Market Roundup
- Deputy PM in new Italy government should come from PD's ranks: deputy PD leader
- Johnson plans to restrict parliament time before Brexit - BBC
- Euro zone household lending growth rises to post-crisis high
- France can reduce unemployment to 7% by 2022: labor minister
- German consumer morale stable despite weaker growth outlook: GfK
Economic Data Ahead
- (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending February 3.
Key Events Ahead
- (1220 ET/1620 GMT) Federal Reserve Bank of Richmond President Thomas I. Barkin gives a speech
- (1730 ET/2130 GMT)Federal Reserve Bank of San Francisco Mary Daly's speech
FX Beat
DXY: The dollar index slightly edged up as broader currency markets were largely quiet with investors watching from the sidelines. The greenback against a basket of currencies traded 0.1 percent up at 98.09, having touched a low of 97.17 on Friday, its lowest since August 9.
EUR/USD: The euro rose, reversing some of its previous session losses, after data showed bank lending in the eurozone accelerated in July, while a money supply indicator rose far more than expected, suggesting that even as the economy continues to cool, it is not facing a downturn or a recession. Moreover, another survey showing German consumer morale remained unexpectedly stable heading into September supported upside. The European currency traded 0.05 percent up at 1.1094, having touched a high of 1.1163 on Monday, its highest since August 14. Immediate resistance is located at 1.1119 (38.2% retracement of 1.1230 and 1.1051), a break above targets 1.1162 (61.8% retracement). On the downside, support is seen at 1.1065 (August 20 Low), a break below could drag it below 1.1030.
USD/JPY: The dollar declined as worries about a global economic downturn encouraged investors to buy the safe-haven Japanese yen. A key part of the U.S. yield curve inverted further, while 30-year Treasury yields fell to a few record low on growing concern about the fallout from global trade conflict. The major was trading 0.05 percent down at 105.67, having hit a low of 104.44 on Monday, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing price index and consumer confidence. Immediate resistance is located at 106.43 (21-DMA), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.26 (August 9 Low), a break below could take it lower at 105.05 (August 12 Low).
GBP/USD: Sterling plunged to a near 1-week low on news that Britain’s government will seek to extend the period during which parliament does not normally sit, shutting it for around a month until October 14, as part of a drive to prevent politicians from derailing its Brexit plan. The major traded 0.7 percent down at 1.2207, having hit a high of 1.2309 on Tuesday, it’s highest since July 29. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2331 (61.8% retracement of 1.2522 and 1.2079), a break above could take it near 1.2417 (78.6% retracement). On the downside, support is seen at 1.2144 (21-DMA), a break below targets 1.2100. Against the euro, the pound was trading 0.7 percent down at 90.89 pence, having hit a high of 90.16 on Tuesday, it’s highest since July 29.
USD/CHF: The Swiss franc rose as a deep inversion in the U.S. Treasury yield curve rattled investors worries about economic growth. The major trades 0.05 percent down at 0.9808, having touched a low of 0.9713 on Monday, it’s lowest since August 14. On the higher side, near-term resistance is around 0.9844 (August 22 High)) and any break above will take the pair to next level till 0.9877 (August 23 High). The near-term support is around 0.9771 (August 21 Low), and any close below that level will drag it till 0.9703 (August 6 Low).
Equities Recap
European shares slumped, weighed down by losses in technology companies, as fears that major economies might be on the brink of a recession intensified.
The pan-European STOXX 600 index tumbled 0.4 percent at 372.25 points, while the FTSEurofirst 300 plunged 0.4 percent to 1,464.07 points.
Britain's FTSE 100 trades 0.4 percent up at 7,120.26 points, while mid-cap FTSE 250 declined 0.6 to 19,214.82 points.
Germany's DAX fell 0.5 percent at 11,672.73 points; France's CAC 40 trades 0.5 percent lower at 5,360.80 points.
Commodities Recap
Crude oil prices rose after an industry report showed stockpiles in the United States fell more than expected, easing worries about economic growth due to the China-U.S. trade war. International benchmark Brent crude was trading 0.1 percent higher at $60.17 per barrel by 1005 GMT, having hit a low of $58.29 on Friday, its lowest since August 16. U.S. West Texas Intermediate was trading 0.1 percent up at $55.70 a barrel, after falling as low as $52.95 on Monday, its lowest since August 9.
Gold prices steadied and held close to a more than 6-year high on hopes of a rate cut by the U.S. central bank and uncertainties around the U.S.-China trade talks. Spot gold was trading flat at $1,542.45 per ounce by 1007 GMT, having touched a high of $1,555.10 on Monday, its highest since August 2013. U.S. gold futures were down 0.4 percent at $1,545.10 an ounce.
Treasuries Recap
The U.S. Treasuries surged during the afternoon session ahead of the country’s medium-term 5-year auction, scheduled to be held today by 17:00GMT, besides, a host of speeches by Federal Open Market Committee (FOMC) members Barkin and Daly, both due today at 16:20GMT and 21:30GMT. The yield on the benchmark 10-year Treasury yield slumped nearly 2-1/2 basis points to 1.468 percent, the super-long 30-year bond yield plunged 5 basis points to 1.916 percent and the yield on the short-term 2-year slipped 1 basis point to 1.518 percent.
The German bunds gained during European trading session ahead of the country’s employment report for the month of August, scheduled to be released on August 29 by 09:40GMT and the consumer price inflation (CPI) data for the similar period, due on the same day by 12:00GMT will provide further direction in the debt market. The German 10-year bond yield, which move inversely to its price, slipped 1 basis point to -0.705 percent, the yield on 30-year note suffered 2 basis points to -0.244 percent and the yield on short-term 2-year traded tad down at -0.891 percent.
The Australian government bonds jumped during Asian session amid turmoil of ongoing risks of trade war while the U.S. Treasury yield curve continued inversion, indicating red signals of plausible recession. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped nearly 3-1/2 basis points to 0.884 percent, the yield on the long-term 30-year bond plunged 6 basis points to 1.489 percent and the yield on short-term 2-year slipped 1-1/2 basis points to 0.724 percent.
