Market Roundup
- Japan July industrial output -0.8% m/m, -0.5% eyed, June +2.2%
- Japan Output looks to rebound in August, +6.0% eyed, September -3.1%
- Still far from CPI target but momentum building - BoJ Masai
- BoJ policies in place, groundwork laid for eventual achievement of target
- MoF data 8/26 wk – Japanese buy net Y359.6 bln for-bonds, Y218 bln stocks
- Foreigners sell Y246 bln Japan stocks, 797.5 bln bills, buy Y504.6 bln JGBs
- China Aug NBS Mfg PMI, 51.7 vs forecast 51.3; last 51.4
- China Aug official Services PMI falls to 53.4 vs July 54.5
- Australia Jul Capital expenditure q/q, 0.8% vs forecast 0.3%; last 0.3%
- New Zealand business sentiment dips in Aug, but still upbeat
- Brexit negotiators trade barbs, eyeing deadlines
- UK consumer confidence edges up in August - GfK
- Trump touts tax reform, overlooks White House aide Cohn
- Trump says 'talking not the answer' on N. Korea, Mattis disagrees
Economic Data Ahead
- (0245 ET/0645 GMT) France Aug CPI (EU Norm) prelim y/y, 1.0% eyed, last 0.8%
- (0300 ET/0700 GMT) Spain Jul Retail sales y/y, 2.4% eyed, last 2.5%
- (0400 ET/0800 GMT) Italy Jul Unemployment rate, 11.1% eyed, last 11.1%
- (0500 ET/0900 GMT) Italy Aug CPI (EU Norm) prelim, 0.0% m/m, 1.3% y/y eyed; last -1.9, 1.2
- (0500 ET/0900 GMT) Italy Aug Consumer price prelim, 0.2% m/m, 1.1% y/y eyed; last 0.1%, 1.1%
- (0500 ET/0900 GMT) EU Aug Inflation flash, 1.4% eyed, last 1.3%
- (0500 ET/0900 GMT) EU Jul Unemployment rate, 9.1% eyed, last 9.1%
Key Events Ahead
- (0300 ET/0700 GMT) Riksbank executive board meeting
- (0330 ET/0730 GMT) Luis Maria Linde, governor of Bank of Spain speaks at a conference
FX Beat
DXY: The dollar rallied across the board as strong U.S. economic data bolstered expectations for a solid U.S. jobs report later this week. The greenback against a basket of currencies traded 0.1 percent up at 92.99, having touched a low of 91.62 on Tuesday, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at 26.80 (Neutral) by 0500 GMT.
EUR/USD: The euro declined to a near 1-week low as the greenback strengthened following the upward revision of the US Q2 GDP and stellar Aug ADP employment report. On Wednesday, the major eased below the 1.1900 handle as solid U.S. economic indicators revived investor expectations for the chances of a Fed rate hike in December. The European currency traded down at 1.1878, having touched a high of 1.2070 on Tuesday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -30.62 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone unemployment rate and Aug prelim consumer price index figures, ahead of the U.S. unemployment benefit claims, personal consumption expenditures and pending home sales data. Immediate resistance is located at 1.1910 (5-DMA), a break above targets 1.2000. On the downside, support is seen at 1.1817 (38.2% retracement 1.1661 and 1.2070), a break below could drag it near 1.1757 (23.6% retracement 1.1661 and 1.2070).
USD/JPY: The dollar rallied to a fresh 2-week high against Japanese yen as strong U.S. economic data bolstered expectations for a solid U.S. August non-farm payrolls report later this week. The ADP National Employment Report released on Wednesday showed U.S. private-sector employers hired 237,000 workers in the month of August, recording its biggest monthly increase in five months. The major was trading 0.2 percent up at 110.50, having hit a high of 110.60 earlier its highest since Aug. 16. FxWirePro's Hourly Yen Strength Index stood at -114.48 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, personal consumption expenditures and pending home sales for further momentum. Immediate resistance is located at 109.94(August 16 High), a break above targets 111.33 (July 28 High). On the downside, support is seen at 109.80 (21-DMA), a break below could take it near 109.43 (10-DMA).
