Market Roundup
- Japan Aug flash Manufacturing PMI 52.8, July 52.1, new domestic/export orders up
- Japan June wages revised up to +0.4% y/y from -0.4% on bonuses – MNI
- New Zealand pre-election update lowered GDP projections, ruled out tax cuts
- Australian state looks to lock in renewable energy target
- Britain outlines plans to break free of European Court after Brexit
- UK employers' hiring confidence lowest since Brexit vote, say recruiters
- N. Korea's Kim orders production of more rocket engines, warhead tips -KCNA
- Trump's Afghan decision may increase U.S. air power, training
- As tax debate heats up, U.S. Republicans tweak business interest plan
Economic Data Ahead
- (0300 ET/0700 GMT) France Aug Markit Manufacturing flash PMI, 54.5 eyed, last 54.9
- (0300 ET/0700 GMT) France Aug Markit Composite flash PMI, 55.5 eyed, last 55.6
- (0300 ET/0700 GMT) France Aug Markit Service flash PMI, 55.8 eyed, last 56.0
- (0330 ET/0730 GMT) Germany Aug Markit Manufacturing flash PMI, 57.7 eyed, last 58.1
- (0330 ET/0730 GMT) Germany Aug Markit Composite flash PMI, 54.7 eyed, last 54.7
- (0330 ET/0730 GMT) Germany Aug Markit Service flash PMI, 53.3 eyed, last 53.1
- (0400 ET/0800 GMT) EU Aug Markit Manufacturing flash PMI, 56.3 eyed, last 56.6
- (0400 ET/0800 GMT) EU Aug Markit Composite flash PMI, 55.5 eyed, last 55.7
- (0400 ET/0800 GMT) EU Aug Markit Service flash PMI, 55.4 eyed, last 55.4
Key Events Ahead
- (0300 ET/0700 GMT) ECB's Draghi speaks at the 6th Lindau Meeting on Economic Sciences
- (0530 ET/0930 GMT) Germany E3bln for 10-year auction
- (0530 ET/0930 GMT) Great Britain Stg 2.75 bln for 6-year auction
FX Beat
DXY: The dollar steadied versus most of its major peers, as investors adjusted positions ahead of a global central bankers' conference later this week. The greenback against a basket of currencies traded flat at 93.53, having touched a high of 94.15 last week, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at 55.59 (Bullish) by 0500 GMT.
EUR/USD: The euro consolidated within narrow ranges, as investors expect the ECB’s Draghi’s speech may not offer any hawkish hints on the monetary policy. The European currency traded flat at 1.1759, having touched a high of 1.1828 on Monday, its highest since Aug. 14. FxWirePro's Hourly Euro Strength Index stood at 58.67 (Bullish) by 0400 GMT. Investors’ attention will remain on the ECB President Draghi’s speech and Eurozone flash manufacturing PMIs, ahead of the U.S. new home sales and preliminary Markit PMI's. Immediate resistance is located at 1.1838 (Aug 14 High), a break above targets 1.1889. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).
USD/JPY: The dollar eased as investors turned cautious ahead of speeches from Fed Chair Janet Yellen and European Central Bank President Mario Draghi on Friday in Jackson Hole. The major was trading 0.1 percent down at 109.44, having hit a low of 108.60 on Friday, its lowest since Apr. 19 2016. FxWirePro's Hourly Yen Strength Index stood at -57.39 (Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the new home sales and preliminary Markit PMI's for further momentum. Immediate resistance is located at 109.99 (61.8% retracement of 112.19 and 108.60), a break above targets 110.41 (50.0% retracement of 112.19 and 108.80). On the downside, support is seen at 109.00, a break below could take it near 108.60 (August 18 Low).
GBP/USD: Sterling tumbled to a fresh 8-week low as uncertain economic outlook quashed expectations of a rise in Bank of England interest rates. The major traded flat at 1.2824, having hit a low of 1.2831 on Friday, its lowest since July 12. FxWirePro's Hourly Sterling Strength Index stood at -34.92 (Neutral) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2869 (5-DMA), a break above could take it near 1.2916 (10-DMA). On the downside, support is seen at 1.2831 (August 18 Low), a break below targets 1.2811 (July 12 Low). Against the euro, the pound was trading flat at 91.70 pence, having hit a fresh 10-month low of 91.77.
