Market Roundup
- N.Korea may consider H-bomb test in Pacific, Kim calls Trump "deranged"
- S&P says downgraded China as debt drive taking longer than expected to curb risks
- Fearing far-right surge, Merkel urges Germans to vote on Sunday
- As crisis ebbs, Tsipras promises doubters a "new" Greece
- Japan policymakers soften fiscal pledges as election prospects loom
- MoF flow data week-ended Sept 16 – Japanese buy net Y318.8 bln for-bonds
- Y141.9 bln for-stocks buys too, foreign investors sell Japan stocks, JGBs
- US to change rules on drone and commando strikes
- U.S. bond funds, tech stocks attract huge inflows -Lipper
- Foreign CB US debt holdings +$3.988 bln to $3.376 trln Sept 20 week
- Treasuries +$5.458 bln to $3.051 trln, agencies $2.482 bln to $261.5 bln
Economic Data Ahead
- (0330 ET/0730 GMT) Germany Sep Markit Comp Flash PMI, 55.8 eyed, last 55.8
- (0330 ET/0730 GMT) Germany Sep Markit Service Flash PMI, 53.8 eyed, last 53.5
- (0330 ET/0730 GMT) Germany Sep Markit Mfg Flash PMI, 59.0 eyed, last 59.3
- (0400 ET/0800 GMT) EU Sep Markit Mfg Flash PMI, 57.1 eyed, last 57.4
- (0400 ET/0800 GMT) EU Sep Markit Comp Flash PMI, 55.5 eyed, last 55.7
- (0400 ET/0800 GMT) EU Sep Markit Serv Flash PMI, 54.7 eyed, last 54.7
Key Events Ahead
- N/A Top ECB officials speak at a financial stability conference in Frankfurt
- (0315 ET/0715 GMT) ECB Board Member Benoit Coeure speaks in Sarajevo
- (0430 ET/0830 GMT) ECB's Draghi speaks in Dublin
- (0445 ET/0845 GMT) ECB Supervisor Ignazio Angeloni gives Speech in Courmayeur
- (0500 ET/0900 GMT) Norges Bank Governor Oystein Olsen speaks in Trondheim
- (0605 ET/1005 GMT) UK Stg0.5/Stg1.0/Stg2.0 bln for 1/3/6 months auction
- (0615 ET/1015 GMT) Sweden Cen.bank Deputy Governor Martin Floden speaks in Linkoping
- (0715 ET/1115 GMT) ECB's Constancio speaks in Frankfurt
- (0915 ET/1315 GMT) ECB's Constancio speaks at the 2nd ESRB annual conference in Frankfurt
FX Beat
DXY: The dollar weakened versus most of its major peers on the back of rising possibility of North Korea conducting another hydrogen bomb test. The greenback against a basket of currencies traded 0.2 percent down at 92.00, having touched a high of 92.70 on Wednesday, its highest since Sept. 5. FxWirePro's Hourly Dollar Strength Index stood at 0.47 (Neutral) by 0600 GMT.
EUR/USD: The euro rose, extending gains above the 1.1900 handle, after European Central Bank President Mario Draghi on Thursday stated that monetary policy is not an appropriate tool to address financial imbalances but offered no fresh insight on the central bank's asset purchase program. The European currency traded 0.1 percent up at 1.1958, having touched a low of 1.1861 on Wednesday, its lowest since Sept. 14. FxWirePro's Hourly Euro Strength Index stood at 76.81 (Slightly Bullish) by 0500 GMT. Investors’ attention will remain on Markit manufacturing and service PMI's from Eurozone economies and ECB Presiden Draghi's speech, ahead of U.S. Markit manufacturing and service PMI's. Immediate resistance is located at 1.2000, a break above targets 1.12030. On the downside, support is seen at 1.1930 (21-DMA), a break below could drag it near 1.1873 (Sept. 13 Low).
USD/JPY: The dollar slumped, after rising to a 2-month high in the previous session as rising tensions on the Korean peninsula and the sharp divergence between U.S. and Japanese monetary policy weighed heavily on the greenback. The major was trading 0.5 percent down at 111.90, having hit a high of 112.71 the prior session, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at -50.33 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. Markit manufacturing and service PMI's. for further momentum. Immediate resistance is located at 112.50, a break above targets 112.70. On the downside, support is seen at 111.28 (5- DMA), a break below could take it near 110.65 (61.8% retracement of 107.31 and 112.71).
