Market Roundup
- Catalan leader calls for international mediation in Madrid stand-off
- Australia's central bank holds rates at record lows, signals patience on policy
- Australia's Aug Building approval, 0.4% vs -1.7%, revised -1.2% forecast -0.5%
- Australia's Aug Private House Approvals, -0.6% vs 0.0%, revised 1.0%
- New Zealand business confidence sinks to 18-month low as election uncertainty weighs
- Boris and Brexit sour British PM Theresa May's party in Manchester
- Merkel's Bavarian allies insist on conservative unity before coalition talks
- Tokyo governor Koike says will not run in Japan election - Yomiuri
- BOJ tankan corporate inflation expectations flagging
- White House again rejects talks with North Korea on nuclear issue
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Sep Markit/CIPS Cons PMI, 51.0 eyed, last 51.1
- (0500 ET/0900 GMT) EU Aug Medium Producer Prices, 0.1% m/m, 2.3% y/y eyed; last 0.0%, 2.0%
Key Events Ahead
- N/A Norway Central Bank holds conference in Oslo
- (030 ET/0930 GMT) Swedish National Bank Gov Ingves speaks in Gothenburg
FX Beat
DXY: The dollar rallied across the board after a strong reading on U.S. manufacturing activity boosted expectations for U.S. interest rates to rise by the year-end.
EUR/USD: The euro slumped, extending previous session losses as Spain faced its biggest constitutional crisis in decades after Sunday's independence referendum in Catalonia. The European currency traded 0.1 percent down at 1.1716, having touched a low of 1.1694 earlier, its lowest since Aug. 17. FxWirePro's Hourly Euro Strength Index stood at -7.21 (Neutral) by 0600 GMT. Immediate resistance is located at 1.1827 (61.8% retracement of 1.2005 and 1.1717), a break above targets 1.1849 (10-DMA). On the downside, support is seen at 1.1694 (Session Low), a break below could drag it near 1.1662.
USD/JPY: The dollar rallied above the 113.00 handle as U.S. Treasury yields rose after a strong reading on U.S. manufacturing activity strengthened expectations for U.S. interest rates to rise by December. The pair was trading 0.3 percent up at 113.05, having hit a high of 113.25 last week, its highest since mid-Jul. FxWirePro's Hourly Yen Strength Index stood at -46.50 (Neutral) by 0600 GMT. Immediate resistance is located at 113.30, a break above targets 113.70. On the downside, support is seen at 112.25 (10- DMA), a break below could take it near 112.00.
GBP/USD: Sterling declined to a fresh 3-week low as manufacturing surveys released on Monday showed the British economy was struggling to gain momentum. Investors’ attention remains on Brexit negotiations after Britain's junior Brexit minister said he was hopeful that EU negotiators would agree to move on to discuss future relationships in October. Sterling traded down at 1.3268, having hit a low of 1.3229 earlier, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at -41.11 (Neutral) by 0600 GMT. Immediate resistance is located at 1.3329 (21-DMA), a break above could take it near 1.3389 (10-DMA). On the downside, support is seen at 1.3229 (Session Low), a break below targets 1.3183. Against the euro, the pound was trading flat at 88.35 pence, having hit a high of 87.46 pence on Wednesday, its highest since July.
AUD/USD: The Australian dollar tumbled to three-month lows after the country's central bank held rates steady as expected and cautioned that a higher currency would weigh on the economy and inflation. The Aussie trades 0.1 percent down 0.7812, having hit a low of 0.7785 earlier, it’s lowest since Jul. 18. FxWirePro's Hourly Aussie Strength Index stood at -21.43 (Neutral) by 0600 GMT. Immediate support is seen at 0.7750, a break below targets 0.7730. On the upside, resistance is located at 0.7847 (5-DMA), a break above could take it near 0.7910 (10-DMA).
NZD/USD: The New Zealand dollar fell to a 1-month low after a survey showed the recent inconclusive election had weighed heavily on business confidence. The Kiwi trades 0.3 percent down at 0.7170, having touched a low of 0.7148 earlier, its lowest level since Sept. 4. FxWirePro's Hourly Kiwi Strength Index was at 13.90 (Neutral) by 0600 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7207 (5-DMA), a break above could take it near 0.7277 (Sept. 26 High). On the downside, support is seen at 0.7131 (Aug. 31 Low), a break below could drag it till 0.7100.
Equities Recap
Asian shares rallied, taking clues from record closes on Wall Street, while the greenback struck a 1-1/2-month high on upbeat U.S. economic data.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
Tokyo's Nikkei rose 1.05 percent to 20,614.07 points, Australia's S&P/ASX 200 index fell 05 percent to 5,701.40 points.
Hong Kong’s Hang Seng was trading 2.0 percent higher at 28,103.67 points. Taiwan shares added 0.05 percent to 10,469.35 points.
Liquidity was relatively thin, with China and South Korea markets closed for public holidays.
Commodities Recap
Crude oil prices declined, extending previous session losses, amid signs that a global glut in crude may not be clearing as quickly as some had expected. International benchmark Brent crude was trading 0.3 percent down at $55.87 per barrel by 0641 GMT, having hit a high of $59.48 last week, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.3 percent down at $50.41 a barrel, after rising as high as $52.41 last week, its highest since April.
Gold prices steadied after falling to a 7-week low earlier in the session, as equities and the dollar were supported by upbeat economic data and strong U.S. treasury yields. Spot gold flat at $1,271.46 an ounce by 0643 GMT, after earlier touching its lowest since mid-August at $1,268.21. U.S. gold futures for December delivery shed 0.3 percent to $1,272 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.348 percent higher by 0.011 bps, while 5-year yield was 0.005 bps up at 1.939 percent.
The Japanese government bonds remained flat as investors traded sideways in ma muted session amid lack of significant economic data. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.08 percent, the yield on long-term 30-year rose 1 basis point to 0.88 percent and the yield on short-term 2-year traded flat at -0.11 percent.
The Australian bonds continued to slump as investors digested the Reserve Bank of Australia’s (RBA) monetary policy decision. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 2.86 percent, the yield on the 15-year note climbed 2 basis points to 3.16 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.97 percent.
The New Zealand bonds gained at the time of closing after the nation’s business confidence across firms continued to remain soft, according to a survey conducted by the New Zealand Institute of Economic Research (NZIER) showed today. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis points to 3.00 percent, the yield on 7-year note also slipped 1-1/2 basis points to 2.84 percent and the yield on short-term 2-year ended 1 basis point lower at 2.10 percent.
The Canadian government bond prices were lower across a steeper yield curve, with the two-year down 2.5 Canadian cents to yield 1.533 percent and the 10-year falling 25 Canadian cents to yield 2.129 percent. Last week, the 10-year yield touched a three-year high at 2.202 percent.
