Market Roundup
- ECB should be ready to disappoint markets sometimes: Nowotny
- Oil prices ease amid mounting concern over U.S. economy
- Gold prices gains on recession fears, trade uncertainty
- New Zealand's ANZ Activity Outlook and ANZ Business Confidence slump
Economic Data Ahead
- (0355 ET/0755 GMT) German unemployment change August
- (0355 ET/0755 GMT) German unemployment rate s.a. August
- (0400 ET/0800 GMT) Italy industrial sales s.a. MoM June
- (0400 ET/0800 GMT) Italy industrial sales n.s.a. YoY June
- (0400 ET/0800 GMT) Italy industrial orders s.a. MoM June
- (0400 ET/0800 GMT) Italy industrial orders n.s.a. YoY June
- (0400 ET/0800 GMT) Italy producer price index MoM July
- (0400 ET/0800 GMT) Italy producer price index YoY July
- (0400 ET/0800 GMT) Eurozone service sentiment August
- (0400 ET/0800 GMT) Eurozone consumer confidence August
- (0400 ET/0800 GMT) Eurozone industrial confidence August
- (0400 ET/0800 GMT) Eurozone business climate August
- (0400 ET/0800 GMT) Eurozone economic sentiment indicator August
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index rose, extending previous session gains after U.S. Treasury Secretary Steven Mnuchin said he has no intention of intervening in the dollar right now, according to Bloomberg. The greenback against a basket of currencies traded 0.05 percent up at 98.23, having touched a low of 97.17 on Friday, its lowest since August 9.
EUR/USD: The euro rose, hating a 3-day losing streak, as the ECB has all but promised a stimulus package for its September 12 policy meeting. Investors now price in several rate cuts for the coming year and a fresh round of bond purchases. The European currency traded 0.05 percent up at 1.1082, having touched a high of 1.1163 on Monday, its highest since August 14. Investors’ attention will remain on Eurozone economic sentiment indicator and German prelim consumer price index, ahead of the U.S. unemployment benefit claims, preliminary gross domestic product, flash wholesale inventories, goods trade balance, prelim personal consumption expenditure and pending home sales. Immediate resistance is located at 1.1119 (38.2% retracement of 1.1230 and 1.1051), a break above targets 1.1162 (61.8% retracement). On the downside, support is seen at 1.1065 (August 20 Low), a break below could drag it below 1.1030.
USD/JPY: The dollar declined against the safe-haven Japanese yen as the U.S. Treasury yield curve remains inverted, which is considered a sign of an impending recession. The yields on 30-year Treasuries have hit a record low as investors rushed for the safety of government debt. The major was trading 0.2 percent down at 105.90, having hit a low of 104.44 on Monday, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, preliminary gross domestic product, flash wholesale inventories, goods trade balance, prelim personal consumption expenditure and pending home sales. Immediate resistance is located at 106.22 (21-DMA), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.26 (August 9 Low), a break below could take it lower at 105.05 (August 12 Low).
GBP/USD: Sterling consolidated within narrow ranges after tumbling to a near 1-week low in the previous session, as the suspension of UK parliament limited the time opponents have to derail a disorderly Brexit, but also increases the chance that Johnson could face a vote of no-confidence in his government. The major traded flat at 1.2209, having hit a high of 1.2309 on Tuesday, it’s highest since July 29. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2273 (August 22 High), a break above could take it near 1.2309 (August 27 High)). On the downside, support is seen at 1.2147 (21-DMA), a break below targets 1.2108 (August 22 Low)). Against the euro, the pound was trading 0.1 percent down at 90.81 pence, having hit a high of 90.16 on Tuesday, it’s highest since July 29.
AUD/USD: The Australian dollar fell, extending losses for the third straight session, weighed down by a surprise negative release of Construction Work Done during the second quarter. The Aussie trades 0.2 percent down at 0.6717, having hit a low of 0.6689 on Monday, 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 plunged to a fresh multi-year low after the country's ANZ Activity Outlook and ANZ Business Confidence slumped. The Kiwi trades 0.3 percent down at 0.6319, having touched a low of 0.6306 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 0.6368 (5-DMA), a break above could take it near 0.6409 (August 23 Low). On the downside, support is seen at 0.6275, a break below could drag it below 0.6240.
Equities Recap
Asian shares slumped as global recession worries from intensifying U.S.-China trade dispute and the spectre of a no-deal Brexit drove investors to safe-haven assets
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent
Tokyo's Nikkei declined 0.9 percent to 20,460.93 points, Australia's S&P/ASX 200 index rallied 0.1 percent to 6,507.40 points and South Korea's KOSPI eased 0.4 percent to 1,933.41 points.
Shanghai composite index fell 0.1 percent to 2,890.92 points, while CSI 300 index traded 0.3 percent down at 3,790.19 points.
Hong Kong’s Hang Seng traded 0.4 percent lower at 25,516.76 points. Taiwan shares added 0.3 percent to 10,462.43 points.
Commodities Recap
Crude oil prices declined for the first time in two days after San Francisco Federal Reserve President Mary Daly sounded a note of concern about the strength of U.S. economy. International benchmark Brent crude was trading 0.5 percent lower at $60.13 per barrel by 0630 GMT, having hit a low of $58.29 on Friday, its lowest since August 16. U.S. West Texas Intermediate was trading 0.6 percent down at $55.58 a barrel, after falling as low as $52.95 on Monday, its lowest since August 9.
Gold prices edged higher against the backdrop of recession fears, with traders tracking signs of progress on the U.S.-China trade talks and global central banks for direction on interest rates. Spot gold rose 0.3 percent to $1,546.16 per ounce by 0632 GMT, having touched a high of $1,555.10 on Monday, its highest since August 2013. U.S. gold futures were up 0.2 percent at $1,552.40 an ounce.
Treasuries Recap
The Japanese government bond yields slipped to fresh three-year lows amid persisting global recession concerns. The 30-year yield was down 1 basis point at 0.150 percent, its lowest since July 2016. The 10-year JGB yield was down 1 basis point at minus 0.280 percent after falling to minus 0.285 percent the previous day, its lowest since July 2016.
The Australian government bonds rallied during the Asian session after the U.S. Treasury yield closed near-record-low following bulk hedging by investors against riskier assets such as oil and equities. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged nearly 1 basis point higher to 0.882 percent, the yield on the long-term 30-year bond surged 1-1/2 basis points to 1.485 percent and the yield on short-term 2-year remained flat at 0.726 percent.
