GMT) EZ M3 Money Supply YoY September
- (0500 ET/0900 GMT) EZ Private Loans YoY September
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index surged ahead of a U.S. Federal Reserve meeting this week where policymakers are expected to cut interest rates but emphasize their reluctance to ease policy further. The greenback against a basket of currencies traded up at 97.86, having touched a low of 97.14 earlier in the month, its lowest since August 9.
EUR/USD: The euro consolidated near 1-week lows, weighed down by last week's business surveys which point to stagnating economic momentum in the eurozone. The European currency traded flat at 1.1080, having touched a low of 1.1072 on Friday, its lowest since October 17. Investors’ attention will remain on a Eurozone money supply, private loan data, and ECB President Draghi's speech ahead of the U.S. data, including Chicago Fed National Activity Index, preliminary wholesale inventories, goods trade balance and Dallas Fed manufacturing business index. Immediate resistance is located at 1.1101 (10-DMA), a break above targets 1.1130. On the downside, support is seen at 1.1046, a break below could drag it below 1.1012.
USD/JPY: The dollar rallied to an over 1-week peak after the U.S. Trade Representative’s office stated that U.S. and Chinese trade officials neared finalizing parts of the Phase 1 trade pact. Investors now await the Fed meeting ending Oct. 30 and a Bank of Japan meeting ending Oct. 31. The Fed is expected to cut interest rates for a third time this year, while the BoJ is likely to keep policy on hold next week. The major was trading 0.1 percent up at 108.66, having hit a high of 108.79 earlier, its highest since October 17. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. data, including Chicago Fed National Activity Index, preliminary wholesale inventories, goods trade balance and Dallas Fed manufacturing business index. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.49 (October 24), a break below could take it near at 108.03 (October 14).
GBP/USD: Sterling steadied above the 1.2800 handle, as investors remained cautious ahead of an agreement which is expected to delay Britain’s separation from the European Union to January 31 after Prime Minister Boris Johnson failed to win approval for his Brexit timetable. The major traded 0.05 percent up at 1.2816, having hit a low of 1.2788 on Thursday, it’s lowest since October 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2882 (5-DMA), a break above could take it near 1.2949. On the downside, support is seen at 1.2748, a break below targets 1.2700. Against the euro, the pound was trading 0.1 percent down at 86.44 pence, having hit a high of 85.74 earlier in the month, it’s highest since May 8.
AUD/USD: The Australian dollar declined, hovering towards a 1-week low hit in the previous session, after the global rating agency Fitch kept affirmed stable outlook and “AAA” rating for Australia in the latest analysis, however, it forecast that Gross Domestic Product growth to slow sharply to 1.7 percent in 2019, from 2.7 percent in 2018 while also expecting a rise to 2.3 percent in 2020. The Aussie trades 0.1 percent down at 0.6810, having hit a low of 0.6809 on Friday, it’s lowest since October 17. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6751, a break below targets 0.6723. On the upside, resistance is located at 0.6843 (5-DMA), a break above could take it near 0.6880.
NZD/USD: The New Zealand dollar plunged to a 1-week low as investors ignored weekend news concerning the U.S.-China trade deal, Brexit and geopolitics. New Zealand markets are closed in observance of Labor Day. The Kiwi trades 0.05 percent down at 0.6345, having touched a low of 0.6343 earlier, its lowest level since October 18. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6393 (5-DMA), a break above could take it near 0.6416 (October 21 High). On the downside, support is seen at 0.6323 (21-DMA), a break below could drag it below 0.6300.
Equities Recap
Asian shares advanced to a 3-month high as hopes of a U.S.-China trade deal as soon as next month boosted risk sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.2 percent.
Tokyo's Nikkei gained 0.3 percent to 22,871.03 points, Australia's S&P/ASX 200 index rose 0.1 percent to 6,747.30 points and South Korea's KOSPI surged 0.4 percent to 2,096.11 points.
Shanghai composite index rose 0.7 percent to 2,976.22 points, while CSI 300 index traded 0.7 percent up at 3,924.66 points.
Hong Kong’s Hang Seng traded 1.2 percent higher at 26,983.82 points. Taiwan shares added 0.2 percent to 11,319.87 points.
Commodities Recap
Crude oil prices steadied near multi-week peaks after Russia affirmed its commitment to a deal with OPEC producers to keep production in check and support prices. International benchmark Brent crude was trading flat at $61.93 per barrel by 0320 GMT, having hit a high of $62.09 earlier, its highest since September 27. U.S. West Texas Intermediate was trading 0.2 percent lower at $56.51 a barrel, after rising as high as $56.80 earlier, its highest since September 26.
Gold prices consolidated within narrow ranges after rising nearly 1 percent in the previous session, as trade tensions between the United States and China eased. Spot gold was trading flat at $1,504.57 per ounce by 0324 GMT, having hit a high of $1,517.85 on Friday, its highest since Oct. 3. U.S. gold futures were up 0.1 percent at $1,507.40 per ounce.
Treasuries Recap
On Friday, yields on U.S. 5-year, 7-year, and benchmark 10-year notes climbed to 5-week peaks, while yields on 2-year notes hit a 3-week high.
