Market Roundup
- EUR/USD 0.24%, USD/JPY -0.35%, GBP/USD 0.34%, EUR/GBP -0.08%
- DXY -0.24%, DAX 0.05%, FTSE -0.08%, Brent -0.52%, Gold 0.48
- Bank of England talking up sterling to fight inflation - S&P
- ECB tells banks to set aside more cash on bad loans
- Germany Sept Markit Composite Final PMI 57.7 vs 57.8, forecast 57.8
- EZ Sept Markit Service Final PMI 55.8 vs 55.6, forecast 55.6
- EZ Sept Markit Composite Final PMI 56.7 vs 56.7, forecast 56.7
- Great Britain Sept Markit/CIPS Service PMI 53.6 vs 53.2, forecast 53.2
- EZ Aug Retail Sales YY 1.2% vs 2.6%, revised 2.3%, forecast 2.6%
- Trump tax plan expends recession-fighting U.S. business tax break
- Majority of Germans want Merkel's conservatives, FDP, Greens to form govt
- Trump EPA to propose repealing Obama's climate regulation -document
- Japan's economy sees output exceed capacity the most in 9 years
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of September. The report is expected to show that 125,000 jobs were added as compared with 237,000 jobs in August.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of September. The index posted a final reading of 55.1 in August.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of September. The index posted a final reading of 54.6 in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index rose to a final reading of 55.5 in September from 55.3 in August.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending September 29.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending September 29.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending September 29.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae and Freddie Mac (max $500 mn)
- (1315 ET/1715 GMT) European Central Bank (ECB) President Mario Draghi's Speech.
- (1500 ET/1900 GMT) Federal Reserve Bank of St. Louis President James Bullard's speech.
- (1515 ET/1915 GMT) U.S. Federal Reserve Chair Janet Yellen gives brief welcome remarks before the Community Banking in the 21st Century Research and Policy Conference hosted by the Federal Reserve Bank of St. Louis.
FX Beat
DXY: The dollar eased versus its major peers on speculation that FOMC’s Jerome Powell might be the leading candidate to replace Yellen. The greenback against a basket of currencies traded 0.3 percent down at 93.31, having touched a high of 93.92 on Tuesday, its highest since Aug. 17. FxWirePro's Hourly Dollar Strength Index stood at -21.36 (Neutral) by 1000 GMT.
EUR/USD: The euro rallied after data showed business across the Eurozone grew rapidly in September. IHS Markit's final composite Purchasing Managers' Index for the Eurozone rose to 56.7 from August's 55.7, in line with an earlier preliminary estimate. The European currency traded 0.2 percent up at 1.1770, having touched a low of 1.1696 in the previous session, its lowest since Aug. 17. FxWirePro's Hourly Euro Strength Index stood at -44.47 (Neutral) by 1000 GMT. Technically pair is facing strong support at 1.17200 (200- W MA) and any convincing close below that level confirms minor weakness, a decline till 1.16600/1.1600 likely. On the higher side, near-term resistance around 1.17877 (23.6% retracement of 1.20925 and 1.16964) and any break above will take it to next level till 1.1833 (34- day MA)/ 1.1870.
USD/JPY: The dollar eased, halting its 3-day winning streak on speculation that U.S. President Donald Trump's choice for the next Fed chair could be a dovish candidate than some had expected. The major was trading 0.4 percent down at 112.44, having hit a high of 113.25 last week, its highest since mid-Jul. FxWirePro's Hourly Yen Strength Index stood at 124.82 (Highly Bullish) by 1000 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 rebounded after slumping to a 3-week low in the previous session as Britain's dominant services industry showed growth sped up unexpectedly in September. The better-than-expected UK services PMI helped in compensating for weaker readings in the manufacturing and construction industries reported earlier in the week. Sterling traded 0.4 percent up at 1.3285, having hit a low of 1.3222 on Tuesday, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at -141.27 (Highly Bearish) by 1000 GMT. On the lower side, nearby support is around 1.3220 and any break below will drag the pair down till 1.3200/1.3100. The near-term resistance is around 1.3435 and any break above will take it till 1.3465/1.3500/1.3570 (Sep 25th, 2017 high). Against the euro, the pound was trading flat at 88.65 pence, having hit a low of 88.81 pence the day before, its lowest since Sept. 19.
