Market Roundup
- EUR/USD -0.65%, USD/JPY 0.29%, GBP/USD -0.7%, EUR/GBP 0.03%
- DXY 0.57%, DAX 0.32%, FTSE 0.5%, Brent -1.32%, Gold -0.43%
- EZ Markit Mfg Final PMI Sept 58.1 vs 58.2, 58.2 forecast
- EZ Unemployment Rate Aug 9.1% vs 9.1%, 9.0% forecast
- Great Britain Markit/CPIS Mfg PMI Sept 55.9 vs 56.9, 56.4 forecast
- Germany Markit/BME Final PMI Sept 60.6 vs 60.6, 60.6 forecast
- Japan's business mood hits decade-high, labour shortage bites - BOJ tankan
- Japan Sept Mfg PMI – final 52.9, flash 52.6, Aug final 52.2, sectoral growth up
- Capitalism is the only way, UK finance minister says in challenge to Labour
- Trump to top U.S. diplomat: Don't bother talking to North Korea
- At least 20 killed at shooting rampage at Las Vegas concert
- Oil slips further below $57 after third-quarter rally
- Gold hits near 7-week low as rising U.S. yields lift dollar
Economic Data Ahead
- (0930 ET/1330 GMT) Markit will release Canada's Manufacturing PMI for the Month of September. The indicator stood at 54.6 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of September. The index is likely to show a final reading of 53.3 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 58.0 in September from 58.8 in August.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.3 percent in September after falling 0.6 percent in the previous month.
- (1800 ET/2200 GMT) The New Zealand Institute of Economic Research (NZIER) will report its Business Confidence for the third quarter. The indicator came in at 18 percent in the prior quarter.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.25 bn)
- (1400 ET/1800 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated Q&A session before the "Dialogue with the Fed Luncheon" hosted by the Federal Reserve Bank of Dallas, El Paso Branch, Texas.
FX Beat
DXY: The dollar gained versus most of its peers on renewed optimism over the US tax reform and increasing expectations that the Fed would move towards raising interest rates in December. The greenback against a basket of currencies traded 0.6 percent up at 93.64, having touched a high of 93.67 on Thursday, its highest since Aug. 18. FxWirePro's Hourly Dollar Strength Index stood at 70.94 (Bullish) by 0900 GMT.
EUR/USD: The euro slumped as a police crackdown on a unilateral independence vote in Catalonia weighed heavily on the investor sentiment. The European currency traded 0.6 percent down at 1.1738, having touched a low of 1.1717 on Wednesday, its lowest since Aug. 18. FxWirePro's Hourly Euro Strength Index stood at -7.21 (Neutral) by 0900 GMT. Immediate resistance is located at 1.1827 (61.8% retracement of 1.2005 and 1.1717), a break above targets 1.1870 (10-DMA). On the downside, support is seen at 1.1717 (Sept. 27 Low), a break below could drag it near 1.1700.
USD/JPY: The dollar rose above the 113.00 handle on the back of increasing expectations that the U.S. Federal Reserve will raise interest rates for a third time this year and as U.S. Treasury yields hit their highest in almost 12 weeks. The pair was trading 0.4 percent up at 112.86, having hit a high of 113.25 on Wednesday, its highest since mid Jul. FxWirePro's Hourly Yen Strength Index stood at -46.60 (Neutral) by 0900 GMT. Immediate resistance is located at 113.10, a break above targets 113.50. On the downside, support is seen at 112.13 (10- DMA), a break below could take it near 112.00.
GBP/USD: Sterling tumbled to a near three-week low against the dollar after data showed the manufacturing sector activity in the UK economy decelerated slightly in the month of September. The manufacturing PMI came in at 55.9 points in September, as compared to a previous reading 56.7 (revised down from 56.9) reading. The major traded 0.7 percent down at 1.3304, having hit a low of 1.3301 earlier, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at -41.11 (Neutral) by 0900 GMT. Immediate resistance is located at 1.3427 (5-DMA), a break above could take it near 1.3471 (10-DMA). On the downside, support is seen at 1.3295 (Session Low), a break below targets 1.3250. Against the euro, the pound was trading 0.1 percent down at 88.23 pence, having hit a high of 87.46 pence on Wednesday, its highest since July.
USD/CHF: The Swiss franc declined as the greenback rallied across the board following a rise in the U.S. Treasury yields. The major trades 0.3 percent up at 0.9708, having touched a high of 0.9769 on Wednesday, it’s highest since Aug. FxWirePro's Hourly Swiss Franc Strength Index stood at 121.07 (Highly Bullish ) by 0900 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 0.9758 (Sept 28 high) and any convincing break above will take it to next level till 0.9808/0.9845/0.9900.
