Market Roundup
- EUR/USD -0.46%, USD/JPY 0.02%, GBP/USD -0.24%, EUR/GBP -0.25%
- DXY 0.38%, DAX -1.34%, FTSE -0.52%, Brent 0.4%, Gold 0.14%
- Italy's hikes deficit goal, defies EU and rattles markets
- Boris Johnson demands UK PM May scrap her Brexit proposals
- U.S. Senate panel heads to vote on Supreme Court nominee Kavanaugh
- Great Britain Q2 GDP QQ, 0.4%, 0.4% forecast, 0.4% previous, 0.1% revised
- Great Britain Q2 GDP YY, 1.2%, 1.3% forecast, 1.3% previous, 1.1% revised
- UK firms cut investment as Brexit nears, current account gap widens
- Dip in underlying euro zone inflation likely to worry ECB
- EZ Sep HICP Flash YY, 2.1%, 2.1% forecast, 2.0% previous
- EZ Sep HICP-X F&E Flash YY, 1.1%, 1.2% forecast, 1.2% previous
- Germany Sep Unemployment Rate SA, 5.1%, 5.2% forecast, 5.2% previous
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for August, which is expected to rise 0.4 percent from 0.3 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of August. The index is likely to rise at an annualized rate of 2.2 percent, while core PCE is expected to have increased 2.0 percent year-on-year, unchanged from previous month reading.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.3 percent in the month of August, after surging 0.4 percent in July.
- (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of August. The index posted a rise of 0.7 percent in July.
- (0830 ET/1230 GMT) The Statistics Canada will report its industrial producer prices for the month of August. The indicator fell 0.2 percent in the prior month.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that gross domestic product increased 0.1 percent in July, after staying flat in the previous month.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions eased to 62.5 in September from 63.6 last month.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. consumer sentiment index remained unchanged at 100.8 in September.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0830 ET/1230 GMT) Federal Reserve Bank of Richmond President Thomas Barkin speaks before the "Banking and the Economy: a Forum for Minorities in Banking" in Charlotte
- (0835 ET/1235 GMT) ECB chief economist Peter Praet attends a panel discussion on "Macroprudential policy in recovering economies" at the 3rd Annual ESRB conference in Frankfurt
- (0920 ET/1320 GMT) Bank of England Deputy Governor, Markets and Banking Dave Ramsden gives a speech at Society of Professional Economists Annual Conference, London
- (1645 ET/2045 GMT) Federal Reserve Bank of New York President John Williams addresses Columbia University's School of International and Public Affairs, in New York.
FX Beat
DXY: The dollar index rallied to a near 3-week peak, boosted by yesterday's data that showed the U.S. economy expanded at the fastest pace in nearly four years and on Federal Reserve's signal for a steady course of rate increases over the next year. The greenback against a basket of currencies trades 0.3 percent up at 95.30, having touched a high of 95.37, its highest since September 10. FxWirePro's Hourly Dollar Strength Index stood at 121.71 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro slumped to an over 2-week low after the Italian government agreed to set a higher than expected budget deficit target that could put Rome on a collision course with Brussels. Italy's new government proposed a budget deficit at 2.4 percent of the gross domestic product, which was three times bigger than the previous administration's target. The European currency traded 0.4 percent down at 1.1591 having touched a low of 1.1581 earlier, its lowest since September 12. FxWirePro's Hourly Euro Strength Index stood at -155.39 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.1698 (September 17 High), a break above targets 1.1757 (September 27 High). On the downside, support is seen at 1.1570 (September 12 Low), a break below could drag it till 1.1530 (September 4 Low).
USD/JPY: The dollar surged to a 9-1/2 month peak after the Federal Reserve raised interest rates and Fed Chairman Jerome Powell stated that the U.S. economy does not face a large chance of a recession in the next two years. The major was trading 0.1 percent up at 113.42, having hit a high of 113.64 earlier, its highest since Dec 12. FxWirePro's Hourly Yen Strength Index stood at 86.78 (Slightly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. personal consumption expenditures-price index and Michigan consumer sentiment index. Immediate resistance is located at 113.71 (Nov 13 High), a break above targets 114.00 (Nov 8 High). On the downside, support is seen at 112.87 (5-DMA), a break below could take it lower 112.42 (September 21 Low).
