Market Roundup
- EUR/USD -0.10%, USD/JPY -0.17%, GBP/USD -0.12%, EUR/GBP 0.01%
- DXY 0.01%, DAX -1.02%, FTSE -0.49%, Brent -0.93%, Gold 0.53%
- Pound jumps vs euro, dollar on EU Barnier testimony on Brexit
- India central bank defends 72 rupee/dollar mark strongly - dealers
- Rouble up from 2-1/2-year lows, gov't bonds hit by sanction fears
- Germany Jul Industrial Output MM, -1.1%, 0.2% forecast, -0.9% previous, -0.7% revised
- Germany Jul Trade Balance, EUR, SA, 15.8 bln, 19.0 bln forecast, 19.3 bln previous
- EZ Q2 GDP Revised YY, 2.1%, 2.2% forecast, 2.2% previous
- EZ Q2 GDP Revised QQ, 0.4%, 0.4% forecast, 0.4% previous
- Great Britain Aug Halifax House Price 3M/YY, 3.7%, 3.9% forecast, 3.3% previous
- Great Britain Aug Halifax House Prices MM, 0.1%, -0.3% forecast, 1.4% previous, 1.2% revised
- EU Brexit negotiator Barnier said - we should be able to de-dramatise the Brexit backstop
- France Jul Industrial Output MM, 0.7%, 0.2% forecast, 0.6% previous, 0.7% revised
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of August. The report is likely to show 191,000 jobs were added compared with an increase of 157,000 in July.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of August. 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 declined to 3.8 percent in August from 3.9 percent in the month before.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.2 percent in August after climbing 0.3 percent in the month before.
- (0830 ET/1230 GMT) The Statistics Canada releases the employment report for August. The economy probably added 50,000 jobs, compared to a rise of 54,100 jobs in July, while the participation rate is expected to remain steady at 65.4 percent, unchanged from the previous month.
- (0830 ET/1230 GMT) Canada's unemployment rate is expected to have increased 5.9 percent in August, compared with a 5.8 percent rise in July.
- (0900 ET/1300 GMT) Mexico's inflation rate is expected to have increased 0.51 percent in August, compared to a reading of 0.54 percent in July, while core inflation rate is likely to have edged up to 0.25 percent, after rising 0.29 percent in the previous month.
- (1000 ET/1400 GMT) The Richard Ivey School of Business releases Canada's seasonally adjusted Ivey Purchasing Managers Index for the month of August. The index posted a reading of 61.8 in the prior month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- N/A ECB's Benoit Coeure participates in Eurogroup meeting - Vienna
- N/A European Union finance ministers expected to discuss taxation of digital economy, possible regulation of cryptocurrencies - Vienna
- N/A ECB's Daniele Nouy, Luis de Guindos and Benoit Coeure participate in Informal ECOFIN meeting - Vienna
- (0830 ET/1230 GMT) Boston Federal Reserve Bank President Eric Rosengren speaks at the bank's 62nd Annual Economic Conference, which is entitled "What Are the Consequences of Long Spells of Low Interest Rates?"
- (0900 ET/1300 GMT) Fed's Loretta J. Mester moderates "Reality Check from the Markets: A Panel Discussion" at the Federal Reserve Bank of Boston's 62nd Economic Conference
- (1320 ET/1720 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated question-and-answer session before event, "Energy and the Economy: Charting the Course Ahead," in Dallas
- (1730 ET/2130 GMT) Reserve Bank of New Zealand governor Adrian Orr gives a speech to a financial services group entitled: 'Geopolitics, New Zealand and the Winds of Change' in Wellington
FX Beat
DXY: The dollar index plunged to a 1-week low earlier in the day, as investors will remain focused on trade war headlines than upcoming U.S. economic data. The greenback against a basket of currencies trades 0.05 percent down at 94.98, having touched a low of 94.87 earlier, its lowest since August 31. FxWirePro's Hourly Dollar Strength Index stood at -40.39 (Neutral) by 1000 GMT.
EUR/USD: The euro surged, reversing most of its previous session losses after data showed the euro zone economy grew at 0.4 percent in the second quarter, as business and other investments rose sharply. The economy expanded by 0.4 percent quarter-on-quarter, while revising its year-on-year figure to 2.1 percent from an initial 2.2 percent. The European currency traded 0.1 percent up at 1.1635, having touched a low of 1.1530 on Tuesday, its lowest since Aug 23. FxWirePro's Hourly Euro Strength Index stood at -41.60 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1689 (August 31 High), a break above targets 1.1733 (August 28 High). On the downside, support is seen at 1.1594 (August 27 Low), a break below could drag it till 1.1545 (21-DMA).
