Market Roundup
- EUR/USD 0.12%, USD/JPY 0.12%, GBP/USD -0.62%, EUR/GBP 0.75%
- DXY -0.07%, DAX 0.28%, FTSE 0.64%, Brent 0.14%, Gold 0.05%
- Great Britain GDP YY Q2 1.5% vs 1.7%, 1.7% forecast
- Great Britain Nationwide house price YY Sept 2.0% vs 2.1%, 1.9% forecast
- Great Britain Mortgage Lending Aug 4.041B vs 3.584B, 3.600B
- EZ Flash Inflation YY Sept 1.5% vs 1.5%, 1.6% forecast
- Germany Retail Sales YY Real Aug 2.8% vs 2.8%, 3.2% forecast
- Germany Unemployment Rate SA Sept 5.6% vs 5.7%, 5.7% forecast
- S&P says China's debt growth to slow over next 5 years but remain elevated
- Oil mixed but set for weekly gain on improving market outlook
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for August, which is expected to rise 0.2 percent, having gained 0.4 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of August. The index is expected to rise 0.3 percent while core PCE is likely to have increased 0.2 percent in August after edging up 0.1 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.1 percent in the month of August, after surging 0.3 percent in July.
- (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of August. The index posted a decline of 0.6 percent in July.
- (0830 ET/1230 GMT) Canadian producer prices are expected to have edged up 0.5 percent in August after falling 1.5 percent in the prior month.
- (0830 ET/1230 GMT) Canada's gross domestic product is likely to rise 0.1 percent in July, after posting a growth of 0.3 percent in June.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions eased to 58.5 in September from 58.9 last month.
- N/A Chile's jobless rate is likely to have edged down to 6.8 percent in August from 6.9 percent in the previous month.
- (1000 ET/1400 GMT) The University of Michigan is expected to report that the consumer sentiment index stood at 95.3 in September from a final reading of 95.2 in August.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0830 ET/1230 GMT) Bank of England Monetary Policy Committee member Dr Ben Broadbent's speech.
- (1045 ET/1445 GMT) Bank of England Governor Mark Carney's speech
- (1100 ET/1500 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on "Economic Outlook, Financial Technology" before the "Fintech: The Impact on Consumers, Banking, and Regulatory Policy" event hosted by the Philadelphia Fed.
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae and Freddie Mac (max $1.925 bn)
FX Beat
DXY: The dollar stood firm versus the safe-haven Japanese yen, in response to the rising optimism following the tax reform proposal by the Trump’s administration earlier in the week. The greenback against a basket of currencies traded flat at 93.10, having touched a high of 93.67 the day before, its highest since Aug. 18. FxWirePro's Hourly Dollar Strength Index stood at 50.76 (Bullish) by 1000 GMT.
EUR/USD: The euro rose, extending previous session gains, despite Eurozone's inflation missing expectations in September, highlighting that price growth remained weak. The economy's inflation held steady at 1.5 percent in September, missing expectations for 1.6 percent and trending well below the ECB's target of almost 2 percent. The European currency traded 0.1 percent up at 1.1801, having touched a low of 1.1717 on Wednesday, its lowest since Aug. 18. FxWirePro's Hourly Euro Strength Index stood at 99.98 (Slightly Bullish) by 1000 GMT. Technically pair is facing strong support at 1.17200 (200- W MA) and any convincing break below that level confirms minor weakness, a decline till 1.16600/ 1.1600 likely. On the higher side, near term resistance around 1.18080 (23.6% retracement of 1.20925 and 1.1717) and any break above will take the pair to next level till 1.1839 (50- day MA)/ 1.1870.
USD/JPY: The dollar gained, reversing some of its previous session losses, following a rebound in U.S. Treasury yields fueled by the Trump administration's tax plan. The pair was trading 0.2 percent up at 112.52, having hit a high of 113.25 on Wednesday, its highest since mid Jul. FxWirePro's Hourly Yen Strength Index stood at -9.36 (Neutral) by 1000 GMT. On the lower side, any close below 112 (233- day MA) confirms minor weakness, a decline till 111.13/110 likely. Any break above 113 confirms minor bullishness, a jump till 114/114.50.
GBP/USD: Sterling slumped below the 1.3400 handle after data showed Britain's economy recorded its weakest year-on-year growth since 2013 in the three months to the end of June. The economy's year-on-year gross domestic product growth slowed to 1.5 percent in the second quarter from 1.8 percent in the first three months of the year. Sterling traded 0.5 percent down at 1.3372, having hit a low of 1.3342 the prior day, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at -73.34 (Bearish) by 1000 GMT. On the lower side, near term support is around 0.7800 and any convincing close below will drag the pair till 0.77186/0.7685. The near term resistance is around 0.7894 (55 –day EMA) and any break above targets 0.7933 (34- day EMA)/0.7976 (20- day MA). Against the euro, the pound was trading 0.7 percent down at 88.24 pence, having hit a high of 87.46 pence on Wednesday, its highest since July.
