Market Roundup
- Italian newspaper reports budget deficit to fall to 2.0% of GDP in 2021
- New York Times says Trump helped parents shield millions from taxes
- Trade pact clause seen deterring China trade deal with Canada, Mexico
- Fed's Powell says U.S. outlook "remarkably positive"
- ECB's Villeroy says fiscal policy must not influence monetary policy
- Challenging her critics, British PM May embraces Brexit "opportunity"
- Australia Aug Building Approvals, -9.4%, 1.0% f'cast, -5.2% prev
- Japan Sep Services PMI 50.2, 51.5 prev, slumps to 2-yr low after natural disasters
Economic Data Ahead
- (0355 ET/0755 GMT) Germany Sep Markit Services PMI, 56.5 f'cast, 56.5 prev
- (0355 ET/0755 GMT) Germany Sep Markit Comp Final PMI, 55.3 f'cast, 55.3 prev
- (0350 ET/0750 GMT) France Sep Markit Serv PMI, 54.3 f'cast, 54.3 prev
- (0350 ET/0750 GMT) France Sep Markit Comp PMI, 53.6 f'cast, 53.6 prev
- (0400 ET/0800 GMT) EZ Sep Markit Serv Final PMI, 54.7 f'cast, 54.7 prev
- (0400 ET/0800 GMT) EZ Sep Markit Comp Final PMI, 54.2 f'cast, 54.2 prev
- (0430 ET/0830 GMT) Great Britain Sep Markit/CIPS Serv PMI, 54.0 f'cast, 54.3 prev
- (0500 ET/0900 GMT) EZ Aug Retail Sales YY, 1.7% f'cast, 1.1% prev
Key Events Ahead
- (0600 ET/1000 GMT) IMF’s Andrea Schaechter holds press conference on preliminary conclusions of IMF's 2018 yearly review of the Spanish economy in Madrid
- (0630 ET/1030 GMT) Fed Reserve Bank of Chicago President Charles Evans gives a lecture on the U.S. economic outlook in London
- (0805 ET/1205 GMT) Fed Reserve Bank of Richmond President Thomas Barkin speaks on "The Outlook for Tomorrow: Five Numbers to Watch" in Charleston, W.Va.
- (1315 ET/1715 GMT) Fed Reserve Bank of Philadelphia President Patrick Harker speaks on "Rethinking the Labor Market and Approaches to Employment" in Baltimore, Md.
- (1400 ET/1800 GMT) Fed Reserve Board Governor Lael Brainard speaks on "Payment System" before the FedPayments Improvement Community Forum in Chicago
- (1600 ET/2000GMT) Fed’s Powell participates in discussion before event, The Atlantic Festival in partnership with the Aspen Institute in Washington D.C.
FX Beat
DXY: The dollar index declined, after rising to a near 1-week in the previous session as investors remained concerned even as a new U.S.-Mexico-Canada trade agreement appeared to ease global trade tensions. The greenback against a basket of currencies trades 0.1 percent down at 95.35, having touched a high of 95.74 on Tuesday, its highest since September 4. FxWirePro's Hourly Dollar Strength Index stood at 82.01 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro rebounded after falling to a 6-week low in the previous session after Italian newspaper Corriere della Sera reported that Italy aims to gradually reduce its budget deficit to 2 percent of gross domestic product in 2021. The European currency traded 0.3 percent up at 1.1578 having touched a low of 1.1505 on Tuesday, its lowest since August 21. FxWirePro's Hourly Euro Strength Index stood at -13.20 (Neutral) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies, EZ Markit PMI's and retail sales, ahead of the U.S. ADP employment change, Service PMI from both Markit and ISM, and speeches from several Fed officials. Immediate resistance is located at 1.1616 (September 10 High), a break above targets 1.1659 (September 6 High). On the downside, support is seen at 1.1525 (September 10 Low), a break below could drag it till 1.1500.
USD/JPY: The dollar surged, recovering some of its previous session losses, as investors awaited U.S. labour data that could provide fresh insights on the strength of the economy. Payrolls processor ADP is expected to show that 185,000 jobs were added in September as compared with 163,000 jobs in August. The major was trading 0.1 percent up at 113.71, having hit a high of 114.06 on Monday, its highest since Nov. 8. FxWirePro's Hourly Yen Strength Index stood at 21.31 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment change, Service PMI from both Markit and ISM, and speeches from several Fed officials. Immediate resistance is located at 114.28 (Nov 1 High), a break above targets 114.73 (Nov 6 High). On the downside, support is seen at 113.45 (5-DMA), a break below could take it lower 112.63 (September 26 Low).
