Market Roundup
- Oil prices hold near multi-week lows
- Gold eases as dollar extends gains
- Caixin PMI: China's service sector sustains recovery
- Australia July Trade Balance surplus narrows
Economic Data Ahead
- (0400 ET/0800 GMT) EZ Markit Services PMI(Aug)
- (0400 ET/0800 GMT) EZ Markit PMI Composite(Aug)
- (0500 ET/0900 GMT) EZ Retail Sales (YoY)(Jul)
- (0500 ET/0900 GMT) EZ Retail Sales (MoM)(Jul)
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index rose after the U.S. Federal Reserve highlighted that U.S. business activity and employment gained momentum through late August. Data released yesterday showed U.S. private employers hired fewer workers than expected for a second straight month in August, while separate report showed factory orders rose more than expected in July. The greenback against a basket of currencies traded 0.4 percent up at 92.98, having touched a low of 91.75 on Tuesday, its lowest since April 2018.
EUR/USD: The euro slumped to a 1-week trough on remarks from European Central chief economist Philip Lane, stating that the exchange does not matter for monetary policy, raising concerns that the ECB was worried about the currency's rise. The European currency traded 0.4 percent lower at 1.1804, having touched a high of 1.2011 on Tuesday, its highest since May 2018. Investors’ attention will remain on a series of data from the Eurozone economies, EZ service PMI and retail sales, ahead of the U.S. trade balance, unemployment benefit claims and service PMI by both Markit and ISM. Immediate resistance is located at 1.1885 (5-DMA), a break above targets 1.1902. On the downside, support is seen at 1.1777, a break below could drag it below 1.1754.
USD/JPY: The dollar rallied, extending gains for the fourth straight session, as risk sentiment improved on data showing a sustained recovery in China's service sector and the prospect of additional U.S. stumulus. The recovery in China's service sector activity extended into a fourth straight month in August, as companies hired more people for the first time since January. The major was trading 0.1 percent up at 106.32, having hit a high of 105.34 earlier, its highest since August 28. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance, unemployment benefit claims and service PMI by both Markit and ISM. Immediate resistance is located at 106.54, a break above targets 106.70. On the downside, support is seen at 105.98 (10-DMA), a break below could take it near at 105.74.
GBP/USD: Sterling declined against the dollar but rallied to multi-month peaks versus the euro, as investors awaited speeches from several Bank of England officials for direction. The major traded 0.4 percent down at 1.3295, having hit a high of 1.3483 on Tuesday, it’s highest since mid December 2019. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3396, a break above could take it near 1.3434. On the downside, support is seen at 1.3237 (10-DMA), a break below targets 1.3199. Against the euro, the pound was trading 0.05 percent up at 88.74 pence, having hit a high of 88.80 earlier, it’s highest since June 9.
AUD/USD: The Australian dollar slumped after the country's July trade balance surplus came in below estimates. The economy's imports increased 7 percent while exports declined 4 percent for a trade balance of A$4,607 million. However, the pair found support from data showing China’s Caixin Services PMI rose to 54.00 versus 50.4 expected and 54.1 prior during the month of August. The Aussie trades 0.5 percent lower at 0.7302, having hit a high of 0.7413 on Tuesday, it’s highest since August 2018. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7350, a break above could take it near 0.7371. On the downside, support is seen at 0.7276 (50% retracement of 0.7135 and 0.7413), a break below targets 0.7257.
NZD/USD: The New Zealand dollar declined, halting a 7-day rally, on data showing the ANZ World Commodity Price Index eased 0.9 percent in August as lower dairy prices were partially offset by stronger prices for meat and aluminium. Moreover, strength in the greenback also dented the bid tone around the NZ currency. The Kiwi trades 0.4 percent lower at 0.6747, having touched a high of 0.6786 on Wednesday, its highest level since July 2019. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6807, a break above could take it near 0.6837. On the downside, support is seen at 0.6727 (5-DMA), a break below could drag it below 0.6697.
Equities Recap
Asian shares surged as risk appetite improved after data showed China's service sector activity grew for a fourth straight month in August.
MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 0.5 percent.
Tokyo's Nikkei surged 0.9 percent to 23,463.99 points, Australia's S&P/ASX 200 index rose 0.8 percent to 6,112.60 points. South Korea's KOSPI gained 1.2 percent to 2,393.46 points.
Shanghai composite index declined 0.6 percent to 3,385.76 points, while CSI 300 index traded 0.5 percent down at 4,820.07 points.
Hong Kong’s Hang Seng traded 0.6 percent lower at 24,978.17 points. Taiwan shares added 0.5 percent to 12,757.97 points.
Commodities Recap
Crude oil prices declined, hovering towards multi-week lows hit in the previous session after U.S. data showed gasoline demand fell and recovery from the COVID-19 pandemic was lagging. International benchmark Brent crude was trading 0.1 percent down at $44.33 per barrel by 0511 GMT, having hit a low of $44.22 on Tuesday, its lowest since August 7. U.S. West Texas Intermediate was trading 0.2 percent lower at $41.49 a barrel, after falling as low as $41.25 on Tuesday, its lowest since August 7.
Gold prices edged lower, extending previous session losses as the U.S. dollar steadied, although worries over the global economic outlook due to rising Covid-19 cases limited downside. Spot gold was trading 0.1 percent lower at $1,940.45 per ounce by 0518 GMT, having hit a high of $1992.56 on Tuesday, its highest since August 19. U.S. gold futures surged 0.1 percent to $1,946.05.
Treasuries Recap
The U.S. Treasury yields steadied, with the benchmark 10-year note yield trading at 0.656 percent.