USD/CHF: The Swiss franc consolidated within a narrow range, while market watchers remained skeptical about the dollar's long-term outlook. The major trades flat at 0.9697, having touched a high of 0.9769 on Wednesday, it’s highest since Aug. FxWirePro's Hourly Swiss Franc Strength Index stood at -12.83 (Neutral) by 1000 GMT. The short term trend is still bullish as long as support 0.9640 (55- day EMA) holds and any break below will drag the pair down till 0.9580/0.9565/0.9525.The near term resistance is around 0.97730 (Aug 8th 2017 high) and any convincing break above will take it to next level till 0.9808/0.9845/0.9900
AUD/USD: The Australian dollar slumped after a poll showed the Reserve Bank of Australia to leave its cash rate at a record low of 1.5 percent at its monthly policy meeting next week. The Aussie trades 0.2 percent down 0.7836, having hit a low of 0.7799 in the previous session, it’s lowest since Jul. 18. FxWirePro's Hourly Aussie Strength Index stood at -133.15 (Highly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7800 and any convincing close below will drag the pair till 0.77186/0.7685. The near term resistance is around 0.7894 (55 –day EMA) and any break above targets 0.7933 (34- day EMA)/0.7976 (20- day MA).
Equities Recap
European shares gained and were on track for their best monthly gains this year, while sterling declined after data showed Britain’s economy recorded its weakest annual growth since 2013 in the second quarter this year.
The pan-European STOXX 600 index climbed 0.01 percent to 386.29 points, while the FTSEurofirst 300 index rallied 0.05 percent to 1,518.82 points.
Britain's FTSE 100 trades 0.5 percent up at 7,361.46 points, while mid-cap FTSE 250 gained 0.6 percent to 19,787.72 points.
Germany's DAX rose 0.2 percent at 12,732.50 points; France's CAC 40 trades 0.1 percent lower at 5,290.31 points.
Commodities Recap
Crude oil prices declined, but were on track for weekly gains as investors speculated that efforts to cut a global glut are working and that the demand outlook is improving. International benchmark Brent crude was trading 0.8 percent down at $57.20 per barrel by 0944 GMT, having hit a high of $59.48 on Tuesday, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.02 percent down at $51.56 a barrel, after rising as high as $52.41 on Tuesday, its highest since April.
Gold prices rose, extending previous session gains but was headed for its biggest monthly decline this year amid rising prospects of a U.S. rate hike in December. Spot gold was trading 0.1 percent down at $1,287.09 per ounce as of 0948 GMT, having declined to a low of $1277.64 on Thursday, its lowest since Aug. 25 and was on track to register a 2.5 percent decline in September. U.S. gold futures rose 0.1 percent to $1,289.70 per ounce.
Treasuries Recap
The U.S. Treasuries flat as investors remained side-lined in any major trading activity amid a silent session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury hovered around 2.31 percent, the super-long 30-year bond yields held steady at 2.87 percent and the yield on short-term 2-year note also traded nearly flat at 1.46 percent.
The UK gilts surged after the country’s gross domestic product (GDP) for the second quarter of this year, fell to 1.5 percent y/y, compared to expectations of and from previous 1.7 percent y/y. However, on a q/q basis, it remained unchanged from 0.3 percent in Q1. The yield on the benchmark 10-year gilts, fell 2 basis points to 1.35 percent, the super-long 30-year bond yields slipped 1-1/2 basis points to 1.91 percent and the yield on the short-term 2-year also traded 1 basis point lower at 0.45 percent.
The German government bunds jumped after eurozone’s consumer price-led inflation index for the month of September, ditched market expectations. Also, the European Central Bank Governor Mario Draghi is scheduled to deliver a keynote speech later today, which will add further direction to the deb market. The German 10-year bond yields, which moves inversely to its price, slumped nearly 3 basis points to 0.45 percent, the yield on 30-year note also plunged 3 basis points to 1.25 percent and the yield on short-term 2-year traded flat at -0.69 percent.
The New Zealand bonds jumped at the time of closing as uncertainty continued to hover around the possible formation of a government in the country as votes still remain on the counting. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 3.00 percent, the yield on 7-year note flat at 2.85 percent and the yield on short-term 2-year ended 1 basis point lower at 2.10 percent.
The Japanese government bonds sharply rebounded on the last trading day of the week, as investors poured into safe-haven instruments, following worries over the upcoming snap election, called by Prime Minister Shinzo Abe. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 0.06 percent, the yield on long-term 30-year fell nearly 1-1/2 basis points to 0.87 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.11 percent.
The Australian bonds surged after the yield spread between shorter and longer-dated U.S. Treasuries grew on Thursday in the aftermath of a tax plan that raised concerns about faster growth in the federal deficit and borrowing. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.84 percent, the yield on the 15-year note also plunged 2-1/2 basis points to 3.12 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.97 percent.
