Market Roundup
- Trump, Abe agree two-way trade talks, Japan dodges U.S. auto tariffs
- Trump accuses China of 2018 election meddling; Beijing rejects charge
- Trump wavers on U.S. Supreme Court nominee Kavanaugh
- Trump slams Canada over NAFTA, says rejected Trudeau meeting
- Trump, May discuss desire for "ambitious" post-Brexit trade deal
- China Aug Industrial profits yy, 9.2% vs 16.2% July
- China leaves rates steady after Fed as two economies diverge
- After Fed, Philippines, Indonesia seen hiking rates; NZ holds the line
- Italy to present budget targets after government tussle
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Sep MFG Business Confidence, 104.5 f'cast, 104.8 prev
- (0400 ET/0800 GMT) Italy Sep Consumer Confidence, 114.9 f'cast, 115.2 prev
- (0500 ET/0900 GMT) EZ Sep Business Climate, 1.19 f'cast, 1.22 prev
- (0500 ET/0900 GMT) EZ Sep Economic Sentiment, 111.2 f'cast, 111.6 prev
- (0500 ET/0900 GMT) EZ Sep Industrial Sentiment, 5.1 f'cast, 5.5 prev
- (0500 ET/0900 GMT) EZ Sep Services Sentiment, 14.6 f'cast, 14.7 prev
- (0500 ET/0900 GMT) EZ Sep Consumer Confidence Final, -2.9 f'cast, -2.9 prev
- (0800 ET/1200 GMT) Germany Sep CPI Prelim YY, 2.0% f'cast, 2.0% prev
- (0800 ET/1200 GMT) Germany Sep HICP Prelim YY, 2.0% f'cast, 1.9% prev
Key Events Ahead
- N/A General Council meeting of the ECB in Frankfurt
- N/A ECB's Mario Draghi, BoE's Mark Carney, Bank of France's Francois Villeroy de Galhau and Irish Central Bank's Philip Lane speak at a conference about financial stability in Frankfurt
- (0745 ET/1145 GMT) BoE's Andy Haldane: Panelist at Institute for Government "In Conversation" with Bronwen Maddox in London
- (0930 ET/1330 GMT) Welcome address by ECB President Mario Draghi at 3rd Annual ESRB conference in Frankfurt
- (1000 ET/1400 GMT) Riksbank's Stefan Ingves participates in a panel discussion on climate change and financial stability, The conference will be arranged by the European Systemic Risk Board (ESRB) in Frankfurt
- (1000 ET/1400 GMT) BoE's Mark Carney: Chairing policy panel discussion on "Sustainable Finance" at the Third European Systemic Risk Board Annual Conference in London
- (1300 ET/1700 GMT) Keynote speech by ECB chief economist Peter Praet at Money, Macro and Finance Research Group conference in London
- (1400 ET/1800 GMT) Fed's Robert Kaplan discusses "What You Really Need to Lead: the Power of Thinking and Acting Like an Owner" at the "Banking and the Economy: a Forum for Minorities in Banking" conference in Charlotte, N.C.
FX Beat
DXY: The dollar index advanced to a 1-week peak after the Federal Reserve raised key overnight borrowing costs for a third time in 2018, as expected, and signaled it would increase rates further. The greenback against a basket of currencies trades 0.2 percent up at 94.50, having touched a low of 93.81 on Friday, its lowest since July 9. FxWirePro's Hourly Dollar Strength Index stood at 43.29 (Neutral) by 0500 GMT.
EUR/USD: The euro slumped to a 1-week low as the greenback surged after the Fed raised interest rates for the third time this year, as expected, and still foresees another rate hike in December, three more next year, and one increase in 2020. The European currency traded 0.2 percent down at 1.1715 having touched a high of 1.1815 on Monday, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at -48.21 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone Economic Sentiment Indicator and ECB President Draghi's and Praet's speech, ahead of the U.S. unemployment benefit claims, gross domestic product, preliminary wholesale inventories, goods trade balance, personal consumption expenditures, durable goods orders, pending home sales and Fed Powell's speech. Immediate resistance is located at 1.1784 (September 20 High), a break above targets 1.1820 (June 11 High). On the downside, support is seen at 1.1662 (August 28 Low), a break below could drag it till 1.1605 (September 5 Low).
USD/JPY: The dollar eased from a 2-1/2 month peak touched in the previous session, after the Federal Reserve raised interest rates as expected, sticking to its script of gradual policy tightening. The major was trading 0.1 percent down at 112.62, having hit a high of 113.13 the day before, its highest since July 19. FxWirePro's Hourly Yen Strength Index stood at 64.52 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, gross domestic product, preliminary wholesale inventories, goods trade balance, personal consumption expenditures, durable goods orders, pending home sales and Fed Powell's speech. Immediate resistance is located at 113.30 (Jan 5 High), a break above targets 113.69 (Dec 11 High). On the downside, support is seen at 112.42 (September 21 Low), a break below could take it lower 112.04 (September 20 Low).
