Market Roundup
- EUR/USD -0.07%, USD/JPY 0.15%, GBP/USD -0.24%, EUR/GBP 0.19%
- DXY 0.06%, DAX 0.24%, FTSE 0.1%, Brent 1.55%, Gold -0.19%
- China says Trump forces its hand, will retaliate against new U.S. tariffs
- Trump economic adviser says U.S. wants serious trade talks with China
- China's yuan down as Beijing, Washington escalate trade row; stimulus hopes boost stocks
- ECB's Villeroy urges deal on bank resolution backstop by end of year
- China central bank warns investors of ICOs and virtual currency risks
- Russian rouble up after Russia-Turkey deal on Syria's Idlib, higher oil
- Brexiteers start "chuck Chequers" campaign against UK PM May's plans
- Italy Industrial Orders (y/y) NSA, 2.80%, 2.00% previous
Economic Data Ahead
- (0830 ET/1230 GMT) Statistics Canada releases manufacturing shipments data for the month of July. Manufacturing sales are likely to have increased 0.6 percent after rising 1.1 percent in June.
- (1000 ET/1400 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index rose to 66 in September, compared with a reading of 67 in the month before.
- N/A Argentina's gross domestic product is likely to have contracted 4.2 percent in the second quarter from the same period last year.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index rebounded from an over 1-1/2 month low after a top economic adviser to President Donald Trump stated that the U.S. budget deficits is likely to be about 4 percent to 5 percent of the country's economic output for the next 1-2 years. The greenback against a basket of currencies trades 0.1 percent up at 94.56, having touched a low of 94.35, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at -54.96 (Bearish) by 1000 GMT.
EUR/USD: The euro edged down as the greenback gained on the back of growing concerns about a full-blown trade war between the U.S. and China. The European currency traded 0.05 percent down at 1.1680, having touched a high of 1.1721 on Friday, its highest since Aug 30. FxWirePro's Hourly Euro Strength Index stood at -22.58 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1718 (August 30 High), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1584 (August 31 Low), a break below could drag it till 1.1542 (September 5 Low).
USD/JPY: The dollar rallied to a 2-month peak after U.S. President Donald Trump imposed 10 percent tariffs on an additional $200 billion worth of Chinese imports and warned of duties on more products if China took retaliatory action. Moreover, a modest uptick in the U.S. Treasury bond yields also provided an additional boost to the upside. The major was trading 0.2 percent up at 112.11, having hit a high of 112.16 on Friday, its highest since July 20. FxWirePro's Hourly Yen Strength Index stood at -104.07 (Highly Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. Housing Market Index. Immediate resistance is located at 112.56 (July 16 High), a break above targets 112.92 (July 17 High). On the downside, support is seen at 111.45 (10-DMA), a break below could take it lower 111.06 (September 11 Low).
GBP/USD: Sterling nudged down after rising to an over 1-1/2 month peak as investors turned cautious over the progress of a Brexit deal ahead of a European Union summit later this week. The major traded 0.1 percent down at 1.3141, having hit a high of 1.3170 earlier; it’s highest since July 31. FxWirePro's Hourly Sterling Strength Index stood at -15.38 (Neutral) 1000 GMT. Immediate resistance is located at 1.3213 (July 26 High), a break above could take it near 1.3274 (July 5 High). On the downside, support is seen at 1.3080 (5-DMA), a break below targets 1.3002 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 88.89 pence, having hit a high of 88.71 earlier, it’s highest since August 2.
USD/CHF: The Swiss franc rallied to a fresh 5-month peak as the ongoing U.S. - China trade war escalated further after China said that it has no option but to levy retaliatory tariffs on the U.S. The major trades 0.05 percent down at 0.9620, having touched a low of 0.9601 earlier, it’s lowest since April 16. FxWirePro's Hourly Swiss Franc Strength Index stood at 48.73 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9663 (23.6% retracement of 0.9865 and 0.9601) and any break above will take the pair to next level till 0.9702 (38.2% retracement). The near-term support is around 0.9585 and any close below that level will drag it till 0.9553.
Equities Recap
European shares edged up, while the greenback steadied after the United States imposed a new round of tariffs on Chinese imports.
The pan-European STOXX 600 index rallied 0.08 percent at 378.55 points, while the FTSEurofirst 300 index surged 0.05 percent to 1,479.56 points.
Britain's FTSE 100 trades 0.2 percent up at 7,313.81 points, while mid-cap FTSE 250 gained 0.5 percent to 20,478.29 points.
Germany's DAX rose 0.3 percent at 12,128.39 points; France's CAC 40 trades 0.2 percent higher at 5,360.72 points.
Commodities Recap
Crude oil prices surged after Saudi Arabia indicated it was comfortable with a higher price range, however, an escalation in the China-U.S. trade war clouded the outlook for crude demand from the world's top oil consumers. International benchmark Brent crude was trading 1.4 percent up at $78.94 per barrel by 1027 GMT, having hit a high of $80.08 on Wednesday, its highest since May 22. U.S. West Texas Intermediate was trading 1.4 percent up at $69.69 a barrel, after rising as high as $71.24 on Wednesday, its highest since September 4.
Gold prices declined as the U.S. dollar held gains amid concerns of an escalation in global trade tensions. Spot gold slupmed 0.2 percent to $1,198.55 an ounce at 1029 GMT, having hit a high of $1212.55 on Thursday, its highest since Aug. 28. U.S. gold futures were down 0.3 percent at $1,202.20 an ounce.
Treasuries Recap
The U.S. Treasuries remained flat as investors remained side-lined in a silent trading day amid lack of economically significant data. The yield on the benchmark 10-year Treasuries hovered around 2.996 percent, the super-long 30-year bond yields traded nearly flat at 3.140 percent and the yield on the short-term 2-year too traded steady at 2.786 percent.
The German bunds rose during European session amid a muted trading day that witnessed data of little economic significance. The German 10-year bond yields, which move inversely to its price, slipped nearly 1 basis point to 0.449 percent, the yield on 30-year note slumped nearly 2 basis points to 1.089 percent and the yield on short-term 2-year traded tad lower at -0.544 percent.
The New Zealand bonds plunged at the time of closing as investors expect to see a rise in the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released on September 19 by 22:45GMT. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 2.633 percent, the yield on the long-term 20-year note also climbed 2-1/2 basis points to 2.955 percent and the yield on short-term 2-year too closed 2-1/2 basis points higher at 1.690 percent.
The Japanese government bond prices suffered during late Asian session even as market participants expect to see a worse trade balance data for the month of August, scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained 1/2 basis point higher at 0.115 percent, the yield on the long-term 30-year note climbed 1 basis point to 0.851 percent while the yield on short-term 2-year traded flat at -0.108 percent.
The Australian government bonds slumped across the curve during Asian session after the U.S. 10-year Treasuries yield surged to a near 4-month high on expectations of the Federal Reserve policy tightening. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 2-1/2 basis points to 2.653 percent, the yield on the long-term 30-year bond traded 2-1/2 basis points higher at 3.144 percent and the yield on short-term 2-year climbed 3 basis points to 2.066 percent.
