Market Roundup
- BOJ holds policy, sticks to modest economic growth view despite trade perils
- Japan Aug exports yy, +6.6% vs +5.6% f'cast
- China will use trade war with U.S. to replace imports - state media
- China's Premier Li says unilateral trade actions will not resolve problems
- Maintaining China's steady growth increasingly difficult - Premier Li
- Trump says U.S.-South Korea trade deal may be signed at U.N.
- Kavanaugh accuser wants FBI investigation before she will testify
- North Korea to invite foreign experts to permanently scrap missile sites
- Nearing divorce, May seeks goodwill from EU to avoid disorderly Brexit
- India's struggle to defend rupee shifts focus to rate hikes
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Aug Core CPI YY, 1.8% f'cast, 1.9% prev
- (0430 ET/0830 GMT) Great Britain Aug CPI YY, 2.4% f'cast, 2.5% prev
- (0430 ET/0830 GMT) Great Britain Aug RPI YY, 3.2% f'cast, 3.2% prev
- (0430 ET/0830 GMT) Great Britain Aug PPI Input Prices YY NSA, 9.1% f'cast, 10.9% prev
- (0430 ET/0830 GMT) Great Britain Aug PPI Output Prices YY NSA, 2.9% f'cast, 3.1% prev
- (0430 ET/0830 GMT) Great Britain Aug PPI Core Output YY NSA, 2.1% f'cast, 2.2% prev
Key Events Ahead
- N/A Roundtable with Silvana Tenreyro, member of the Monetary Policy Committee, Bank of England in London
- (0400 ET/0800 GMT) Bank of England's Andy Haldane gives Lecture at the Bank of Estonia's 100th Anniversary conference in Tallinn, Estonia
- (0800 ET/1200 GMT) Riksbank's Henry Ohlsson will participate in Business Arena Stockholm and discuss the Riksbank's role in the economy in Stockholm
- (0930 ET/1330 GMT) ECB's Mario Draghi speaks at an event entitled "Making Europe's Economic Union work" organized by Jacques Delors Institute, Hertie School of Governance, Bertelsmann Stiftung in Berlin
FX Beat
DXY: The dollar index eased, hovering towards an over 1-1/2 month low hit in the previous session, as escalating trade tensions pose a risk to the global economy. The greenback against a basket of currencies trades 0.1 percent down at 94.53, having touched a low of 94.32, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at -84.83 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro edged up after easing from a 3-week peak touched in the previous session, as the greenback eased amid another round of retaliatory tariffs in the U.S. - China trade dispute. The European currency traded 0.1 percent up at 1.1676, having touched a high of 1.1724 on Tuesday, its highest since Aug 28. FxWirePro's Hourly Euro Strength Index stood at -19.10 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone current account data, construction output and ECB President Draghi's speech, ahead of the U.S. Housing Starts, building permits and current account figures. Immediate resistance is located at 1.1718 (August 30 High), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1584 (August 31 Low), a break below could drag it till 1.1542 (September 5 Low)
USD/JPY: The dollar eased from a 2-month high as trade tensions escalated further after President Donald Trump imposed tariffs on $200 billion worth of Chinese goods, which drew retaliatory duties from Beijing on about $60 billion worth of U.S. goods. The major was trading 0.05 percent down at 112.31, having hit a high of 112.43 earlier, its highest since July 20. FxWirePro's Hourly Yen Strength Index stood at -95.24 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. Housing Starts, building permits and current account figures. Immediate resistance is located at 112.62 (July 12 High), a break above targets 112.92 (July 17 High). On the downside, support is seen at 111.88 (5-DMA), a break below could take it lower 111.66 (September 18 Low).
