Market Roundup
- EUR/USD 0.07%, USD/JPY -0.25%, GBP/USD 0.18%, EUR/GBP -0.11%
- DXY -0.08%, DAX -0.08%, FTSE 0.01%, Brent 1.11%, Gold 0.28%
- Fed conflicted by tepid U.S. inflation, global economic rebound
- OECD sees U.S. growth of 2.1% in 2017, 2.4% in 2018
- OECD forecasts Euro Zone growth of 2.1% in 2017, 1.9% in 2018
- OECD expects 2017 World growth of 3.5%, 3.7% in 2018
- German wholesalers expect revenues to hit record high in 2017
- UK Aug Retail Sales YY 2.4% vs 1.3%, 1.1% f'cast, 1.4% r'vsd
- UK Aug Retail Sales Ex-Fuel YY 2.8% vs 1.5%, 1.4% f'cast, 1.7% r'vsd
- JP Aug trade surplus Y113.6 bln, Y93.9 eyed, exports +18.1%, imports +15.2%
- JP Exports best since Nov ’13, to US +21.8%, China +25.8%, Asia +19.9%
- Japan end-June household financial assets Y1832 trln, +4.4% y/y
- GPIF net long Y1.353 trln foreign bonds end-June, short JGBs, stocks
- Oil set for strongest Q3 since 2004, Iraq hints at OPEC extension
- Gold inches up ahead of Fed policy statement
Economic Data Ahead
- (0700 ET/1100 GMT) MBA Weekly Mortgage Application Indices
- (1000 ET/1400 GMT) Existing Home Sales (Aug) (mkt 5.46 mn SAAR, prev 5.44 mn SAAR)
- (1030 ET/1430 GMT) EIA Weekly Petroleum Status Report
Key Events Ahead
- (0900 ET/1300 GMT) FOMC continues two-day policy meeting
- (1400 ET/1800 GMT) FOMC Policy Statement and Summary of Economic Projections
- (1430 ET/1830 GMT) Fed Chair Press Conference
FX Beat
DXY: US Dollar index is trading in narrow range between 92.66 and 91.58 for the past three trading session. It is currently trading around 91.70. Short term bullishness can be seen only above 92.36- 92.60. The index major support is at 91 low made yesterday and break below targets 90.
EUR/USD: EUR/USD hits 9 day high after breaking psychological resistance at 1.2000. The pair is facing strong psychological resistance at 1.200. On the lower side, near term intraday support is around 1.1850 (trend line joining 1.13400 and 1.13705). Market awaits US Fed monetary policy for further direction.
USD/JPY: Dollar trades sideways, caution prevails in the market ahead of the the Federal Reserve's meeting. US dollar inched 0.24 percent lower against its Japanese counterpart and was trading at to 111.32 yen at 1030 GMT. Focus also remains on Bank of Japan policy meeting and analysts expect the central bank to maintain the status quo as inflation remains tepid despite the modestly recovering economy. Technically, the major has broken above 100-DMA at 111.13 and is on track to test 200-DMA at 112.21. Cloud offers stiff resistance at 111.60, break above needed for further upside.
GBP/USD: Sterling jumped against the dollar on Wednesday after UK retail sales' unexpected surge in August. Upbeat data adds pressure on the Bank of England to lift interest rates from record lows. GBP/USD jumped till 1.36074 and is currently trading around 1.35570. On the higher side, near term resistance is around 1.36320 and any break above will take the pair till 1.3700/1.3750. The near term support is around 1.3500 and any break below will drag the pair down till 1.3450/1.3400. The minor weakness only below 1.3150.
USD/CHF: USD/CHF is consolidating in narrow range between 0.9705 and 0.95650 for the past four trading session. The pair has formed a minor bottom at 0.95650 on Sep 15 th 2017 and jumped slightly from that level. It is currently trading around 0.96105. Short term trend is still bullish as long as support 0.9535 holds. The near term resistance is around 0.9700 and any convincing break above will take the pair to next level till 0.97730/0.9808.
AUD/USD: AUD/USD up 0.50% on the day, trading at 0.8050 at around 1045 GMT. A broad based rally seen across the commodities’ space helps lift the sentiment around the antipodean. Fed policy decision will play decisive part to determine the next direction in the major. Weekly 200-SMA at 0.7949 is major support, while 0.8070 (trendline) is major resistance.