USD/JPY: The dollar rebounded from an over 2-week low touched earlier in the session, as U.S. and Canadian negotiators pushed the talks ahead to rescue the North American Free Trade Agreement. Moreover, expectations that the Federal Reserve is poised to hike interest rates this month, its third monetary tightening move in 2018 underpinned the bid tone around the pair. The major was trading 0.1 percent up at 110.82, having hit a low of 110.38 earlier, its lowest since August 22. FxWirePro's Hourly Yen Strength Index stood at 39.77 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. nonfarm payroll report and unemployment data. Immediate resistance is located at 110.95 (21-DMA), a break above targets 111.15 (5-DMA). On the downside, support is seen at 110.31 (August 17 Low), a break below could take it lower 110.02 (August 20 Low).
GBP/USD: Sterling rallied to a 1-week peak after European Union Brexit negotiator Barnier stated that he was open to discussing other backstops on Irish Brexit issue. Moreover, data showing British house prices rose in the three months to August at their fastest annual rate since November 2017 supported the upside. The major traded 0.8 percent up at 1.3017, having hit a low of 1.2785 on Wednesday; it’s lowest since August 20. FxWirePro's Hourly Sterling Strength Index stood at 155.05 (Highly Bullish) 0500 GMT. Immediate resistance is located at 1.3043 (August 30 High), a break above could take it near 1.3083 (July 19 High). On the downside, support is seen at 1.2855 (September 3 Low), a break below targets 1.2799 (August 24 Low). Against the euro, the pound was trading 0.7 percent up at 89.26 pence, having hit a low of 90.52 on Wednesday, it’s lowest since August 29.
USD/CHF: The Swiss franc rose to a 4-1/2 month peak, as worries over an escalating trade dispute between the United States and China as well as weakness in emerging markets dented investors' appetite for risky assets. The major trades 0.05 percent down at 0.9649, having touched a high of 0.9767 on Tuesday, it’s highest since August 29. FxWirePro's Hourly Swiss Franc Strength Index stood at 75.74 (Slightly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9696 (23.6% retracement of 0.9865 and 0.9641) and any break above will take the pair to next level till 0.9729 (38.2% retracement). The near-term support is around 0.9620 and any close below that level will drag it till 0.9585.
Equities Recap
European shares plunged to 5-month lows as uncertainty over global trade rippled through markets, forcing investors to dump riskier sectors.
The pan-European STOXX 600 index gained 0.3 percent at 372.36 points, while the FTSEurofirst 300 index slumped 0.2 percent to 1,456.68 points.
Britain's FTSE 100 trades 0.5 percent down at 7,279.28 points, while mid-cap FTSE 250 declined 0.7 percent to 20,142.16 points.
Germany's DAX fell 0.4 percent at 11,910.89 points; France's CAC 40 trades 0.3 percent lower at 5,228.69 points.
Commodities Recap
Crude oil prices declined, extending losses for the fourth straight session, as a rise in stocks of refined petroleum products offset a big fall in U.S. crude inventories. International benchmark Brent crude was trading 0.2 percent down at $76.41 per barrel by 1011 GMT, having hit a high of $79.69 on Tuesday, its highest since July 11. U.S. West Texas Intermediate was trading 0.1 percent lower at $67.80 a barrel, after rising as high as $71.37 on Tuesday, its highest since July
Gold prices consolidated within a thin range after a report suggested that U.S. President Donald Trump would next take up trade issues with Japan. Spot gold was trading flat at $1,199.98 as of 1015 GMT, having touched a high of $1,126.88 on Thursday, its highest since August 31 and headed for a third straight session of gains.U.S. gold futures rose 0.2 percent to $1,206.40 an ounce.
Treasuries Recap
The U.S. Treasuries suffered ahead of the country’s August employment report, coupled with a host of FOMC members’ speeches, scheduled for later in the day. Members Rosengren, Mester and Kaplan are scheduled to deliver their speeches by 12:30GMT, 13:00GMT and 16:45GMT respectively. The yield on the benchmark 10-year Treasuries rose 1 basis point to 2.886 percent, the super-long 30-year bond yields also climbed 1 basis point to 3.063 percent and the yield on the short-term 2-year traded tad higher at 2.645 percent.
The German bunds slumped during late European session as investors have largely shrugged-off the country’s lower-than-expected trade balance for the month of July and Eurozone’s gross domestic product (GDP) for the second quarter of this year. The German 10-year bond yields, which move inversely to its price, jumped 2 basis points to 0.371 percent, the yield on 30-year note also climbed 2 basis points to 1.047 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.576 percent.
The Japanese government bonds remained tad lower on the last trading day of the week following overnight rise in the United States Treasuries as fears over a trade war have not yet subsided and Japan looks to be on the list of next target by President Donald Trump. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded 1/2 basis point lower at 0.106 percent, the yield on the long-term 30-year note remained flat at 0.842 percent and the yield on short-term 2-year too hovered around -0.111 percent.
The Australian bonds jumped during Asian session tracking a similar movement in the United States Treasuries following disappointment over U.S. employment data for the month of August, released late yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.551 percent, the yield on the long-term 30-year bonds also plunged 2 basis points 3.056 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.984 percent.
