Market Roundup
- Johnson kicks off election campaign as parliament blocks no-deal Brexit
- UK must prepare for no-deal in case any Brexit delay request blocked - minister
- Recession risks rise for Germany as industrial orders plunge
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of August. The report is expected to show that 149,000 jobs were added as compared with 156,000 jobs in July.
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 1,000 to a seasonally adjusted 216,000 for the week ended Aug. 30, while continuing claims for the week ended Aug. 23 is expected to decline to 1.685 million from a previous reading of 1.698 million.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of August. The index posted a final reading of 50.9 in the previous month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of August. The index posted a final reading of 50.9 in July.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' Index rose to a final reading of 54.0 in August from 53.7 in July.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders increased 1.0 percent in July from 0.6 percent in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 30.
- (1100 ET/1500 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending August 30.
Key Events Ahead
- (1030 ET/1430 GMT) Bank of England Monetary Policy Committee member Silvana Tenreyro's speech
- (1145 ET/1545 GMT) Bank of Canada Deputy Governor Lawrence Schembri gives a speech
FX Beat
DXY: The dollar index plunged to a 1-week low, as the U.S. Treasury yield curve was at its steepest in two weeks as two-year yields hit their lowest since September 2017. The greenback against a basket of currencies traded 0.2 percent down at 98.16, having touched a low of 98.14 earlier, its lowest since August 28.
EUR/USD: The euro surged to a 1-week peak, as Italian Prime Minister Giuseppe Conte unveiled a new cabinet that united the anti-establishment 5-Star Movement and the centre-left Democratic Party, easing political tensions. The European currency traded 0.3 percent up at 1.1065, having touched a low of 1.0925 on Tuesday, its lowest since May 2017. Immediate resistance is located at 1.1072 (61.8% retracement of 1.1163 and 1.0925), a break above targets 1.1112 (78.6% retracement). On the downside, support is seen at 1.1003 (5-DMA), a break below could drag it below 1.0963 (August 30 High).
USD/JPY: The dollar rallied to a 3-day peak, as risk appetite improved on news that Hong Kong leader Carrie Lam was withdrawing an extradition bill that triggered months of violent protests. The major was trading 0.3 percent up at 106.55, having hit a high of 106.75 earlier, its highest since August 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, unemployment benefit claims, factory orders and service PMI from both Markit and ISM. Immediate resistance is located at 106.97 (August 13 High), a break above targets 107.56 (August 2 High). On the downside, support is seen at 105.73 (September 3 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling advanced to a 1-month peak after lawmakers voted to force Prime Minister Johnson to seek a three-month delay to Brexit if he failed to secure a transition agreement with the European Union. The major traded 0.7 percent up at 1.2339, having hit a high of 1.2353 earlier, it’s highest since July 29. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2383 (July 29 High), a break above could take it near 1.2456 (July 17 High). On the downside, support is seen at 1.2197 (10-DMA), a break below targets 1.2139 (August 30 Low). Against the euro, the pound was trading 0.4 percent down at 89.66 pence, having hit a high of 89.50 earlier, it’s highest since July 26.
USD/CHF: The Swiss franc retreated from a 1-week peak, as risk sentiment improved after global political worries eased with what markets perceived as positive news in Hong Kong, Italy and Britain. The major trades 0.2 percent up at 0.9822, having touched a high of 0.9929 on Tuesday, it’s highest since August 1. On the higher side, near-term resistance is around 0.9875 (August 29High) and any break above will take the pair to next level till 0.9949 (July 31 High). The near-term support is around 0.9775 (August 27 High), and any close below that level will drag it till 0.9737 (August 8 Low).
Equities Recap
European shares surged to 1-month highs after China said it would hold trade talks with the United States, raising hopes that both the economies will make progress on the trade dispute.
The pan-European STOXX 600 index rallied 0.6 percent at 385.45 points, while the FTSEurofirst 300 surged 0.5 percent to 1,516.54 points.
Britain's FTSE 100 trades 0.6 percent down at 7,264.44 points, while mid-cap FTSE 250 eased 0.1 to 19,594.70 points.
Germany's DAX rose 0.8 percent at 12,116.68 points; France's CAC 40 trades 0.9 percent higher at 5,583.87 points.
Commodities Recap
Crude oil prices surged as hopes of progress in resolving the U.S.-China trade row boosted investor sentiment, although a report showing U.S. crude inventories increased unexpectedly weighed on prices. International benchmark Brent crude was trading 0.4 percent higher at $60.68 per barrel by 1122 GMT, having hit a high of $61.14 earlier, its highest since August 29. U.S. West Texas Intermediate was trading 0.1 percent up at $56.02 a barrel, after rising as high as $56.62 earlier, its highest since August 30.
Gold prices declined as investors booked profits after the safe-haven metal rallied to a 6-year peak in the previous session. Spot gold eased 0.7 percent to $1,541.61 per ounce by 1125 GMT, having touched a high of $1,556.88 on Wednesday, its highest since April 2013. U.S. gold futures dropped 0.7 percent to $1,549.70 per ounce.
Treasuries Recap
The eurozone bond yields inched higher as investors cheered signs of progress in resolving the U.S.-China trade war. The 10-year German Bund rose more than 1 basis point to -0.66 percent, away from the record lows of -0.743 percent touched on Tuesday. The 10-year Italian yield was unchanged at 0.826 percent, close to the record low of 0.803 percent. The 30-year Italian bond yields were little moved in early trade.
The yield on Japan’s benchmark 10-year note, which moves inversely to its price, fell to at -0.265 percent down from August high of -0.130 percent, the yield on the long-term 30-year bond hovered at 0.140 percent while the yield on short-term 2-year traded at -0.287 percent.
The Australian government bonds slumped as a mild easing in geopolitical tensions improved risk appetite, pushing the benchmark 10-year yield to a month high. However, the country’s underlying momentum in the economy remains weak, which would further drag down the bond yields. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged 4-1/2 basis points higher to 0.969 percent, the yield on the long-term 30-year bond also rose 4 basis points to 1.563 percent while the yield on short-term 2-year climbed 3-1/2 basis points to 0.805 percent.