GBP/USD: Sterling plunged to a fresh 2-week low after data showed British companies cut their investment in the second quarter of 2018 and the economy's balance of payments deficit grew more than expected. Moreover, the selling pressure intensified after another report showed Britain's overall economy grew slightly slower than previously expected. The major traded 0.3 percent down at 1.3037, having hit a low of 1.3034 earlier; it’s lowest since September 21. FxWirePro's Hourly Sterling Strength Index stood at -92.15 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.3139 (10-DMA), a break above could take it near 1.3193 (September 25 High). On the downside, support is seen at 1.3026 (September 13 Low), a break below targets 1.2979 (September 12 Low). Against the euro, the pound was trading 0.3percent up at 88.75 pence, having hit a high of 88.74 earlier, it’s highest since September 21.
USD/CHF: The Swiss franc consolidated near a 1-month low as the greenback surged after robust U.S. economic data reinforced upbeat views about the U.S. economy, supporting the Federal Reserve's signal for a steady course of rate increases over the next year. The major trades flat at 0.9769, having touched a high of 0.9783 on Thursday, it’s highest since August 28. FxWirePro's Hourly Swiss Franc Strength Index stood at 6.63 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9798 (78.6% retracement of 0.9865 and 0.9542) and any break above will take the pair to next level till 0.9845 (August 27 High). The near-term support is around 0.9719 (September 11 Low) and any close below that level will drag it till 0.9687 (September 4 Low).
Equities Recap
European shares tumbled after the Italian government agreed to set a higher than expected budget deficit target that could set up a clash with the European Commission.
The pan-European STOXX 600 index slumped 0.4 percent at 384.68 points, while the FTSEurofirst 300 index plunged 0.7 percent to 1,505.11 points.
Britain's FTSE 100 trades 0.6 percent lower at 7,502.50 points, while mid-cap FTSE 250 declined 0.4 percent to 20,284.52 points.
Germany's DAX fell 0.9 percent at 12,319.80 points; France's CAC 40 trades 0.5 percent lower at 5,510.89 points.
Commodities Recap
Crude oil prices rose as U.S. sanctions on Tehran eased Iranian crude exports, tightening supply even as other key exporters increased production. International benchmark Brent crude was trading 0.1 percent up at $81.55 per barrel by 1026 GMT, having hit a high of $82.52 on Tuesday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.1 percent down at $72.09 a barrel, after rising as high as $72.73 on Tuesday, its highest since July 11.
Gold prices surged after falling to a fresh 6-week low and were on track for its longest monthly losing streak since January 1997 as the dollar steadied after upbeat U.S. economic data supported the Federal Reserve's resolve for steady interest rate hikes. Spot gold was 0.2 percent up at $1,184.51 by 1029 GMT, \having hit a low of $1181.80 on Thursday, its lowest since August 17 and was down about 1.6 percent in September, its sixth straight monthly loss. U.S. gold futures eased 0.1 percent at $1,186.20 an ounce.
Treasuries Recap
The German bunds plunged during late European session after the country’s unemployment report for the month of September cheered market participants. Also, euro zone’s consumer price inflation (CPI) data for the month of September rose, meeting consensus estimates, which added to widespread losses in bund prices. The German 10-year bond yields, which move inversely to its price, plunged 7 basis points to 0.459 percent, the yield on 30-year note also slumped 5-1/2 basis points to 1.064 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points lower at -0.543 percent.
The Japanese government bond prices fell on the last trading day of the week after the country’s retail sales for the month of August beat market expectations and the unemployment rate also came in lower than previous, adding to gains in debt yields, as investors shifted away from safe-haven assets.The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1/2 basis point to 0.129 percent, the yield on the long-term 30-year note climbed nearly 1-1/2 basis points to 0.907 percent and the yield on short-term 2-year remained flat at -0.112 percent.
The Australia government bonds surged during Asian session amid a silent trading session that witnessed domestic data of little economic significance. However, the Reserve Bank of Australia’s (RBA) monetary policy meeting, scheduled to be concluded by early next week will add further direction to the country’s debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.675 percent, the yield on the long-term 30-year bond plunged 2-1/2 basis points to 3.160 percent and the yield on short-term 2-year too traded nearly 2 basis points lower at 2.042 percent.
