Market Roundup
- In quick reversal, Trump threatens shutdown over border wall
- NAFTA talks make progress; U.S., Canadian officials to work into night
- Trump says not ready to make trade deal with China
- N.Korea's Kim says wants to denuclearize in Trump's first term -Seoul
- Supreme Court nominee evasive on scope of Trump's presidential power
- Fed's Bostic says risks balanced, U.S. rates should rise
- Australia's ANZ and CBA raising home loan rates due to higher funding costs
- China angered after British Navy warship sails near S.China Sea islands
- Dissenter criticizes BOJ's flexible bond yield plan, wants more easing
- BOJ buying operation points to small cut in 5-10 yr JGB purchases
- Argentina confident about new deal with IMF, peso rises
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0330 ET/0730 GMT) Swedish Central Bank announces interest rate decision. Monetary policy report will be published in Stockholm
- (0500 ET/0900 GMT) Riksbank's Stefan Ingves and Jesper Hansson will participate in the press conference on the interest rate decision in Stockholm
- (0745 ET/1145 GMT) Speech by member of the ECB's Executive Board Sabine Lautenschlager at the Eurofi Financial Forum in Vienna
- (1000 ET/1400 GMT) Fed's John Williams sits with Paul Tesluk, dean of the University at Buffalo School of Management, for a fireside chat focused on the regional and national economy and the New York Fed's outreach efforts in Buffalo, N.Y.
- (1100 ET/1500 GMT) Bank of Russia's Elvira Nabiullina delivers the annual Michel Camdessus Central Banking Lecture at the International Monetary Fund in Washington D.C.
- (1230 ET/1630 GMT) Speech by Fritz Zurbrugg, Swiss National Bank Vice Chairman of the Governing Board, "10 years after the storm: How weatherproof is the Swiss banking system today?" at University of Lucerne
- (1445 ET/1845 GMT) Bank of Canada's Carolyn Wilkins will give a speech at Saskatchewan Trade and Export Partnership in Regina, Saskatchewan
FX Beat
DXY: The dollar index rebounded from a 6-day low touched earlier in the day after Trump stated that the United States was not yet prepared to come to an agreement over trade disputes with China. The greenback against a basket of currencies trades 0.05 percent up at 95.15, having touched a low of 94.94, its lowest since August 31. FxWirePro's Hourly Dollar Strength Index stood at 5.79 (Neutral) by 0500 GMT.
EUR/USD: The euro surged to a 6-day peak after data released yesterday showed Eurozone business activity gained momentum in August, indicating that the European Central Bank is unlikely to be swayed from closing its 2.6 trillion euro asset purchase programme by year-end. The European currency traded 0.05 percent up at 1.1635, having touched a low of 1.1530 on Tuesday, its lowest since Aug 23. FxWirePro's Hourly Euro Strength Index stood at 95.78 (Slightly Bullish) by 0500 GMT. Investors’ attention will remain on ECB Lautenschlager's speech, ahead of the U.S. Markit service PMI and factory orders. Immediate resistance is located at 1.1689 (August 31 High), a break above targets 1.1733 (August 28 High). On the downside, support is seen at 1.1594 (August 27 Low), a break below could drag it till 1.1545 (21-DMA).
USD/JPY: The dollar declined, halting a 2-day winning streak, as investors turned cautious amid turmoil in emerging markets and concerns over a potentially severe escalation in the U.S.-China trade war. The major was trading 0.1 percent down at 111.37, having hit a high of 111.75 the day before, its highest since August 30. FxWirePro's Hourly Yen Strength Index stood at -77.60 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. Markit service PMI and factory orders. Immediate resistance is located at 111.82 (August 29 High), a break above targets 112.15 (August 1 High). On the downside, support is seen at 110.96 (21-DMA), a break below could take it lower 110.43 (August 15 Low).
