Market Roundup
- Reserve Bank of Australia keeps cash rate unchanged
- Oil prices mixed as market awaits stocks data
- Sterling eases on political turmoil
- Gold prices decline as firmer greenback weighs
Economic Data Ahead
- (0230 ET/0630 GMT) Switzerland consumer price index MoM August
- (0300 ET/0700 GMT) Spain unemployment change August
- (0430 ET/0830 GMT) UK Markit construction PMI August
- (0500 ET/0900 GMT) Eurozone Producer price index MoM July
- (0500 ET/0900 GMT) Eurozone Producer price index YoY July
Key Events Ahead
- (0300 ET/0700 GMT) ECB's nominated President Lagarde's speech
FX Beat
DXY: The dollar index rallied to a more than a 2-year high as the 10-year U.S. Treasuries yield rose 2.5 basis points to 1.532 percent, off a three-year low of 1.443 percent touched last week. Investors eye U.S. manufacturing survey by the Institute for Supply Management, which has so far stayed above 50, pointing to growth in the sector. The greenback against a basket of currencies traded 0.2 percent up at 99.22, having touched a high of 99.33 earlier, its highest since May 2017.
EUR/USD: The euro plunged to an over 2-year low as speculation grew that the European Central Bank would deliver a bigger interest rate cut next week than previously anticipated. Data released yesterday showed European manufacturing contracted for seven straight months, supporting expectations for monetary easing from the ECB. The European currency traded 0.3 percent down at 1.0939, having touched a low of 1.0930 earlier, its lowest since May 2017. Investors’ attention will remain on Eurozone producer price index and ECB's nominated president Lagarde's speech, ahead of the U.S. construction spending and manufacturing PMI from both the Markit and ISM. Immediate resistance is located at 1.0985 (23.6% retracement of 1.1163 and 1.0930), a break above targets 1.1019 (38.2% retracement). On the downside, support is seen at 1.0900, a break below could drag it below 1.0870.
USD/JPY: The dollar rose, extending previous session gains as investors await the U.S. August ISM manufacturing PMI, which is expected to be stable at 51.2. However, U.S.-China trade war, Brexit concerns and further cracks in global growth curbed market gains. The major was trading 0.05 percent up at 106.25, having hit a low of 104.44 last week, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. construction spending and manufacturing PMI from both the Markit and ISM. Immediate resistance is located at 106.73 (August 23 High), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.65 (August 28 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling plunged to a 3-week low, amid growing investor worries about a no-deal Brexit as leaving the European Union without trading agreements in place could cause economic turmoil. The major traded 0.3 percent down at 1.2022, having hit a low of 1.2021 earlier, it’s lowest since August 12. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2090 (23.6% retracement of 1.2309 and 1.2021), a break above could take it near 1.2132 (38.2% retracement). On the downside, support is seen at 1.2014 (August 12 Low), a break below targets 1.1986 (Jan. 16 2017 Low). Against the euro, the pound was trading 0.2 percent down at 90.97 pence, having hit a high of 90.16 last week, it’s highest since July 29.
AUD/USD: The Australian dollar steadied after falling to a near 4-week low earlier in the session as the country's central bank kept its cash rate at an all-time low of 1 percent, expecting recent policy easing to boost broader economic growth in coming quarters. The major is likely to remain on the downside as domestic retail sales fell in July, despite stimulus measures such as income tax cuts and interest rate cuts. The Aussie trades flat at 0.6718, having hit a low of 0.6687 earlier, it’s lowest since August 7. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6677 (August 7 Low), a break below targets 0.6630. On the upside, resistance is located at 0.6799 (August 2 1 High), a break above could take it near 0.6822 (August 8 High).
NZD/USD: The New Zealand dollar tumbled to a fresh 4-year low amid fears of a global economic slowdown fuelled by intensifying U.S.-China trade war. The Kiwi trades 0.3 percent down at 0.6293, having touched a low of 0.6269 earlier, its lowest level September 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6324 (5-DMA), a break above could take it near 0.6358 (10-DMA). On the downside, support is seen at 0.6255, a break below could drag it below 0.6210.
Equities Recap
Asian shares slumped after China said it registered a complaint against the United States at the World Trade Organization over U.S. import duties.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.3 percent.
Tokyo's Nikkei rose 0.1 percent to 20,639.91 points, Australia's S&P/ASX 200 index declined 0.2 percent to 6,564.90 points and South Korea's KOSPI eased 0.4 percent to 1,962.74 points.
Shanghai composite index fell 0.1 percent to 2,921.54 points, while CSI 300 index traded 0.2 percent down at 3,842.51 points.
Hong Kong’s Hang Seng traded 0.4 percent lower at 25,533.31 points. Taiwan shares shed 0.7 percent to 10,558.21 points.
Commodities Recap
Crude oil prices consolidated as the ongoing U.S.-China trade war dented investor sentiment, with soft South Korean data adding to concerns over emerging markets and a rise in OPEC output. International benchmark Brent crude was trading 0.05 percent higher at $58.63 per barrel by 0450 GMT, having hit a low of $58.08 on Monday, its lowest since August 15. U.S. West Texas Intermediate was trading 0.2 percent up at $54.84 a barrel, after falling as low as $54.32 on Monday, its lowest since August 27.
Gold prices declined as the dollar surged, although fears of a global economic slowdown fuelled by intensifying U.S.-China trade war kept prices near a multi-year high. Spot gold was trading 0.3 percent down at $1,524.10 per ounce at 0453 GMT, having touched a low of $1,516.76 on Friday, its lowest since August 23. U.S. gold futures were up 0.3 percent at $1,533.8 an ounce.
Treasuries Recap
The 10-year U.S. Treasuries yield rose 2.5 basis points to 1.532 percent, off a three-year low of 1.443 percent touched last week. The yield dropped 51.5 basis points last month, the biggest monthly decline since August 2011.
The Japanese government bond prices were steady to slightly firmer amid an escalating U.S.-China trade dispute. The 10-year JGB yield was unchanged at minus 0.270 percent. The 20-year yield declined 1 basis point to 0.045 percent, hovering back near a three-year trough of 0.040 percent set last week.
The two-year German government bond yield has dipped to minus 0.919 percent on Monday, near its record low around minus 0.964 percent hit in early 2017.