GBP/USD: Sterling declined, extending previous session losses, as investors remained cautious about negotiations between Britain and the European Union on a Brexit deal. The major traded 0.3 percent down at 1.3126, having hit a low of 1.3055 on Friday; it’s lowest since September 13. FxWirePro's Hourly Sterling Strength Index stood at 95.48 (Slightly Bullish) 0500 GMT. Investors’ attention will remain on the BoE MPC member Haldane and Governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3215 (September 19 High), a break above could take it near 1.3244 (July 12 High). On the downside, support is seen at 1.3098 (September 19 Low), a break below targets 1.3055 (September 21 Low). Against the euro, the pound was trading 0.05 percent up at 89.12 pence, having hit a low of 89.95 on Friday, it’s lowest since September 7.
AUD/USD: The Australian dollar slumped to a 1-week low as investors expect the Reserve Bank of Australia to keep rates at 1.5 percent and shown every sign of staying there for a long time at its October policy meeting next week. The Aussie trades 0.4 percent down at 0.7227, having hit a high of 0.7303 on Friday; it’s highest since August 30. FxWirePro's Hourly Aussie Strength Index stood at -120.89 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7213 (September 19 Low), a break below targets 0.7175 (August 31 Low). On the upside, resistance is located at 0.7292 (September 30 High), a break above could take it near 0.7315 (August 30 High).
NZD/USD: The New Zealand dollar tumbled after the Reserve Bank of New Zealand held rates at a record low of 1.75 percent as expected and reiterated that trade tensions were a risk to its growth outlook. The Kiwi trades 0.3 percent down at 0.6639, having touched a high of 0.6699 on Friday, its highest level since August 30. FxWirePro's Hourly Kiwi Strength Index was at 19.26 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6727 (August 28 High), a break above could take it near 0.6763 (August 8 High). On the downside, support is seen at 0.6630 (August 23 Low), a break below could drag it below 0.6593 (September 3 Low).
Equities Recap
Asian shares tumbled amid concerns that higher U.S. yields would encourage investors to move funds out of emerging markets to the United States.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1 percent.
Tokyo's Nikkei declined 0.8 percent to 23,809.47 points, Australia's S&P/ASX 200 index plunged 0.2 percent to 6,181.20 points, and South Korea's KOSPI gained 0.4 percent to 2,348.49 points.
Shanghai composite index declined 0.5 percent to 2,792.45 points, while CSI300 index traded 0.4 percent down at 3,402.87 points.
Hong Kong’s Hang Seng traded 0.4 percent lower at 27,720.65 points. Taiwan shares added 0.5 percent to 11,034.19 points.
Commodities Recap
Crude oil prices rallied as investors focused on the prospect of tighter markets due to U.S. sanctions against major crude exporter Iran, which are set to be implemented in November. International benchmark Brent crude was trading 0.5 percent up at $82.05 per barrel by 0520 GMT, having hit a high of $82.52 on Tuesday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.5 percent up at $72.33 a barrel, after rising as high as $72.73 on Tuesday, its highest since July 11.
Gold prices rose after falling to a 2-week low in the previous session following a U.S. interest rate hike. Spot gold gained 0.2 percent to $1,196.67 an ounce by 0523 GMT, having hit a low of $1190.41 on Wednesday, its lowest since September 11. U.S. gold futures were up 0.3 percent at $1,202.10 an ounce.
Treasuries Recap
The Japanese government bond prices gained during late Asian session ahead of the country’s unemployment rate and industrial production for the month of August, scheduled to be released today by 23:50GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.120 percent, the yield on the long-term 30-year note fell nearly 1-1/2 basis points to 0.898 percent and the yield on short-term 2-year remained tad lower at -0.112 percent.
The Australia government bonds jumped across the curve during Asian session, tracking a similar movement in the United States counterpart even as the Federal Reserve adopted a rate hike in its monetary policy meeting, held overnight, as was widely anticipated by market participants. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped nearly 3-1/2 basis points to 2.707 percent, the yield on the long-term 30-year bond plunged nearly 4 basis points to 3.191 percent and the yield on short-term 2-year traded 3 basis points lower at 2.069 percent.
The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year climbed 36 Canadian cents to yield 2.417 percent. On Tuesday, the 10-year yield touched its highest intraday in more than four months at 2.472 percent.