AUD/USD: The Australian dollar declined as markets remained cautious ahead of an annual gathering of central bankers at Jackson Hole later in the week. The Aussie trades 0.2 percent down at 0.7894, having hit a high of 0.7962 last week, it’s strongest since Aug. 04. FxWirePro's Hourly Aussie Strength Index stood at 58.67 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7869 (August 18 Low), a break below targets 0.7807. On the upside, resistance is located at 0.7950, a break above could take it near 0.7927 (Aug 17 High).
NZD/USD: The New Zealand dollar fell to a 1-week low after the NZ Treasury trimmed GDP forecasts. New Zealand pre-election Economic and Fiscal update [PREFU] released earlier showed the Treasury expects the Reserve Bank of New Zealand to start the tightening cycle in mid-2018 and a smaller surplus in 2019-21 on lower growth. The Kiwi trades 0.5 percent down at 0.7239, having touched a low of 0.7223 on Wednesday, its lowest level since July 12. FxWirePro's Hourly Kiwi Strength Index was at -15.44 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7295 (78.6% retracement of 0.7558 and 0.7223), a break above could take it near 0.7373 (21-DMA). On the downside, support is seen at 0.7200, a break below could drag it till 0.7170 (June 12 Low).
Equities Recap
Asian shares traded in a volatile market, while the dollar declined against the yen following campaign-rally threats by U.S. President Donald to force a government shutdown over funding a border wall.
MSCI's broadest index of Asia-Pacific shares outside Japan traded flat.
Tokyo's Nikkei rallied 0.3 percent to 19,436.92 points, Australia's S&P/ASX 200 index fell 0.3 percent to 5,732.60 points and South Korea's KOSPI eased 0.1 percent to 2,362.79 points.
Shanghai composite index rose 0.05 percent to 3,291.14 points, while CSI300 index was trading 0.1 percent up at 3,756.91 points. Taiwan shares added 0.1 percent to 10,406.81 points.
Commodities Recap
Crude oil prices consolidated within narrow ranges, as concerns of oversupply triggered by rising Libya output and fears of reduced future investment in the industry weighed on market sentiment. International benchmark Brent crude was trading 0.2 percent up at $51.73 per barrel by 0417 GMT, having hit a high of $52.93 on Friday, its strongest since Aug. 8. U.S. West Texas Intermediate was trading 0.2 percent at $47.70 a barrel, after rising as high as $48.71 last week, its highest since Aug. 14.
Gold prices rose after declining in the previous session, as the U.S. dollar strengthened ahead of an annual meeting of central bankers this week. Spot gold was down 0.1 percent at $1,285.45 an ounce by 0430 GMT, having touched a high at $1,300.80 per ounce last week, its highest since Nov. U.S. gold futures settled down 0.4 percent at $1,291.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.213 percent lower by 0.002 bps, while 5-year yield was 0.002 bps down at 1.783 percent.
The Japanese bonds traded nearly flat as market awaits inflation data scheduled for Thursday, August 24 at 23:30 GMT. The yield on the benchmark 10-year Treasury note traded flat 0.036 percent, the yield on long-term 40-year note remained steady at 1.043 percent and the yield on short-term 3-year hovered around -0.129 percent.
The Australian bonds slumped Wednesday tracking weakness in the U.S. Treasuries as investors digest weak economic data ahead of the Federal Reserve’s Jackson Hole Economic Policy Symposium scheduled for this Friday in Wyoming. The yield on the benchmark 10-year Treasury note rose more than 3 basis points to 2.685 percent, the yield on 15-year note also climbed 3 basis points to 2.983 percent and the yield on short-term 2-year rose 2 basis points to 1.847 percent.
The New Zealand bonds slumped at the time of closing after the government released its Pre-election Economic and Fiscal Update (PREFU), where it reflects policy decisions that were signed off by Cabinet up to 7 August, but do not incorporate any new or upcoming policy announcements. At the time of closing, the yield on the benchmark 10-year Treasury note jumped 4 basis points to 2.94 percent, the yield on 7-year note climbed 3-1/2 basis points to 2.79 percent while the yield on short-term 2-year ended 1 basis point lower at 2.07 percent.
The Canadian government bond prices were lower across the maturity curve, with the two-year price down 3.5 Canadian cents to yield 1.269 percent and the benchmark 10-year falling 34 Canadian cents to yield 1.921 percent. The Canada-U.S. two-year bond spread stood at -5.7 basis points, while the 10-year spread stood at -29.4 basis points.
