Market Roundup
- Trump proposes U.S. tax overhaul, stirs concerns on deficit
- Hawkish Rosengren acknowledges low inflation gives Fed flexibility
- Japan parliament dissolved, snap Oct. 22 election expected
- Tokyo Gov Koike’s party gains traction ahead of general election
- Moody’s – Japan banking system stable despite pressure on profitability
- Japan set for largest party realignment in 15 years – Nikkei
- Japan machine tools orders seen hitting record levels in ’17 – Nikkei
- RBNZ flags softer NZ growth as construction boom deflates
- Australia job vacancies surge to record high in August quarter
- Schaeuble to head German parliament, unblocking coalition talks
- Britain's May defends free markets and debt reduction
- BoE's Haldane: pay signs encouraging, rate hike would be good news
Economic Data Ahead
- (0200 ET/0600 GMT) Germany Oct GfK Consumer Sentiment, 11.0 eyed; last 10.9
- (0500 ET/0900 GMT) EU Sep Services Sentiment, 14.9 eyed; last 14.9
- (0500 ET/0900 GMT) EU Sep Business Climate, 1.11 eyed, last 1.09
- (0500 ET/0900 GMT) EU Sep Industrial Sentiment, 5.1 eyed, last 5.1
- (0500 ET/0900 GMT) EU Sep Economic Sentiment, 112.0 eyed, last 111.9
- (0500 ET/0900 GMT) EU Sep Consumer Confid. Final -1.2 eyed, last -1.2
- (0800 ET/1200 GMT) Germany Sep HICP Prelim, 0.1% m/m, 1.9% y/y eyed; last 0.2%, 1.8%
- (0800 ET/1200 GMT) Germany Sep CPI Prelim, 0.1% m/m, 1.8% y/y eyed; last 0.1%, 1.8%
Key Events Ahead
- N/A BoE holds '20 Years On' conference in London (to September 29)
- N/A Riksbank Gov Ingves and Deputy Gov Floden speaks in Stockholm
- (0235 ET/0635 GMT) BOJ's Kuroda speaks in Tokyo
- (0320 ET/0720 GMT) Norges Bank Deputy Gov Matsen speaks in Copenhagen
- (0400 ET/0800 GMT) ECB's Praet speaks in Berlin
- (0600 ET/1000 GMT) Italy E1.500/E2.500/E2.000 bln for 7/5/10 year auction
- (0600 ET/1000 GMT) RBA Deputy Governor Debelle speaks in London
- (0700 ET/1100 GMT) Riksbank executive board meeting
- (0710 ET/1110 GMT) ECB's Lautenschlager speaks in Vienna
- (1000 ET/1400 GMT) Fed's Fischer speaks in London
- (1950 ET/2350 GMT) BOJ to release summary of policy meeting
FX Beat
DXY: The dollar traded near multi-week highs versus most of its major peers as the U.S. President Donald Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades. The greenback against a basket of currencies traded 0.1 percent up at 93.55, having touched a high of 93.61 the day before, its highest since Aug. 23. FxWirePro's Hourly Dollar Strength Index stood at 162.39 (Highly Bullish) by 0400 GMT.
EUR/USD: The euro declined, extending losses for the fourth straight session, as the greenback rose to a one month high on hopes that U.S. President Donald Trump's administration may be making progress on fiscal reforms. The European currency traded 0.1 percent down at 1.1731, having touched a low of 1.1717 the day before, its lowest since Aug. 18. FxWirePro's Hourly Euro Strength Index stood at -61.26 (Bearish) by 0400 GMT. Investors’ attention will remain on the Eurozone sentiment indicator, ahead of series of Fed official speeches, unemployment benefits claims, personal consumption expenditure and gross domestic product data. Immediate resistance is located at 1.1779 (78.6% retracemet of 1.2005 and 1.1717), a break above targets 1.1855 (5-DMA). On the downside, support is seen at 1.1717 (Previous Session Low), a break below could drag it near 1.1700.
USD/JPY: The dollar steadied above the 113.00 handle after U.S. President Donald Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades, offering to cut taxes for most Americans. The major was trading 0.2 percent up at 113.05, having hit a high of 113.25 the day before, its highest since mid Jul. FxWirePro's Hourly Yen Strength Index stood at -31.74 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. unemployment benefits claims, personal consumption expenditure and gross domestic product and series of Fed officials' speeches for further momentum. Immediate resistance is located at 113.30, a break above targets 113.50. On the downside, support is seen at 112.23 (5- DMA), a break below could take it near 111.75 (10-DMA)..
