Market Roundup
- Australia wage growth stays tepid
- Gold holds steady as political, trade woes persist
- Oil prices declines as data shows surprise climb in U.S. inventories
Economic Data Ahead
- (0245 ET/0645 GMT) France consumer price index EU norm YoY July
- (0245 ET/0645 GMT) France consumer price index EU norm MoM July
- (0430 ET/0830 GMT) UK retail sales MoM July
- (0430 ET/0830 GMT) UK retail sales YoY July
- (0430 ET/0830 GMT) UK producer price index - Output YoY n.s.a July
- (0430 ET/0830 GMT) UK producer price index - Output MoM n.s.a July
- (0430 ET/0830 GMT) UK consumer price index - YoY July
- (0430 ET/0830 GMT) UK consumer price index - YoY July
- (0500 ET/0900 GMT) EZ preliminary gross domestic product s.a. Q2 YoY
- (0500 ET/0900 GMT) EZ preliminary gross domestic product s.a. Q2 QoQ
- (0500 ET/0900 GMT) EZ industrial production s.a. MoM June
- (0500 ET/0900 GMT) EZ industrial production w.s.a. YoY June
Key Events Ahead
- (0330 ET/0730 GMT) Reserve Bank of Australia Assistant Governor Guy Debelle's speech
FX Beat
DXY: The dollar index surged to an over 1-week peak as U.S. President Donald Trump backed off his September 1 deadline for 10 percent tariffs on the remaining Chinese imports, delaying duties on cellphones, laptops and other consumer products. The greenback against a basket of currencies traded flat at 97.83, having touched a low of 97.03 on Friday, its lowest since July 19.
EUR/USD: The euro steadied after plunging in the previous session on data showing the sentiment among German investors eased far more than expected in August. Investors now focus on Eurozone's Q2 prelim Gross Domestic Product that could shape the near-term direction of the major. The European currency traded 0.05 percent up at 1.1173, having touched a high of 1.1249 last week, its highest since July 19. Investors’ attention will remain on EZ industrial production and flash Q2 GDP figures, ahead of the U.S. import and export index. Immediate resistance is located at 1.1241 (August 7 High), a break above targets 1.1282 (July 19 High). On the downside, support is seen at 1.1138 (50% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1111 (61.8% retracement).
USD/JPY: The dollar slightly eased after rising to a 1-week peak in the previous session on news that U.S. President Donald Trump would delay some additional tariffs on Chinese products. However, the weakness comes in as weaker-than-expected Chinese economic data reinforced the view that resolving the trade war was a long way off. The major was trading 0.2 percent down at 106.55, having hit a low of 105.05 on Monday, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. import and export index. Immediate resistance is located at 107.18 (50.0% retracement of 109.31 and 105.05), a break above targets 107.68 (61.8% retracement). On the downside, support is seen at 106.00 (5-DMA), a break below could take it lower at 105.49 (Aug. 7 Low).
GBP/USD: Sterling eased, extending previous session losses, as uncertainty about how Britain will exit the European Union clouded the outlook for the Bank of England’s monetary policy. The major traded 0.05 percent down at 1.2052, having hit a low of 1.2014 on Monday, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2135 (23.6% retracement of 1.2522 and 1.2079), a break above could take it near 1.2210 (38.2% retracement). On the downside, support is seen at 1.1986 (Jan 16, 2017, Low, a break below targets 1.1904 (Oct 7, 2016, Low). Against the euro, the pound was trading flat at 92.64 pence, having hit a low of 93.24 on Monday, it’s lowest since October 2009.
AUD/USD: The Australian dollar edged lower after data showed growth of China’s industrial output slowed much more than expected to 4.8 percent in July from a year earlier, its slowest pace since February 2002, while retail sales and fixed-asset investment in July also grew less than forecast, highlighting concerns the trade war is damaging the health of the Chinese economy. The Aussie trades 0.1 percent down at 0.6787, having hit a low of 0.6677 last week, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6725, a break below targets 0.6700. On the upside, resistance is located at 6831 (38.2% retracement of 0.7082 and 0.6677), a break above could take it near 0.6879 (50% retracement).
NZD/USD: The New Zealand dollar consolidated within narrow ranges as Reserve Bank of New Zealand is expected to cut the interest rate by the end of the year which would take the OCR below 1 percent. The Kiwi trades flat at 0.6453, having touched a low of 0.6376 last week, its lowest level Jan 2016. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6534 (38.2% retracement of 0.6790 and 0.6376), a break above could take it near 0.6583 (50% retracement). On the downside, support is seen at 0.6400, a break below could drag it below 0.6365.
Equities Recap
Asian shares jumped after Washington delayed tariffs on some Chinese imports and provided the much-needed relief for markets gripped by political and economic turmoil.
MSCI's broadest index of Asia-Pacific shares outside Japan increased 0.9 percent.
Tokyo's Nikkei surged 0.9 percent to 20,642.15 points, Australia's S&P/ASX 200 index rallied 0.1 percent to 6,577.10 points and South Korea's KOSPI gained 0.7 percent to 1,938.56 points.
Shanghai composite index rose 0.7 percent to 2,816.12 points, while CSI 300 index traded 0.7 percent up at 3,693.69 points.
Hong Kong’s Hang Seng traded 0.6 percent higher at 25,427.29 points. Taiwan shares added 0.6 percent to 10,427.73 points.
Commodities Recap
Crude oil prices declined after industry data showed U.S. crude inventories unexpectedly rose last week, erasing some gains from the previous session that were stoked after Washington said it would delay tariffs on some Chinese goods. International benchmark Brent crude was trading 0.5 percent lower at $60.62 per barrel by 0426 GMT, having hit a high of $61.48 on Tuesday, its highest since August 5. U.S. West Texas Intermediate was trading 0.6 percent down at $56.32 a barrel, after rising as high as $57.43 on Tuesday, its highest since August 1.
Gold prices consolidated around the key $1,500 level, supported by the uncertainty around political risks such as the unrest in Hong Kong amid global growth concerns. Spot gold was trading 0.1 percent down at $1,499.79 per ounce at 0432 GMT, having touched a high of $1,519.75 earlier, its highest since April 2013. U.S. gold futures were down 0.1 percent at $1,512.10 an ounce.
Treasuries Recap
The 10-year U.S. Treasury note edged down 2.5 basis points to 1.676 percent after climbing 6 basis points overnight. The yield had plumbed a three-year low of 1.595 percent a week ago.