GBP/USD: Sterling steadied just below the 1.3600 handle, with traders hopeful that a much-anticipated speech from Prime Minister Theresa May would signal a soft exit for Britain from the European Union. The major traded up at 1.3586, having hit a high of 1.3656 on Wednesday, its highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 121.26 (Highly Bullish) by 0500 GMT. Investors’ focus will remain on the UK Prime Minister Theresa May speech, highlighting the issues of the country's foreign policy, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3600, a break above could take it near 1.3650. On the downside, support is seen at 1.3489 (78.6% retracement of 1.2852 and 1.3656), a break below targets 1.3353 (61.8% retracement). Against the euro, the pound was trading 0.2 percent down at 88.05 pence, having hit a high of 87.74 pence last week, its highest since Jul. 17.
AUD/USD: The Australian dollar retreated after falling to a 3-week trough earlier in the session, undermined by a fresh bout of risk aversion, coupled with falling metals and iron ore prices. The Aussie trades 0.1 percent up 0.7938, having hit an early low of 0.7908, it’s lowest since Aug. 31. FxWirePro's Hourly Aussie Strength Index stood at -32.37 (Neutral) by 0600 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7908 (Session Low), a break below targets 0.7871. On the upside, resistance is located at 0.8000, a break above could take it near 0.8080.
NZD/USD: The New Zealand dollar slumped, extending losses from the previous session, as tumbling domestic stocks combined with a sharp fall seen in the NZ credit card spending data triggered the renewed weakness in the major. The Kiwi trades 0.3 percent down at 0.7287, having touched a high of 0.7433 on Wednesday, its highest level since Aug. 4. FxWirePro's Hourly Kiwi Strength Index was at -103.46 (Highly Bearish) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7340, a break above could take it near 0.7363 (Previous Session High). On the downside, support is seen at 0.7272 (10-DMA), a break below could drag it till 0.7211.
Equities Recap
Asian shares tumbled on the back of rising possibility of North Korea conducting another hydrogen bomb test, this time in the Pacific Ocean.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.4 percent
Tokyo's Nikkei fell 0.3 percent to 20,296.45 points, Australia's S&P/ASX 200 index rose 0.5 percent to 5,682.10 points and South Korea's KOSPI declined 0.8 percent to 2,388.71 points.
Shanghai composite index eased 0.2 percent to 3,350.74 points, while CSI300 index was trading 0.05 percent down at 3,836.47 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 27,898.38 points. Taiwan shares shed 1.2 percent to 10,449.68 points.
Commodities Recap
Crude oil prices eased after rising to multi-month highs in the previous session as the market awaited to see whether major oil producers would extend supply cuts beyond March at a meeting in Vienna later in the day. International benchmark Brent crude was trading 0.1 percent down at $56.37 per barrel by 0450 GMT, having hit a high of $56.50 the day before, its strongest since Apr. 12. U.S. West Texas Intermediate was trading 0.2 percent down at $50.59 a barrel, after rising as high as $51.09 earlierin the week, its highest since May. 25.
Gold edged up, rebounding from a four-week low hit in the previous session, as the latest tensions between the United States and North Korea prompted investors to seek safety into the safe-haven asset. Spot gold was up 0.6 percent at $1,297.63 an ounce at 0515 GMT, after falling to its lowest since Aug. 25 at $1288.01 on Thursday. U.S. gold futures for December delivery were up 0.1 percent at $1,296.60 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.257 percent lower by 0.021 bps, while 5-year yield was 0.02 bps down at 1.866 percent.
The Japanese government bonds gained tracking similar momentum in the U.S. counterpart after North Korean leader Kin-Jong-Un said that the North would consider the “highest level of hard-line countermeasure in history” against the United States and that Trump’s comments had confirmed his own nuclear program was “the correct path”. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1 basis point to 0.02 percent, the yield on long-term 30-year also fell 1 basis point to 0.82 percent and the yield on short-term 2-year too traded 1 basis point lower at -0.13 percent.
The Australian bonds jumped, tracking strength in the U.S. Treasuries during early Asian session despite a set of inspiring economic data released yesterday amid a silent trading session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 4 basis points to 2.79 percent, the yield on 15-year note plunged 3-1/2 basis points to 3.08 percent and the yield on short-term 2-year also traded nearly 3 basis points lower at 1.97 percent.
The New Zealand bonds rose during early Asian session as investors poured into safe-haven instruments, following hovering uncertainties ahead of the September 23 general election. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 4 basis points to 3.07 percent, the yield on 7-year note plunged 41/2 basis points to 2.89 percent and the yield on short-term 2-year ended 3 basis points lower at 2.17 percent.
The Canadian government bond prices dipped across a flatter yield curve, with the two-year down 2 Canadian cents to yield 1.592 percent and the 10-year falling 3 Canadian cents to yield 2.109 percent. The 10-year yield hovered below a nearly three-year high of 2.119 percent reached earlier this week.