USD/CHF: The Swiss franc rose, extending previous session gains, as the greenback retreated from a 1-1/2-month high against a basket of currencies on concerns over U.S. President Donald Trump's next Fed chair choice. The major trades 0.1 percent down at 0.9723, having touched a high of 0.9786 the day before, it’s highest since May. FxWirePro's Hourly Swiss Franc Strength Index stood at 0.46 (Neutral) by 1000 GMT. The pair has taken support near 10- day MA at 0.9700 and any break below will drag it down till 0.9580/ 0.9565/ 0.9525. The near-term resistance is around 0.9773 (Aug 8th, 2017 high) and any convincing close above will take it to next level till 0.9808/0.9845/0.9900.
AUD/USD: The Australian dollar rose to a 1-week high as the greenback gave back some of its recent gains amid speculation about who might be the next chair of the Federal Reserve. The Aussie trades 0.4 percent up 0.7868, having hit a low of 0.7785 in the previous session, it’s lowest since Jul. 14. FxWirePro's Hourly Aussie Strength Index stood at 128.00 (Highly Bullish) by 1000 GMT. On the lower side, near-term support is around 0.7800 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 tumbled as the on-going Catalonia crisis weighed heavily on the Spanish and banking stocks, while the greenback declined on news that FOMC’s Jerome Powell is gaining ground in the runoff to lead the Federal Reserve.
The pan-European STOXX 600 index slumped 0.3 percent to 389.65 points, while the FTSEurofirst 300 index declined 0.3 percent to 1,531.43 points.
Britain's FTSE 100 trades 0.04 percent down at 7,465.35 points, while mid-cap FTSE 250 fell 0.1 percent to 20,008.18 points.
Germany's DAX eased 0.01 percent at 12,901.94 points; France's CAC 40 trades 0.4 percent lower at 5,346.44 points.
Commodities Recap
Crude oil prices steadied after declining to recent lows on concerns that a rally that lasted for most of the third quarter would not extend through the last three months of the year. International benchmark Brent crude was trading 0.1 percent up at $55.73 per barrel by 1018 GMT, having hit a low of $55.36 earlier, its weakest since Sept. 20. U.S. West Texas Intermediate was trading 0.05 percent up at $50.19 a barrel, after falling as low as $49.89, its lowest since Sept. 19.
Gold prices rebounded after recording a 7-week low in the previous session, as the dollar retreated from a 1-1/2-month high against a basket of currencies. Spot gold gained 0.5 percent to $1,277.62 an ounce by 1021 GMT, having touched its lowest since mid-August at $1,268.21 on Tuesday. U.S. gold futures for December delivery also rose 0.3 percent, to $1,278.60 per ounce.
Treasuries Recap
The U.S. Treasuries remained firm, following heightened uncertainty over the possible appointment of Fed Chair after Janet Yellen steps down from the position. The yield on the benchmark 10-year Treasury fell 1-1/2 basis points to 2.31 percent, the super-long 30-year bond yields slipped 1 basis point to 2.86 percent and the yield on short-term 2-year note also traded nearly 1 basis point lower at 1.46 percent.
The UK gilts traded lower after the country’s services PMI for the month of September remained tad higher at 53.6, vs expectations of and from 53.2 in August. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.36 percent, the super-long 30-year bond yields climbed nearly 1-1/2 basis points to 1.92 percent and the yield on the short-term 2-year too traded nearly 1 basis point higher at 0.45 percent.
The German government bunds gained after the country’s composite PMI disappointed market expectations, thus pushing investors toward safe-haven assets. The German 10-year bond yields, which moves inversely to its price, slumped 2 basis points to 0.44 percent, the yield on 30-year note also plunged 1-1/2 basis points to 1.23 percent and the yield on short-term 2-year bonds traded 1 basis point lower at -0.71 percent.
The New Zealand bonds ended higher after global dairy prices slumped at the latest GlobalDairyTrade price auction, held late yesterday. At the time of closing, the yield on the benchmark 10-year Treasury note fell 1 basis point to 2.99 percent, the yield on 7-year note also slipped 1 basis point to 2.83 percent and the yield on short-term 2-year ended 1/2 basis point lower at 2.10 percent.
The Japanese government bond yields declined as investors poured into safe-haven assets, following heightened disparity over the possible selection of Fed Chair after serving head Janet Yellen steps down. The yield on the benchmark 10-year Treasury note slumped 2 basis points to 0.06 percent, the yield on long-term 30-year slipped nearly 1 basis point to 0.87 percent and the yield on short-term 2-year traded 1 basis point lower at -0.12 percent.
The Australian bonds gained following firmness in U.S. Treasuries as investors remained cautious ahead of the fresh triggers for trades from President Donald Trump's pending decision on the leadership of the Federal Reserve. The yield on the benchmark 10-year Treasury note fell 3 basis points to 2.82 percent, the yield on the 15-year note dipped 2-1/2 basis points to 3.10 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at 1.95 percent