GBP/USD: Sterling surged to a near 2-month peak amid growing confidence that UK and Brussels can secure an agreement, however, a row within the ruling Conservative Party over the sort of deal Prime Minister Theresa May is proposing limited upside. The major traded 0.05 percent up at 1.3153, having hit a high of 1.3175 earlier; it’s highest since July 26. FxWirePro's Hourly Sterling Strength Index stood at 11.83 (Neutral) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit trade deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3213 (July 26 High), a break above could take it near 1.3274 (July 5 High). On the downside, support is seen at 1.3104 (5-DMA), a break below targets 1.3032 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 88.82 pence, having hit a high of 88.65 earlier, it’s highest since August 2.
AUD/USD: The Australian dollar rose to a near 3-week peak as some investors took comfort from the fact that Washington's new duties were set at 10 percent for now, rather than an outright 25 percent tariff. The Aussie trades 0.3 percent up at 0.7243, having hit a high of 0.7254; it’s highest since August 31. FxWirePro's Hourly Aussie Strength Index stood at 102.73 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7181 (5-DMA), a break below targets 0.7144 (September 18 Low). On the upside, resistance is located at 0.7286 (August 17 High), a break above could take it near 0.7303 (78.6% retracement of 0.7362 and 0.7085).
NZD/USD: The New Zealand dollar advanced to a near 2-week peak despite domestic current account deficit widening in the second quarter, led by a rise in the primary income deficit. The Kiwi trades 0.3 percent up at 0.6604, having touched a high of 0.6609 earlier, its highest level since September 6. FxWirePro's Hourly Kiwi Strength Index was at 96.87 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6639 (61.8% retracement of 0.6727 and 0.6500), a break above could take it near 0.6677 (78.6% retracement). On the downside, support is seen at 0.6538 (September 17 Low), a break below could drag it below 0.6500 (September 11 Low).
Equities Recap
Asian shares advanced as investors looked past the latest escalation in the U.S.-China trade war, while sterling rallied on hopes the European Union and the U.K. will strike a deal to avoid a hard Brexit.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
Tokyo's Nikkei surged 1.1 percent to 23,672.52 points, Australia's S&P/ASX 200 index rallied 0.5 percent to 6,190.00 points, and South Korea's KOSPI fell 0.1 percent to 2,307.51 points.
Shanghai composite index rose 1.4 percent to 2,737.62 points, while CSI300 index traded 1.6 percent up at 3,321.31 points.
Hong Kong’s Hang Seng traded 1.4 percent higher at 27,458.63 points. Taiwan shares added 0.9 percent to 10,857.27 points.
Commodities Recap
Crude oil prices surged as concerns that producers will not be able to respond to a shortfall in supply once U.S. sanctions on Iran are imposed. International benchmark Brent crude was trading 0.2 percent down at $79.01 per barrel by 0506 GMT, having hit a high of $79.69 on Tuesday, its highest since September 12. U.S. West Texas Intermediate was trading 0.3 percent up at $69.91 a barrel, after rising as high as $70.40 on Tuesday, its highest since September 12.
Gold prices surged above the $1200.00 level as the dollar weakened despite another round of retaliatory tariffs in the U.S. - China trade dispute. Spot gold rose 0.3 percent to $1,202.05 an ounce by 0510 GMT, having hit a high of $1212.55 on Thursday, its highest since Aug. 28. U.S. gold futures were up 0.1 percent at $1,203.70 an ounce.
Treasuries Recap
The Japanese government bond prices remained nearly flat after the Bank of Japan (BoJ) in its 2-day bi-monthly monetary policy meeting, kept interest rate unchanged, as was widely anticipated by market participants. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained nearly 1/2 basis point higher at 0.118 percent, the yield on the long-term 30-year note flat at 0.851 percent and the yield on short-term 2-year hovered around -0.104 percent.
The Australian 10-year government bond yield surged to a 1-1/2 month high during Asian session following a heavy sell-off in the United States counterpart. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 5 basis points to 2.715 percent, the yield on the long-term 30-year bond also surged 5 basis points to 3.210 percent and the yield on short-term 2-year too climbed 5 basis points to 2.125 percent.
The Canadian government bond prices were lower across a steeper yield curve, with the 10-year falling 35 Canadian cents to yield 2.383 percent, its highest since May 25.
