Market Roundup
- Oil increases as the U.S., China swap concessions in the trade war
- Gold slips as trade optimism boost risk appetite
Economic Data Ahead
- (0500 ET/0900 GMT) EZ industrial production w.d.a YoY July
- (0500 ET/0900 GMT) EZ industrial production s.a MoM July
Key Events Ahead
- (0745 ET/1145 GMT) ECB interest rate decision
FX Beat
DXY: The dollar index held gains near a 1-week peak after data released on Wednesday showed U.S. producer prices unexpectedly rose in August and underlying producer prices rebounded. However, markets still expect the Federal Reserve to cut interest rates again next week to support a slowing economy. The greenback against a basket of currencies traded flat at 98.64, having touched a low of 97.86 on Wednesday, its lowest since August 26.
EUR/USD: The euro steadied after falling to a 1-week low in the previous session, as investors cautiously await the European Central Bank policy meeting, where is expected to cut interest rates and deliver other stimulus measures in a bid to boost the region's economy. ECB policymakers are leaning toward a package that includes a rate cut, a pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates. The European currency traded flat at 1.1014, having touched a low of 1.1010 on Wednesday, its lowest since September 4. Investors’ attention will remain on a series of data out from the Eurozone economies and ECB interest rate decision, ahead of the U.S. unemployment benefit claims, consumer price index and monthly budget statement. Immediate resistance is located at 1.1059 (21-DMA), a break above targets 1.1116 (August 27 High). On the downside, support is seen at 1.0963 (August 30 High), a break below could drag it below 1.0925 (September 3 Low).
USD/JPY: The dollar rallied to a 6-week peak, as investors’ appetite for risk showed cautious improvement after China announced its first batch of tariff exemptions for 16 types of U.S. products, ahead of a planned meeting between the two countries to try and de-escalate their tariff row. Moreover, news that U.S. President Donald Trump agreed to delay an additional increase in tariffs on Chinese goods by two weeks at the request of China’s Vice Premier Liu He supported the bid tone around the pair. The major was trading 0.2 percent up at 108.03, having hit a high of 108.16 earlier, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, consumer price index and monthly budget statement. Immediate resistance is located at 108.37 (July 16 High), a break above targets 108.75 (July 25 High). On the downside, support is seen at 107.28 (5-DMA), a break below could take it lower at 106.76 (10-DMA).
GBP/USD: Sterling consolidated within narrow ranges, as the probability of a no-deal Brexit was still a concern for traders, given that Johnson stood firm on taking Britain out of the European Union by the end of next month. The major traded 0.1 percent down at 1.2315, having hit a high of 1.2384 on Monday, it’s highest since July 26. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2353 (September 5 High), a break above could take it near 1.2384 (September 9 High). On the downside, support is seen at 1.2279 (September 6 Low), a break below targets 1.2236(10-DMA). Against the euro, the pound was trading 0.1 percent down at 89.38 pence, having hit a high of 89.04 on Monday, it’s highest since July 25.
AUD/USD: The Australian dollar surged to a fresh 6-week peak, as trade war tensions eased after China exempted a basket of U.S. goods from its own tariffs while U.S. President Donald Trump said he would delay a scheduled tariff hike by two-weeks in October. The Aussie trades traded 0.3 percent up at 0.6875, having hit a high of 0.6879 earlier, it’s highest since July 31. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6848 (5-DMA), a break below targets 0.6807 (September 6 Low). On the upside, resistance is located at 0.6916 (July 31 High), a break above could take it near 0.6955 (July 26 High).
NZD/USD: The New Zealand dollar rose to a near 1-month peak, as the United States on Wednesday agreed to delay increasing tariffs on $250 billion worth of Chinese imports to Oct. 15 from Oct.1, after China moved to exempt some U.S. anti-cancer drugs and other goods from tariffs. The Kiwi trades 0.1 percent up at 0.6432, having touched a high of 0.6444 on Monday, its highest level since August 16. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6471 (August 13 High), a break above could take it near 0.6498 (August 9 High). On the downside, support is seen at 0.6383 (21-DMA), a break below could drag it below 0.6325 (September 4 Low).
Equities Recap
Asian shares touched a 6-week high on hopes for a thaw in U.S.-China trade frictions and expectations that the European Central Bank will push interest rates even further into negative territory.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.
Tokyo's Nikkei rose 0.8 percent to 21,759.61 points, Australia's S&P/ASX 200 index rallied 0.3 percent to 6,654.90 points.
Shanghai composite index rose 0.7 percent to 3,029.18 points, while CSI 300 index traded 1.01 percent up at 3,969.49 points.
Hong Kong’s Hang Seng traded 0.2 percent lower at 27,105.48 points. Taiwan shares added 0.3 percent to 10,827.55 points.
Commodities Recap
Crude oil prices steadied, boosted by moves to ease trade tensions between Washington and Beijing and a decline in U.S. crude inventories to the lowest in nearly a year. International benchmark Brent crude was trading 0.3 percent higher at $61.25 per barrel by 0508 GMT, having hit a high of $63.74 on Tuesday, its highest since August 1. U.S. West Texas Intermediate was trading 0.6 percent up at $56.26 a barrel, after rising as high as $58.74 on Tuesday, its highest since July 31.
Gold prices eased as hopes for a thaw in the U.S.-China trade tensions boosted risk appetite, while some investors booked profits ahead of a meeting by the European Central Bank. Spot gold declined 0.1 percent to $1,495.34 per ounce by 0514 GMT, having touched a low of $1,483.22 earlier, its lowest since August 13. U.S. gold futures fell 0.1 percent to $1,501.70 per ounce
Treasuries Recap
The Japanese government bond prices were little changed amid rising hopes of easing U.S.-China tensions. The Benchmark 10-year JGB futures rose 0.11 points to 154.65. The 10-year JGB yield fell 0.5 basis points to minus 0.215 percent, off 1-month high of minus 0.200 percent. The two-year JGB yield fell 0.5 basis points to minus 0.285 percent, while the five-year yield fell 1 basis points to minus 0.305 percent, reversing earlier rise to -0.280 percent. The 20-year JGB yield fell 0.5 basis points to 0.150 percent. The 30-year JGB yield was flat at 0.285 percent while the 40-year JGB yield rose 0.5 basis point to 0.320 percent.
