Market Roundup
- EUR/USD 0.01%, USD/JPY 0.04%, GBP/USD -0.41%, EUR/GBP 0.43%
- DXY 0.02%, DAX 0.08%, FTSE 0.21%, Brent -0.49%, Gold 0.16%
- ECB to release more data on corporate bond holdings
- Cautious BoE in no rush to restrict algorithmic trading
- Franco-German bonds would be a good move, senior Merkel ally says
- FDP leader wants tougher eurozone policy, no new German debt
- UK productivity falls at joint-fastest rate since 2013 - ONS
- Germany Aug Industrial Orders MM 3.6% vs -0.7%, forecast 0.7%, revised -0.4%
- Great Britain Sept HalifaxHousePrice 3M/YY 4.0% vs 2.6%, forecast 3.6%
- French trade deficit narrows in August as exports rebound
- Japan's economy likely posted 2nd best stretch of post-war growth - index
- BOJ's bond holdings fall for first time since deploying stimulus in 2013
- Japan's new party vows to scrap over-reliance on fiscal, monetary steps
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of September. The report is likely to show 90,000 jobs were added compared with an increase of 156,000 in August.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of September. The rate stood at 62.9 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate remained unchanged at 4.4 percent in September.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in September after climbing 0.1 percent in the month before.
- (0830 ET/1230 GMT) The Statistics Canada releases employment report for September. The economy is likely to have added 14,500 jobs, compared to a rise of 22,200 jobs in August, while the participation rate stood at 65.7 percent in the same month.
- (0830 ET/1230 GMT) Canada's unemployment rate is expected to edge up 6.3 percent in September from 6.2 percent in the previous month.
- (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories rose 1.0 percent in August after posting a similar gain in the prior month.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of September. The index posted a reading of 56.8 in the prior month.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to report that consumer credit declined to $16.0 billion in August from $18.5 billion the month before.
Key Events Ahead
- (0915 ET/1315 GMT) Atlanta Fed President Raphael Bostic speaks on "The Fed's Role in Changing Opportunity" before the Investing in America's Workforce conference hosted by the Federal Reserve System.
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae and Freddie Mac (max $2.2 bn)
- (1145 ET/1545 GMT) Federal Reserve Bank of Boston President Eric Rosengren speech.
- (1215 ET/1615 GMT) New York Fed President William Dudley speaks on "The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility" before the 56th Annual Financial Literacy and Economic Education Conference hosted by the Council for Economic Education in Brooklyn.
- (1245 ET/1645 GMT) Dallas Fed President Robert Kaplan participates in a moderated Q&A session, before the Investing in America's Workforce conference hosted by the Federal Reserve System.
- (1350 ET/1750 GMT) St. Louis Fed President James Bullard gives a presentation on "Standard of Living Across U.S. Metropolitan Statistical Areas" before the Bi-State Development 2017 Annual Luncheon Meeting, in St. Louis.
FX Beat
DXY: The dollar gained across the board, after the House of Representatives approved a fiscal 2018 spending budget and moved one step closer to overhaul the U.S. tax code. The greenback against a basket of currencies traded 0.1 percent up at 94.02, having touched a high of 94.12 earlier, its highest since Aug. 16. FxWirePro's Hourly Dollar Strength Index stood at 86.60 (Slightly Bullish) by 0900 GMT.
EUR/USD: The euro tumbled to a 7-week low as the greenback rallied on growing expectations that the Fed would deliver a third rate hike in December and optimism over the U.S. tax reforms. Moreover, Thursday's ECB meeting minutes, indicating policymakers view that the monetary policy should remain highly accommodative under all scenarios and the political situation in Spain continued to weigh on the major. The European currency traded 0.1 percent down at 1.1699, having touched a low of 1.1686 earlier, its lowest since Aug. 17. FxWirePro's Hourly Euro Strength Index stood at 58.99 (Bullish) by 0900 GMT. Any break below 1.16625 confirms major weakness, a decline till 1.15920 (20- W MA)/1.1500 is possible. On the higher side, nearby resistance is around 1.1720 and any break above will take it to next level till 1.17650/1.17890.
USD/JPY: The dollar rose above the 113.00 handle after the House of Representatives passed the budget on to Senate and moved one step closer to tax cut plans. Additionally, growing speculation that Federal Reserve will hike interest rates over the coming months supported the upward momentum. The major was trading 0.2 percent up at 113.00, hovering towards a high of 113.25 hit last week, its highest since mid-Jul. FxWirePro's Hourly Yen Strength Index stood at 27.39 (Neutral) by 0900 GMT. On the lower side, any close below 112.15 (233- day MA) confirms minor weakness, a decline till 111.13/110 likely. Any break above 113.20 (161.8% fibo) confirms minor bullishness, a jump till 114/114.50.