GBP/USD: Sterling continued to trade within narrow ranges as investors attention remained on the third round of Brexit negotiations which started on Monday. The major traded flat at 1.2926, having hit a high of 1.2978 on Tuesday, its highest since August 14. FxWirePro's Hourly Sterling Strength Index stood at 119.58 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on series of U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2978 (August 29 High), a break above could take it near 1.3053 (August 8 High). On the downside, support is seen at 1.2889 (5-DMA), a break below targets 1.2850. Against the euro, the pound was trading 0.1 percent up at 91.87 pence, having hit a multi-month low of 93.06 pence earlier in the week.
AUD/USD: The Australian dollar steadied after falling to a near 1-week low earlier in the session following data showing domestic private capex rose 0.8 percent in Q2, beating the estimate of 0.3 percent by a big margin. The major is seen struggling to extend gains as the greenback rallied following the release of robust U.S. economic data. The Aussie trades flat at 0.7901, having hit a high of 0.7995 the prior session, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at -32.32 (Neutral) by 0500 GMT. Investors will continue to digest upbeat domestic data, ahead of U.S. economic releases. Immediate support is seen at 0.7866 (August 24 Low), a break below targets 0.7838 (August 11 Low). On the upside, resistance is located at 0.7950, a break above could take it near 0.7995 (Previous Session High).
NZD/USD: The New Zealand dollar tumbled to a near 3-month low after data released earlier showed New Zealand business confidence declined slightly to 18.3 in August versus the previous reading of 19.4, while the ANZ Activity Outlook stood at 38.2 against 40.3 prior. The Kiwi trades 0.4 percent down at 0.7168, having touched a low of 0.7163 earlier, its lowest level since Jun. 6. FxWirePro's Hourly Kiwi Strength Index was at -8.57 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7230 (5-DMA), a break above could take it near 0.7263 (August 28 High). On the downside, support is seen at 0.7126 (August 6 Low), a break below could drag it till 0.7100.
Equities Recap
Asian shares gained after a survey showed growth in Chinese manufacturing sector unexpectedly accelerated in August, while the dollar extended recovery on solid U.S. economic data.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.2 percent.
Tokyo's Nikkei rallied 0.8 percent to 19,664.07 points, Australia's S&P/ASX 200 index rose 0.7 percent to 5,708.00 points and South Korea's KOSPI fell 0.4 percent to 2,362.86 points.
Shanghai composite index eased 0.4 percent to 3,349.48 points, while CSI300 index was trading 0.6 percent down at 3,811.53 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 27,910.13 points. Taiwan shares added 0.2 percent to 10,575.78 points.
Commodities Recap
Crude oil prices steadied after falling to a 2-week low in the previous session, while gasoline prices hit $2 a gallon for the first time since 2015 as flooding from storm Harvey knocked out almost a quarter of U.S. refineries. International benchmark Brent crude was trading 0.3 percent up at $50.76 per barrel by 0434 GMT, having hit a low of $50.53 the prior session, its weakest since Aug. 17. U.S. West Texas Intermediate was trading flat at $45.92 a barrel, after falling as low as $45.57 earlier, its lowest since Jul. 24.
Gold prices declined, extending previous session losses as the dollar gained on positive U.S. economic data, however, the downside remained limited amid tensions over North Korea. Spot gold was down 0.4 percent at $1,303.20 per ounce as of 0438 GMT, having hit the highest since Nov. 9 at 1,325.89 on Tuesday. U.S. gold futures for December delivery eased 0.5 percent to $1,307.80.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.150 percent higher by 0.005 bps, while 5-year yield was 0.01 bps up at 1.734 percent.
The Japanese government bonds remained flat after the country’s industrial production for the month of July failed to revive markets. The yield on the benchmark 10-year Treasury note hovered around 0.01 percent, the yield on the long-term 30-year flat at 1.04 percent and the yield on short-term 2-year traded tad nearly 1 basis point lower at -0.15 percent.
The Australian bonds sharply rallied, tracking firm performance in the U.S. Treasuries after the country’s second-quarter gross domestic product (GDP) cheered markets, adding to hopes of an interest rate hike in December although inflation remains below consensus. The yield on the benchmark 10-year Treasury note jumped 7 basis points to 2.74 percent, the yield on 15-year note also surged 7 basis points to 3.03 percent and the yield on short-term 2-year also traded 3 basis points higher at 1.90 percent.
The New Zealand bonds rebounded at the time of closing amid a silent trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, slid 1 basis point to 2.92 percent, the yield on 7-year note also fell 1 basis point to 2.76 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.05 percent.
The Canadian government bond prices were little changed across the yield curve, with the 10-year flat to yield 1.836 percent.