AUD/USD: The Australian dollar fell to a fresh 2-1/2 month low as expectations that the Fed would move towards raising interest rates in December and renewed optimism over the U.S. tax reform underpinned the U.S. Dollar demand. The Aussie trades 0.3 percent down at 0.7803, having hit a low of 0.7795 earlier, it’s lowest since Jul. 18. FxWirePro's Hourly Aussie Strength Index stood at -21.43 (Neutral) by 0900 GMT. Immediate support is seen at 0.7795 (Session Low), a break below targets 0.7770. On the upside, resistance is located at 0.7869 (5-DMA), a break above could take it near 0.7923 (10-DMA).
Equities Recap
European shares advanced, while the dollar rallied across the board as U.S. Treasury yields hit their highest in almost 12 weeks.
The pan-European STOXX 600 index climbed 0.2 percent to 388.95 points, while the FTSEurofirst 300 index rallied 0.2 percent to 1,528.42 points.
Britain's FTSE 100 trades 0.5 percent up at 7,411.48 points, while mid-cap FTSE 250 gained 0.2 percent to 19,907.67 points.
Germany's DAX rose 0.3 percent at 12,864.28 points; France's CAC 40 trades 0.02 percent lower at 5,328.11 points.
Commodities Recap
Crude oil prices declined as an increase in U.S. drilling and higher OPEC output weighed heavily on market sentiment. International benchmark Brent crude was trading 0.2 percent down at $56.56 per barrel by 0916 GMT, having hit a high of $59.48 on Tuesday, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.4 percent down at $51.39 a barrel, after rising as high as $52.41 on Tuesday, its highest since April.
Gold prices slumped to its lowest in nearly seven weeks earlier in the day as the U.S. dollar rose on growing expectations for a Federal Reserve interest rate hike in December also added to pressure. Spot gold was down 0.4 percent at $1,273.71 an ounce by 0920 GMT, after touching its lowest since mid-August at $1,271.10. U.S. gold futures for December delivery shed 0.7 percent to $1,276.50.
Treasuries Recap
The U.S. Treasuries suffered Monday, as investors wait to watch the country’s ISM manufacturing PMI for the month of September, scheduled to be released later today. Also, FOMC member Kaplan’s speech, late today will add further direction to the debt market. The yield on the benchmark 10-year Treasury rose 1-1/2 basis points to 2.34 percent, the super-long 30-year bond yields held steady at 2.86 percent and the yield on short-term 2-year note traded nearly 1 basis point higher at 1.49 percent.
The UK gilts rallied after the country’s manufacturing PMI for the month of September disappointed market expectations, coming in at 55.9 in September, down from August’s four-month high of 56.7, but above its long-run average of 51.7. The yield on the benchmark 10-year gilts, fell 2-1/2 basis points to 1.34 percent, the super-long 30-year bond yields plunged 2 basis points to 1.90 percent and the yield on the short-term 2-year also traded 1-1/2 basis point lower at 0.43 percent.
The German government bunds traded flat Monday despite hovering worries over the Catalan referendum that took place on Sunday. Spain's constitutional court had banned the vote and hundreds of people were injured as police used force to try to block voting. Officers seized ballot papers and boxes at polling stations. The German 10-year bond yields, which moves inversely to its price, hovered around 0.46 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 1-1/2 basis points lower at -0.69 percent.
The New Zealand bonds closed mixed Monday amid silent trading session as investors remained focused on the upcoming GlobalDairyTrade (GDT) auction, scheduled for Tuesday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, closed 1 basis point lower at 3.005 percent, the yield on the 7-year note also ended 1 basis point down at 2.850 percent and the yield on short-term 2-year closed1 basis point higher at 2.115 percent.
The Japanese government bonds slumped after Reuters’ Tankan rose unexpectedly in Q3. This shows that the big manufacturers have more confidence in business conditions than they have had for a decade as global demand adds momentum to economic recovery. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, more than 1 basis point to 0.076 percent, the yield on long-term 30-year rose nearly 1 basis point to 0.88 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.11 percent.
The Australian bonds slumped on the first trading day of the week Monday as investors hope to witness a hawkish tone form the Reserve Bank of Australia (RBA) in its monetary policy statement, scheduled to be held on October 3 by 03:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.83 percent, the yield on the 15-year note also urged 4 basis points to 3.16 percent and the yield on short-term 2-year traded 3-1/2 basis points higher at 2.00 percent.
