Market Roundup
- IMF cuts world economic growth forecasts as import tariffs, emerging market issues bite
- China must take strong stimulus measures to support growth - state media
- IMF chief economist not concerned about China's ability to defend currency
- Trump says had 'good talk' with Rosenstein; no plans to fire him
- Britain, EU play game of chicken in Brexit countdown
- UK's summer spending spree cools in September - surveys
- New Zealand's 2017/18 operating surplus beats forecast at NZ$5.5 bln
- Japan Aug Current Account NSA JPY, 1,838.4 bln, 1,896.6 bln f’cast, 2,009.7 bln
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0300 ET/0700 GMT) Riksbank’s Skingsley participates in Swedish Trade Union Confederation economists' monetary policy seminar in Stockholm.
- (0430 ET/0830 GMT) BoE's Financial Policy Committee statement to be published in London.
- (0730 ET/1130 GMT) Federal Reserve Bank Dallas’ Kaplan speaks before Economic Club of New York breakfast, in New York.
- (1000 ET/1400 GMT) Federal Reserve Bank of Chicago’s Evans gives opening remarks at the OFN Conference 2018 in Chicago.
- (1300 ET/1700 GMT) Federal Reserve Bank of Philadelphia’s Harker speaks at Global Interdependence Center event in Philadelphia.
- (1400 ET/1800 GMT) BoE’s Carney gives off-record remarks to CISI industry dinner in London.
- N/A ECB governing council meeting in Frankfurt. No interest rate announcements scheduled.
- N/A ECB governing council non-monetary policy meeting in Frankfurt.
FX Beat
DXY: The dollar index nudged down after a senior U.S. Treasury official stated that the United States remains concerned about China's recent currency depreciation. The greenback against a basket of currencies trades 0.05 percent down at 95.71, having touched a high of 96.12 on Thursday, its highest since August 20. FxWirePro's Hourly Dollar Strength Index stood at -41.25 (Neutral) by 0500 GMT.
EUR/USD: The euro rebounded after falling to a 1-1/2 month low in the previous session, as the greenback slightly eased after the IMF cut forecasts of global growth for both this year and next, including downgrades to the outlook for the United States, China and Europe. However, discord between Italy and the European Union over Rome's budget plans continued to weigh on investor sentiment. The European currency traded 0.05 percent up at 1.1497, having touched a low of 1.1460 on Monday, its lowest since August 20. FxWirePro's Hourly Euro Strength Index stood at -23.62 (Neutral) by 0500 GMT. Investors’ attention will remain on the U.S. NIFB Business optimism index and IBD/TIPP economic optimism index, amid a lack of significant data from the Eurozone docket. Immediate resistance is located at 1.1549 (October 5 High), a break above targets 1.1593 (October 3 High). On the downside, support is seen at 1.1450, a break below could drag it till 1.1415.
USD/JPY: The dollar plunged, extending losses for the fourth straight session, as the U.S.-China trade war and political turmoil in Europe continued to dent investor risk sentiment. The major was trading 0.1 percent down at 113.08, having hit a low of 112.82 on Monday, its lowest since September 27. FxWirePro's Hourly Yen Strength Index stood at 76.70 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. NIFB Business optimism index and IBD/TIPP economic optimism index. Immediate resistance is located at 113.55 (10-DMA), a break above targets 114.10 (October 5 High). On the downside, support is seen at 112.75 (21-DMA), a break below could take it lower 112.40 (September 24 Low).
GBP/USD: Sterling steadied near the 1.3100 handle, as markets continued to digest European Commission President Jean-Claude Juncker comments, citing that a deal with Britain would be reached in November, if not this month. The major traded 0.1 percent up at 1.3101, having hit a high of 1.3132 on Monday; it’s highest since September 27. FxWirePro's Hourly Sterling Strength Index stood at 102.56 (Highly Bullish) 0500 GMT. Investors’ attention will remain on the UK FPC statement, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3173 (September 18 High), a break above could take it near 1.3115 (October 1 High). On the downside, support is seen at 1.3062 (10-DMA), a break below targets 1.3000 (September 28 Low). Against the euro, the pound was trading flat at 87.74 pence, having hit a high of 87.72, it’s highest since June 22.
AUD/USD: The Australian dollar rallied to a 5-day peak after data showed domestic business conditions stayed strong in September, while business confidence rebounded despite political uncertainty. The Aussie trades 0.1 percent up at 0.7084, having hit a high of 0.7093 earlier; it’s highest since October 4. FxWirePro's Hourly Aussie Strength Index stood at 31.40 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7042 (October 2 Low), a break below targets 0.7005. On the upside, resistance is located at 0.7131 (September 10 High), a break above could take it near 7182 (September 12 High).
NZD/USD: The New Zealand dollar eased despite the New Zealand government producing a better-than-expected surplus in the 2017/18 year, supported by above-trend economic growth. The Kiwi trades 0.1 percent down at 0.6450, having touched a low of 0.6424 on Monday, its lowest level since February 2016. FxWirePro's Hourly Kiwi Strength Index was at -85.57 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6485 (October 5 High), a break above could take it near 0.6566. On the downside, support is seen at 0.6400, a break below could drag it below 6381 (Jan. 15 Low).
Equities Recap
Asian shares slumped to a 17-month low as China allowed its currency to decline past a psychological level.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent.
Tokyo's Nikkei plunged 1.2 percent to 23,509.83 points, Australia's S&P/ASX 200 index declined 0.9 percent to 6,041.10 points and South Korea's KOSPI tumbled 0.6 percent to 2,253.83 points.
Shanghai composite index rose 0.4 percent to 2,726.07 points, while CSI300 index traded 0.2 percent up at 3,295.73 points.
Hong Kong’s Hang Seng traded 0.3 percent higher at 26,277.25 points. Taiwan shares added 0.1 percent to 10,466.83 points.
Commodities Recap
Crude oil prices surged, halting a 3-day losing streak as more evidence emerged that crude exports from Iran are declining in the run-up to the re-imposition of U.S. sanctions. International benchmark Brent crude was trading 0.7 percent up at $84.38 per barrel by 0437 GMT, having hit a low of $82.64 on Monday, its lowest since October 1. U.S. West Texas Intermediate was trading 0.6 percent up at $74.66 a barrel, after falling as low as $73.10 on Monday, its lowest since October 1.
Gold prices edged up after easing nearly 1.2 percent in the previous session as Asian stocks slumped amid worries over a potential slowdown in China's economic growth. Spot gold was 0.3 percent up at $1,191.19 an ounce at 0442 GMT, having hit a low of $1183.42 on Monday, its lowest since September 28. U.S. gold futures rose 0.3 percent to $1,192.70 an ounce.
Treasuries Recap
The Japanese government bonds slipped during late Asian session ahead of the super-long 30-year auction, scheduled to be held on October 11 by 03:35GMT amid an otherwise muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1/2 basis point to 0.155 percent, the yield on the long-term 30-year note also gained 1/2 basis point to 0.947 percent and the yield on short-term 2-year too traded tad higher at -0.114 percent.
The Australian government bonds traded tad lower during Asian session after the country’s business confidence cheered market participants, adding to slight optimism in risk-taking. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.785 percent, the yield on the long-term 30-year bond gained nearly 1 basis point to 3.268 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points higher at 2.051 percent..
