Market Roundup
- EUR/USD -0.52%, USD/JPY 0.30%, GBP/USD -0.36%, EUR/GBP -0.18%
- DXY 0.42%, DAX -0.72%, FTSE -0.08%, Brent 1.47%, Gold -0.52%
- Sterling falls as doubts build over Brexit, BoE's Carney
- South Africa in recession for first time since 2009, rand slumps
- Emerging currencies stumble, India rupee hits fresh record low
- EZ Jul Producer Prices MM, 0.4%, 0.3% forecast, 0.4% previous
- EZ Jul Producer Prices YY, 4.0%, 3.9% forecast, 3.6% previous
- Great Britain Aug Markit/CIPS Construction PMI, 52.9, 55.0 forecast, 55.8 previous
- UK has looked at economic impact of Brexit plans- Senior Brexit ministry official
- Gold slips as trade, emerging market worries lift dollar
- Oil prices jump as Gulf of Mexico rigs evacuated
Economic Data Ahead
- (0930 ET/1330 GMT) The Markit will release Canada's Manufacturing PMI for the Month of August. The indicator stood at 56.9 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of August. The index is likely to show a final reading of 54.5 after posting similar gains in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index eased to 57.7 in August from 58.1 in July.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.5 percent in July after declining 1.1 percent in the previous month.
- (1000 ET/1400 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of September. The indicator rose to 58.0 in August.
Key Events Ahead
- (1030 ET/1430 GMT) Federal Reserve Bank of Chicago President Charles Evans participates in "Challenges on Central Banking" roundtable before the Central Bank of Argentina "Dealing with Monetary Policy Normalization" Money and Banking Conference in Reconquista, Argentina
- (1200 ET/1600 GMT) National Bank of Austria Governor Ewald Nowotny speaks at an exhibition opening in Vienna
FX Beat
DXY: The dollar index rallied across the board, boosted by growing concerns about a possible escalation in trade conflict between the United States and China. The greenback against a basket of currencies trades 0.4 percent up at 95.55, having touched a high of 95.62 earlier, its highest since August 24. FxWirePro's Hourly Dollar Strength Index stood at 140.66 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro declined to an over 1-week peak after data showed the European Central Bank's debt purchases in August under its stimulus programme were the lowest since the scheme commenced. Moreover, Italian uncertainties continued to weigh on investor sentiment. The European currency traded 0.5 percent down at 1.1558, having touched a low of 1.1549, its lowest since Aug 24. FxWirePro's Hourly Euro Strength Index stood at -40.42 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1658 (5-DMA), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1542 (21-DMA), a break below could drag it till 1.1500.
USD/JPY: The dollar surged to a 5-day peak against the Japanese yen following a rise in the U.S. Treasury bond yields. However, growing concerns over the recent developments in the emerging markets and the US-China trade war limited the upside. The major was trading 0.3 percent up at 111.41, having hit a high of 111.53 earlier, its highest since August 30. FxWirePro's Hourly Yen Strength Index stood at 128.52 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. construction spending, manufacturing PMI from both Markit and ISM; and Fed Evan's speech. Immediate resistance is located at 111.75 (August 23 High), a break above targets 112.15 (August 1 High). On the downside, support is seen at 110.70 (August 9 Low), a break below could take it lower 110.43 (August 15 Low).
GBP/USD: Sterling plunged to an over 1-week low amid growing concerns about the progress of Brexit negotiations and doubts of whether Bank of England Governor Mark Carney will stay on board of the central bank beyond the summer of next year. The major traded 0.4 percent down at 1.2822, having hit a low of 1.2814 earlier; it’s lowest since August 24. FxWirePro's Hourly Sterling Strength Index stood at -99.84 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2907 (10-DMA), a break above could take it near 1.2936 (August 22 High). On the downside, support is seen at 1.2799 (August 24 Low), a break below targets 1.2722 (August 10 Low). Against the euro, the pound was trading 0.1 percent up at 90.16 pence, having hit a high of 89.38 on Friday, it’s highest since August 17.