GBP/USD: Sterling steadied near the 1.3000 handle after tumbling to 3-week trough in the previous session, as UK Prime Minister Theresa May continues to persuade the European Union and senior members of her own party to accept her Brexit proposal. The major traded 0.2 percent up at 1.3005, having hit a low of 1.2941 on Tuesday; it’s lowest since September 10. FxWirePro's Hourly Sterling Strength Index stood at -13.87 (Neutral) 0500 GMT. Investors’ attention will remain on UK Markit service PMI, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3107(10-DMA), a break above could take it near 1.3193 (September 25 High). On the downside, support is seen at 1.2979 (September 12 Low), a break below targets 1.2944 (August 31 Low). Against the euro, the pound was trading 0.1 percent down at 89.09 pence, having hit a high of 88.59 on Monday, it’s highest since September 20.
AUD/USD: The Australian dollar slumped after data showing domestic building permits fell 9.4 percent in July, missing the estimated rise of 1 percent, while the annualized figure came in at -13.6 percent, below an estimate of -2.5 percent. The Aussie trades 0.1 percent down at 0.7183, having hit a low of 0.7162 on Tuesday; it’s lowest since September 18. FxWirePro's Hourly Aussie Strength Index stood at -24.46 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7141 (September 17 Low), a break below targets 0.7098 (September 7 Low). On the upside, resistance is located at 0.7263 (September 25 High), a break above could take it near 7303 (September 21 High).
NZD/USD: The New Zealand dollar tumbled to a near 2-week low as global dairy prices fell for the fourth time in a row at an auction, with the GDT Price Index easing 1.9 percent. The Kiwi trades 0.2 percent down at 0.6580, having touched a low of 0.6592 earlier, its lowest level since September 18. FxWirePro's Hourly Kiwi Strength Index was at -41.91 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6658 (September 25 High), a break above could take it near 0.6727 (August 28 High). On the downside, support is seen at 0.6540 (September 4 Low), a break below could drag it below 0.6500 (September 11 Low).
Equities Recap
Asian shares slumped, while the euro consolidated near a 6-week low as Italy's mounting debt and budget plan set it on a collision course with the European Union.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1 percent.
Tokyo's Nikkei plunged 0.7 percent to 24,100.11 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,146.10 points.
Hong Kong’s Hang Seng traded 0.3 percent lower at 27,044.01 points. Taiwan shares shed 0.5 percent to 10,863.94 points.
Commodities Recap
Crude oil prices surged on expectations of tighter markets once U.S. sanctions against Iran's petroleum industry takes effect from next month. International benchmark Brent crude was trading 0.2 percent up at $84.81 per barrel by 0506 GMT, having hit a high of $85.43 on Monday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.2 percent up at $75.21 a barrel, after rising as high as $75.88 on Tuesday, its highest since Nov 2014.
Gold prices surged to a near 2-week peak, boosted by safe-haven demand as Italy's budget plan sets it on course for a potential dispute with the European Union. Spot gold rose 0.3 percent to $1,206.06 by 0509 GMT, having hit a high of $1208.17 earlier, its highest since September 21. U.S. gold futures were up 0.3 percent at $1,210.10 an ounce.
Treasuries Recap
The Japanese government bond prices traded tad higher during late Asian session, following a dip in investors’ sentiments after the Nikkei 225 retreated, owing to budget worries and political disturbances in Italy. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.140 percent, the yield on the long-term 30-year note hovered around 0.916 percent and the yield on short-term 2-year too traded tad lower at -0.113 percent.
The Australian 10-year government bond yield slumped to a 2-week low during Asian session, struck by woes over the Italian budget deficit. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 5-1/2 basis points to 2.641 percent, the yield on the long-term 30-year bond slumped nearly 6 basis points to 3.127 percent and the yield on short-term 2-year suffered 4 basis points to 1.987 percent.
The yield on Canada's 10-year bond fell 6 basis points to 3.056 percent, which was more than the 5-basis-points drop for Ontario's bond of the same maturity.
