Market Roundup
- EUR/USD 0.11%, USD/JPY -0.14%, GBP/USD 0.17%, EUR/GBP -0.09%
- DXY -0.04%, DAX 0.33%, FTSE 0.29%, Brent 0.03%, Gold 0.47%
- Carney warns of "no-deal" Brexit house price crash - newspaper
- China data shows pressure building on economy despite output surprise
- ECB can't ignore stability risk from low rates – Smets
- Debt relief will help Greece repay "in the medium term" - ECB chief
- China says world trade system not perfect, needs reform
- Sterling set for 2nd biggest weekly rise in 2018
- EZ Jul Eurostat Trade NSA (Eur), 17.6 bln, 22.5 bln
- EZ Q2 Labour Costs (yy), 2.2%, 2.0% previous, 2.1% revised
- EZ Q2 Wages In Euro Zone, 1.9%, 1.8% previous
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales rose 0.4 percent in August after advancing 0.5 percent in July. While excluding autos, retail sales are likely to have gained 0.4 percent, after surging 0.5 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices index for the month of August. The import prices are likely to have fell 0.2 percent after staying flat in July, while exports are expected to come in flat after decreasing 0.5 percent in the prior month.
- (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.3 percent in August, after increasing 0.1 in the prior month.
- (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 78.2 percent in August from 78.1 percent in July.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.6 percent in July, after rising 0.1 percent in June.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 96.6 in September, after posting a final reading of 96.6 in August.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0900 ET/1300 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Northeast Indiana Regional Economic Forum in Fort Wayne, Indiana.
- (1000 ET/1400 GMT) Boston Federal Reserve President Eric Rosengren speaks on Fed's inflation framework, Washington
FX Beat
DXY: The dollar index slumped to a 6-week low as weaker-than-expected U.S. inflation data changed investors views on acceleration in domestic inflation. The greenback against a basket of currencies trades 0.05 percent down at 94.50, having touched a low of 94.36, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at -84.89 (Slightly Bearish) by 1100 GMT.
EUR/USD: The euro rallied to an over 2-week peak, after data showed Eurozone labour costs rose at their steepest rate in almost six years in the second quarter of 2018. However, Belgian policymaker Jan Smets' comments, citing that the ECB will wind down stimulus only very slowly limited the upside. The European currency traded 0.1 percent up at 1.1701, having touched a high of 1.1721, its highest since Aug 28. FxWirePro's Hourly Euro Strength Index stood at 68.48 (Bullish) by 1100 GMT. Immediate resistance is located at 1.1733 (August 28 High), a break above targets 1.1790 (July 9 High). On the downside, support is seen at 1.1613 (5-DMA), a break below could drag it till 1.1542 (September 5 Low).
USD/JPY: The dollar retreated from a 1-1/2 month high touched earlier in the session, as weaker-than-expected U.S. inflation data slashed expectations of a faster pace of policy tightening by the Federal Reserve. The major was trading 0.1 percent down at 111.83, having hit a high of 112.07, its highest since August 1. FxWirePro's Hourly Yen Strength Index stood at -119.45 (Highly Bearish) by 1100 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales, import and export price index, industrial production, capacity utilization, business inventories, and Fed Evan's speech. Immediate resistance is located at 112.17 (July 11 High), a break above targets 112.62 (July 12 High). On the downside, support is seen at 111.38 (5-DMA), a break below could take it lower 110.68 (August 31 Low).
GBP/USD: Sterling rose to a fresh 1-1/2 month peak after Bank of England governor Mark Carney stated that the central bank and Britain's largest banks are well prepared for a disorderly Brexit. Moreover, BoE's upgraded growth forecasts at a policy meeting and news over the progress of Brexit negotiations supported the upward momentum. The major traded 0.1 percent up at 1.3123, having hit a high of 1.3128 earlier; it’s highest since July 31. FxWirePro's Hourly Sterling Strength Index stood at -19.58 (Neutral) 1100 GMT. Immediate resistance is located at 1.3158 (July 23 High), a break above could take it near 1.3213 (July 26 High). On the downside, support is seen at 1.3023 (5-DMA), a break below targets 1.2961 (10-DMA). Against the euro, the pound was trading 0.05 percent up at 89.17 pence, having hit a high of 88.76 on Tuesday, it’s highest since August 2.