USD/CHF: The Swiss franc fell to a 6-day low as greenback rallied to recent peaks ahead of U.S. nonfarm payroll data later in the week. The major trades 0.5 percent up at 0.9735, having touched a high of 0.9745 earlier, it’s highest since August 29. FxWirePro's Hourly Swiss Franc Strength Index stood at -10.17 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9760 (50.0% retracement of 0.9866 and0.9652) and any break above will take the pair to next level till 0.9821 (78.6% retracement). The near-term support is around 0.9635 and any close below that level will drag it till 0.9600.
Equities Recap
European shares slumped, as investors remained cautious due to worries the U.S. could impose new tariffs on imports from China.
The pan-European STOXX 600 index declined 0.5 percent at 380.63 points, while the FTSEurofirst 300 index eased 0.6 percent to 1,486.28 points.
Britain's FTSE 100 trades 0.3 percent down at 7,481.24 points, while mid-cap FTSE 250 declined 0.3 percent to 20,639.54 points.
Germany's DAX fell 0.8 percent at 12,250.12 points; France's CAC 40 trades 1.1 percent lower at 5,355.89 points.
Commodities Recap
Crude oil prices rallied over 1 percent to multi-week peaks after the evacuation of two Gulf of Mexico oil platforms in preparation for a hurricane. International benchmark Brent crude was trading 1.5 percent up at $79.13 per barrel by 1016 GMT, having hit a high of $79.24, its highest since July 11. U.S. West Texas Intermediate was trading 1.3 percent higher at $71.02 a barrel, after rising as high as $71.19, its highest since July 13.
Gold prices slumped as the greenback rose to a more than 1-week high on the back of intensifying global trade tensions and economic worries in emerging markets. Spot gold was down 0.5 percent down at $1,194.64 an ounce at 1041 GMT, having touched a low of $1,193.58, its lowest since August 24. while U.S. gold futures had dropped 0.4 percent at $1,202.10 an ounce.
Treasuries Recap
The U.S. Treasuries slumped ahead of the country’s ISM manufacturing PMI for the month of August, scheduled to be released today by 14:00GMT, together with construction spending data for July and auto sales figures for August. The yield on the benchmark 10-year Treasuries jumped nearly 2 basis points to 2.871 percent, the super-long 30-year bond yields climbed nearly 3 basis points to 3.036 percent and the yield on the short-term 2-year traded close to 1 basis point higher at 2.637 percent .
The United Kingdom’s gilts remained flat during European session after the country’s construction PMI for the month of August disappointed market expectations, also lower than the previous reading in July. The yield on the benchmark 10-year gilts, hovered around 1.407 percent, the super-long 30-year bond yields steady at 1.756 percent while the yield on the short-term 2-year traded nearly 1 basis point lower at 0.721 percent.
The New Zealand bonds closed higher amid a muted trading session that witnessed data of little economic significance ahead of the GlobalDairyTrade (GDT) price auction, scheduled to be held today for added direction in the debt market. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped nearly 1/2 basis point to 2.540 percent, the yield on the long-term 20-year note fell close to 1 basis point to 2.860 percent and the yield on short-term 2-year too closed nearly 1/2 basis point down at 1.655 percent.
The Japanese government bonds traded range-bound on ahead of the 10-year auction scheduled for September 5. However, investors would focus on any new developments in ongoing global trade conflicts. The yield on the benchmark 10-year JGB note, which moves inversely to its price, traded nearly flat at 0.114 percent, the yield on the long-term 30-year note remained steady at 0.860 percent and the yield on short-term 2-year stood flat at -0.108 percent.
The Australian bonds traded nearly flat during late Asian session after the Reserve Bank of Australia (RBA) remained on hold at its monetary policy meeting held today, citing sustained expansion in global economic growth. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, remained tad lower at 2.520 percent, the yield on the long-term 30-year bond hovered around 3.039 percent and the yield on short-term 1-year traded flat at 1.977 percent.