GBP/USD: Sterling eased, extending losses for the fifth consecutive session, as the greenback broadly gained after the U.S. Federal Reserve Chair Janet Yellen said that the central bank should continue gradual rate hikes. The major traded 0.05 percent down at 1.3377, having hit a low of 1.3363 on Wednesday, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at 33.71 (Neutral) by 0400 GMT. Investors’ focus will remain on the BoE Governor Carney's speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3475 (5-DMA), a break above could take it near 1.3570. On the downside, support is seen at 1.3363 (Previous Session Low), a break below targets 1.3300. Against the euro, the pound was trading flat at 87.71 pence, having hit a high of 87.46 pence in the previous session, its highest since July.
AUD/USD: The Australian dollar tumbled to a fresh 6-week low as the greenback climbed and Treasury yields rose on wagers a proposed cut in U.S. tax rates could boost economic growth and inflation. The Aussie trades 0.4 percent down 0.7820, having hit a low of 0.7816 earlier, it’s lowest since Aug. 15. FxWirePro's Hourly Aussie Strength Index stood at -84.11 (Slightly Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7800, a break below targets 0.7770. On the upside, resistance is located at 0.7880, a break above could take it near 0.7910(5-DMA).
NZD/USD: The New Zealand dollar slumped below the 0.7200 handle after the country's central bank left policy rates on hold at 1.75 percent in a widely expected decision and noted a lower currency would help deliver more balance growth. The Kiwi trades 0.1 percent down at 0.7191, having touched a low of 0.7167 on Tuesday, its lowest level since Sept. 5. FxWirePro's Hourly Kiwi Strength Index was at -81.52 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7245 (21-DMA), a break above could take it near 0.7277 (Sept. 26 High). On the downside, support is seen at 0.7177 (Previous Session Low), a break below could drag it till 0.7140.
Equities Recap
Asian shares declined, while the greenback against a basket of currencies and U.S. bond yields rose as strong U.S. economic data added to the case for an imminent interest rate hike by the Federal Reserve later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 percent.
Tokyo's Nikkei rose 0.5 percent to 20,366.80 points, Australia's S&P/ASX 200 index gained 0.1 percent to 5,671.00 points and South Korea's KOSPI climbed 0.1 percent to 2,375.93 points.
Shanghai composite index eased 0.2 percent to 3,338.56 points, while CSI300 index was trading 0.01 percent down at 3,820.06 points.
Hong Kong’s Hang Seng was trading 0.3 percent lower at 27,561.31 points. Taiwan shares shed 0.3 percent to 10,296.45 points.
Commodities Recap
Crude oil prices steadied after falling for consecutive two sessions, following a surprise decline in inventories. International benchmark Brent crude was trading 0.05 percent up at $57.68 per barrel by 0354 GMT, having hit a high of $59.48 on Tuesday, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.1 percent down at $51.94 a barrel, after rising as high as $52.41 on Tuesday, its highest since April.
Gold prices slumped to a fresh one-month low on the back of expectations of a rise in U.S. interest rates this year. Spot gold eased 0.05 percent to $1,281.07 per ounce at 0358 GMT, having declined to a low of $1280.62 earlier, its lowest since Aug. 25. U.S. gold futures for December delivery fell 0.1 percent to $1,287.00 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.253 percent higher by 0.044 bps, while 5-year yield was 0.04 bps up at 1.949 percent.
The Japanese government bonds slumped, following similar moves in its U.S. cousin, after President Donald Trump on Wednesday promised that his newly released tax reform plan would deliver American businesses and families some of the lowest tax rates in nearly a century, and do so with bipartisan support in Congress. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 0.07 percent, the yield on long-term 30-year climbed nearly 4 basis points to 0.88 percent and the yield on short-term 2-year traded 1 basis point higher at -0.12 percent.
The Australian bonds slumped, tracking weakness in the U.S. counterpart after the latter faced broad selling pressure on Wednesday after Fed chair Janet Yellen remained steadfast in her view that gradual rate rises are needed despite soggy inflation. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4-1/2 basis points to 2.84 percent, the yield on the 15-year note also climbed 4-1/2 basis points to 3.11 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.97 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year price up 4.5 Canadian cents to yield 1.583 percent and the 10-year falling 17 Canadian cents to yield 2.134 percent. The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 4.9 basis points to a spread of 10.4 basis points.