USD/CHF: The Swiss franc surged to a 5-month peak as weaker U.S. inflation data continued to hurt the dollar amid growing uncertainty around the global outlook for trade. The major trades 0.2 percent down at 0.9638, having touched a low of 0.9634, it’s lowest since April 16. FxWirePro's Hourly Swiss Franc Strength Index stood at 91.54 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9690 (23.6% retracement of 0.9865 and 0.9634) and any break above will take the pair to next level till 0.9724 (38.2% retracement). The near-term support is around 0.9612 and any close below that level will drag it till 0.9585.
Equities Recap
European shares gained, underpinned by technology, autos and mining stocks, while hopes of new trade talks between the United States and China boosted investor sentiment.
The pan-European STOXX 600 index advanced 0.2 percent at 377.20 points, while the FTSEurofirst 300 index surged 0.3 percent to 1,476.03 points.
Britain's FTSE 100 trades 0.3 percent up at 7,303.99 points, while mid-cap FTSE 250 gained 0.4 percent to 20,323.12 points.
Germany's DAX rose 0.2 percent at 12,084.65 points; France's CAC 40 trades 0.3 percent higher at 5,342.16 points.
Commodities Recap
Crude oil prices rose, reversing some of its previous session losses, as the focus returned to supply concerns ahead of a November deadline for U.S. sanctions on Iranian crude. International benchmark Brent crude was trading 0.1 percent up at $78.44 per barrel by 1059 GMT, having hit a high of $80.08 on Wednesday, its highest since May 22. U.S. West Texas Intermediate was trading 0.3 percent up at $68.96 a barrel, after rising as high as $71.24 on Wednesday, its highest since September 4.
Gold edged surged, underpinned by weakness in dollar, however, expectations of a U.S. rate hike later this month limited upside. Spot gold was 0.4 percent up at $1,206.43 an ounce by 1100 GMT, having hit a high of $1212.55 on Thursday, its highest since Aug. 28. The safe-haven metal has gained 0.9 percent so far this week and was heading for its first weekly gain in three. U.S. gold futures were up 0.3 percent at $1,211.70 an ounce.
Treasuries Recap
The U.S. Treasuries plunged during European session ahead of the country’s retail sales for the month of August and Chicago Fed President Evans’ speech, scheduled for today by 12:30GMT and 13:00GMT respectively. The yield on the benchmark 10-year Treasuries jumped 2-1/2 basis points to 2.989 percent, the super-long 30-year bond yields surged 2 basis points to 3.121 percent and the yield on the short-term 2-year traded nearly 2-1/2 basis points higher at 2.778 percent.
The German bunds slumped on the last trading day of the week as investors have largely shrugged-off Eurozone’s weaker-than-expected trade balance for the month of July. The German 10-year bond yields, which move inversely to its price, climbed 1-1/2 basis points to 0.439 percent, the yield on 30-year note also surged 1-1/2 basis points to 1.109 percent and the yield on short-term 3-year traded 1/2 basis point higher at -0.443 percent.
The Japanese government bond prices trade tad lower during late Asian session after Nikkei 225 surged to a 7-month high following renewed hopes of ease in trade tensions between the United States and China. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.111 percent, the yield on the long-term 30-year note also climbed 1/2 basis point to 0.842 percent and the yield on short-term 2-year traded nearly flat at -0.108 percent
The Australian bonds suffered during Asian session tracking a similar movement in the United States Treasuries after the latter’s consumer price inflation (CPI) for the month of August missed market expectations. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 2.607 percent, the yield on the long-term 30-year bond also fell 1/2 basis point to 3.104 percent and the yield on short-term 2-year traded down 1-1/2 basis points to 2.029 percent.