NZD/USD: Kiwi remains buoyed as latest polls show outright majority for ruling government. Also, a slight improvement seen in the latest GDT auction where the NZ GlobalDairyTrade price index arrived at +0.9% vs +0.3% prior. Further, New Zealand’s current account deficit narrowed to 2.8% of GDP in the year to June, following a revised deficit of 2.9% last quarter. NZD/USD broke past 50-DMA to hit 6-week highs at 0.7374. Weekly 200-SMA at 0.7391 is next major resistance and we see scope for further upside on break above.
Equities Recap
World stocks hit new record highs on Wednesday as investors remain cautious ahead of FOMC meeting outcome.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.1 percent. Japan's Nikkei closed up 0.05 percent and Shanghai added 0.3 percent.
Britain's FTSE 100 trades 0.04 percent up at 7,278.25 points, Germany's DAX declined 0.07 percent at 12,553.50 points; France's CAC 40 trades 0.15 percent higher at 5,245.30 points.
Commodities Recap
Gold stuck in range-bound trade on Wednesday as markets wary ahead of the outcome of a two-day Federal Reserve meeting in the United States. Spot gold had risen 0.2 percent to $1,313.50 an ounce by 0612 GMT. U.S. gold futures for December delivery were up 0.5 percent at $1,317.40 an ounce.
Platinum pulled away from near 7-week low, rose 0.7 percent to $954.60 an ounce, while Palladium was up 0.7 pct to $914.75 an ounce. Meanwhile, silver slipped 0.1-percent to $17.30 an ounce.
U.S. oil extended gains after bullish gap open, buoyed after the Iraqi oil minister said OPEC and its partners were considering extending supply cuts. Brent crude futures rose 29 cents to $55.43 a barrel by 0800 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up 42 cents at $49.90 a barrel.
Treasuries Recap
U.S.: The U.S. Treasuries surged as investors wait to watch the Federal Open Market Committee’s (FOMC) policy decision, scheduled to be unveiled today by 18:00GMT. The yield on the benchmark 10-year Treasury slumped 2 basis points to 2.22 percent, the super-long 30-year bond yields plunged 1-1/2 basis points at 2.79 percent and the yield on short-term 2-year note also traded nearly 1-1/2 basis points lower at 1.39 percent.
UK: The UK gilts rallied as investors have largely shrugged-off the country’s retail sales for the month of August, coming in at 1.0 percent m/m, vs expectations of 0.2 percent m/m, from 0.6 percent m/m in July. The yield on the benchmark 10-year gilts, fell nearly 1 basis point to 1.33 percent, the super-long 30-year bond yields slumped 1-1/2 basis points to 1.91 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 0.40 percent.
EUR: The German government bunds strengthened as investors now remain focussed to read along European Central Bank President Mario Draghi’s speech, scheduled to be held on September 21 and 22. The German 10-year bond yields, which moves inversely to its price, fell 1-1/2 basis points to 0.43 percent, the yield on 30-year note slumped nearly 3 basis points to 1.22 percent and the yield on short-term 2-year traded flat at -0.68 percent.
NZD: The New Zealand bonds slumped at the time of closing after dairy prices rose at the overnight GlobalDairyTrade Price auction, reporting its second consecutive increase. Also, the country’s current account deficit narrowed in the second quarter as tourists poured in for high-profile international sports events. At the time of closing, the yield on the benchmark 10-year Treasury note, jumped 4 basis points to 3.08 percent, the yield on 7-year note rose 1/2 basis point to 2.93 percent while the yield on short-term 2-year also ended 1/2 basis point higher at 2.18 percent.
JGBs: The Japanese government bonds trade slightly on the downside after the country’s trade balance data for the month of August showed exports and imports surging in August, with both beating expectations as a recovery in trade appeared to gain momentum. Further, the Bank of Japan’s (BoJ) monetary policy meeting is scheduled to be held on September 21 which will add further direction to the debt market. The yield on the benchmark 10-year Treasury note, rose nearly 1 basis point to 0.03 percent, the yield on long-term 30-year tad higher at 0.85 percent and the yield on short-term 2-year traded 1 basis point higher at -0.13 percent.
AUS: The Australian bonds plunged as growing investor confidence in the Australian economic outlook has pushed rates on government bonds up to their highest level in six months. Also, investors will now be looking forward to a speech from Governor Philip Lowe, scheduled on September 21 by 05:10GMT. The yield on the benchmark 10-year Treasury note, jumped 2 basis points to 2.84 percent, the yield on 15-year note climbed 1-1/2 basis points to 3.13 percent and the yield on short-term 2-year also traded nearly 2 basis points higher at 2.03 percent.