GBP/USD: Sterling declined to a fresh 1-month low against the dollar on data showing British economic productivity fell at its joint-fastest annual rate since 2013 in the 12 months and on growing worries over Theresa May's future as British prime minister. The economy's output per hour worked in the three months to June was 0.3 percent below its level in the three months to June 2016. Sterling traded 0.3 percent down at 1.3074, having hit a low of 1.3059 earlier, its lowest since Sept. 7. FxWirePro's Hourly Sterling Strength Index stood at -75.26 (Slightly Bullish) by 0900 GMT. ). A break below 1.3000 would drag the pair further down till of 1.2850/1.27739. Minor bullishness can be seen above 1.3200 and any break above will take the pair to next level till 1.3250/ 1.3350/ 1.34350. Against the euro, the pound was trading 0.3 percent low at 89.52 pence, having hit a low of 89.54 pence earlier in the day, its lowest since Sept. 14.
USD/CHF: The Swiss franc fell to a 4-month low as the greenback rallied on solid U.S. economic data and growing expectations of the appointment of a likely hawkish Federal Reserve Chair after Yellen steps down. The major trades 0.1 percent up at 0.9795, having touched a high of 0.9799 earlier, it’s highest since May 30. FxWirePro's Hourly Swiss Franc Strength Index stood at 51.25 (Bullish) by 0900 GMT. The short-term trend is still bullish as long as support 0.9649 (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 0.9808 (May 30th, 2017 high) and any convincing close above will take it to next level till 0.9845/ 0.9900.
AUD/USD: The Australian dollar eased to a 2-1/2 month low as the ongoing upsurge in the U.S. Treasury bond yields and growing prospects for additional Fed rate hike action in December weighed heavily on the major. The Aussie trades 0.2 percent down 0.7776, having hit a low of 0.7743 earlier, it’s lowest since Jul. 14. FxWirePro's Hourly Aussie Strength Index stood at -77.62 (Highly Bearish) by 0900 GMT. On the lower side, near-term support is around 0.7740 and any convincing close below will drag the pair till 0.77186/0.7685. The near-term resistance is around 0.7885 (55 –day EMA) and any break above targets 0.7933 (34- day EMA)/0.7976 (20- day MA).
Equities Recap
European shares declined but remained on track for its fourth straight weekly gains, while sterling declined to a 1-month low against the dollar amid persistent uncertainty surrounding Brexit talks and the latest political development in the UK.
The pan-European STOXX 600 index slumped 0.2 percent to 390.40 points, while the FTSEurofirst 300 index declined 0.2 percent to 1,534.16 points.
Britain's FTSE 100 trades 0.1 percent up at 7,516.54 points, while mid-cap FTSE 250 gained 0.3 percent to 20,134.53 points.
Germany's DAX rose 0.1 percent at 12,976.79 points; France's CAC 40 trades 0.1 percent lower at 5,371.52 points.
Commodities Recap
Crude oil prices rose to a 1-month high as traders monitored a tropical storm heading for the Gulf of Mexico. International benchmark Brent crude was trading 0.2 percent up at $57.08 per barrel by 0916 GMT, having hit a high of $57.24 earlier, its strongest since Sept. 29. U.S. West Texas Intermediate was trading 0.2 percent down at $50.61 a barrel, after falling as low as $49.75 on Wednesday, its lowest since Sept. 19.
Gold prices steadied after falling to an 8-week low in the previous session, as the dollar climbed to a more than seven-week high ahead of key U.S. jobs data later in the day. Spot gold rose 0.1 percent at $1,268.15 an ounce at 0920 GMT, having hit its lowest since August 9 at $1,267.66 on Thursday. U.S. gold futures for December delivery were down 0.2 percent at $1,270 per ounce.
Treasuries Recap
The U.S. Treasuries remained soft, as investors wait to watch the country’s September employment report, scheduled to be released today by 12:30GMT. The yield on the benchmark 10-year Treasury rose 1-1/2 basis points to 2.36 percent, the super-long 30-year bond yields climbed 1 basis point to 2.90 percent and the yield on short-term 2-year note also traded 1/2 basis point higher at 1.50 percent.
The UK gilts remained flat Friday as investors are awaiting the Bank of England (BoE) member Haldane’s speech, scheduled to be held today by 12:00GMT amid a silent trading session that witnessed no data of any economic significance. The yield on the benchmark 10-year gilts, hovered around 1.38 percent, the super-long 30-year bond yields flat at 1.96 percent and the yield on the short-term 2-year also traded 1 basis point lower at 0.45 percent.
The German bunds slumped Friday after August factory orders unexpectedly jumped in August after contracting in July, registering its biggest jump this year. This confirms that the eurozone’s largest economic is showing signs of solid domestic and foreign demand. The German 10-year bond yields, which move inversely to its price, rose basis points to 3 basis points to 0.485 percent, the yield on 30-year note also jumped 2-1/2 basis points to 1.26 percent and the yield on short-term 3-year traded 1 basis point higher at -0.61 percent.
The Japanese government bonds traded lower after Congressional Republicans moved to hasten an overhaul of the U.S. tax code on Thursday, while Federal Reserve officials warned in rare public remarks that President Donald Trump’s tax plan could lead to inflation and unsustainable federal debt. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the yield on long-term 30-year climbed 1-1/2 basis points to 0.88 percent and the yield on short-term 2-year traded tad higher at -0.13 percent.
The Australian bonds slumped, tracking similar movement in the U.S. Treasuries after the House of Representatives approved a budget, the first step toward tax reform. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 3 basis points to 2.82 percent, the yield on the 15-year note climbed 3-1/2 basis points to 3.10 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.93 percent.