GBP/USD: Sterling consolidated after rebounding from an over 2-week low in the previous session following a Bloomberg report, citing that the United Kingdom and Germany were prepared to accept a less detailed agreement on Brexit negotiations. However, concerns of a hard Brexit offset hopes of a breakthrough in talks. The major traded flat at 1.2904, having hit a low of 1.2901 on Wednesday; it’s lowest since August 20. FxWirePro's Hourly Sterling Strength Index stood at 84.49 (Slightly Bullish) 0500 GMT. Immediate resistance is located at 1.2982 (September 5 High), a break above could take it near 1.3043(August 30 High). On the downside, support is seen at 1.2855 (September 3 Low), a break below targets 1.2799 (August 24 Low). Against the euro, the pound was trading 0.05 percent up at 90.05 pence, having hit a low of 90.52 on Wednesday, it’s lowest since August 29.
AUD/USD: The Australian dollar declined, reversing most of its previous session gains amid fears of a further escalation of the trade war between the US and China. Investors seem to have ignored a better-than-expected domestic trade surplus, which came in at AUD 1,551 million in July, up 151 million from the consensus estimate of AUD 1,400 million. The Aussie trades 0.3 percent down at 0.7171, having hit a low of 0.7144 on Wednesday; it’s lowest since February 2016. FxWirePro's Hourly Aussie Strength Index stood at -81.72 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7140, a break below targets 0.7105. On the upside, resistance is located at 0.7228 (38.2% retracement of 0.7362 and 0.7166), a break above could take it near 0.7253 (50.0% retracement).
NZD/USD: The New Zealand dollar eased, hovering towards a 2-1/2 year low touched in the previous session, amid uncertainty about whether and when U.S. President Donald Trump might act on a threat to impose tariffs on another $200 billion of Chinese goods. The Kiwi trades 0.2 percent down at 0.6580, having touched a low of 0.6530 on Wednesday, its lowest level since Feb. 2016. FxWirePro's Hourly Kiwi Strength Index was at -16.40 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6628 (50.0% retracement of 0.6719 and 0.6530), a break above could take it near 0.6651 (61.8% retracement). On the downside, support is seen at 0.6540 (September 4 Low), a break below could drag it below 0.6473.
Equities Recap
Asian shares tumbled, extending losses for a sixth straight session on turbulence in emerging markets and worries over a potentially severe escalation in the U.S.-China trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.4 percent.
Tokyo's Nikkei declined 0.4 percent to 22,487.94 points, Australia's S&P/ASX 200 index plunged 1.1 percent to 6,160.40 points, and South Korea's KOSPI eased 0.2 percent to 2,288.32 points.
Shanghai composite index fell 0.7 percent to 2,684.94 points, while CSI300 index traded 1.3 percent down at 3,255.62 points.
Hong Kong’s Hang Seng traded 1.5 percent lower at 26,838.60 points. Taiwan shares shed 0.6 percent to 10,924.30 points.
Commodities Recap
Crude oil prices surged, as a deadline neared for a potential new round of U.S. tariffs on another $200 billion of Chinese goods. International benchmark Brent crude was trading 0.2 percent up at $77.22 per barrel by 0502 GMT, having hit a high of $79.69 on Tuesday, its highest since July 11. U.S. West Texas Intermediate was trading 0.05 percent lower at $68.58 a barrel, after rising as high as $71.37 on Tuesday, its highest since July 13.
Gold prices consolidated within narrow ranges rose, as investors turned cautious ahead of a deadline for a potential new round of U.S. tariffs on another $200 billion of Chinese goods. Spot gold was trading flat at $1,196.36 at 0508 GMT, having touched a low of $1,189.55 on Tuesday, its lowest since August 24. U.S. gold futures rose 0.3 percent at $1,205 an ounce.
Treasuries Recap
The Japanese government bonds traded tad higher during late Asian session as investors expect to see a decline in the country’s household spending data for the month of July, scheduled to be released today by 23:30GMT for further insight into the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded 1/2 basis point lower at 0.109 percent, the yield on the long-term 30-year note also slipped 1/2 basis point to 0.842 percent and the yield on short-term 2-year hovered around -0.114 percent.
The Australian bonds traded mixed as investors remained sidelined amid a muted trading day that is scheduled to witness data of little economic significance. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose nearly 1 basis point to 2.572 percent, the yield on the long-term 30-year bond traded flat at 3.080 percent and the yield on short-term 2-year slumped 1-1/2 basis points to 1.999 percent.
The Canadian government bond prices were mixed across a steeper yield curve, with the 10-year falling 1 Canadian cent to yield 2.237 percent.
