Market Roundup
- EUR/USD -0.09%, USD/JPY -0.29%, GBP/USD flat, EUR/GBP -0.12%
- DXY flat, DAX +0.74%, FTSE +0.9%, Brent +0.31%, Gold -0.18%
- S. Korea seeks bigger warheads, N. ICBM reportedly on the move
- ECB replaces N. Korea in euro zone bond market spotlight
- Great Britain Aug Markit/CIPS Service PMI 53.2 vs 53.8, forecast 53.5
- Great Britain Aug Markit/CIPS construction PMI 51.1 vs 51.9, forecast 52
- Great Britain Aug BRC retail sales yy 1.30% vs 0.90%
- EZ Aug Markit Service final PMI 54.7 vs 54.9, forecast 54.9
- EZ Aug Markit composite final PMI 55.7 vs 55.8, forecast 55.8
- EZ Jul Retail sales mm -0.3% vs 0.5%, forecast -0.2%
- EZ Jul Retail sales yy 2.6% vs 3.3%, forecast 2.5%
- Germany Aug Markit comp final PMI 55.8 vs 55.7, forecast 55.7
- Japan Aug services PMI 51.6, July 52.0, Aug composite 51.9, July 51.8
- Japan Services PMI weakest in six months but still above 50
- Japan preparing for evacuation of tens of thousands in South Korea – Nikkei
- Gold edges up, hovers near 1-year high on haven demand
- US crude rises on returning refineries; gasoline slumps to pre-Harvey levels
Economic Data Ahead
- (0900 ET/1300 GMT) Financial firm Markit will issue Brazil's composite Purchasing Managers' Index data for August.
- (0900 ET/1300 GMT) Mexico releases its seasonally adjusted consumer confidence data for the month of August.
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of August. The index stood at 62.8 in the previous month.
- (1000 ET/1400 GMT) The United States is likely to report that factory orders decreased 3.2 percent in July, after posting a rise of 3.0 percent in the prior month.
- (1000 ET/1400 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of September. The indicator rose to 52.2 in August.
Key Events Ahead
- (0800 ET/1200 GMT) Federal Reserve Board Governor Lael Brainard speaks on the economic outlook and monetary policy before the Economic Club of New York.
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.9 bn)
- (1310 ET/1710 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a moderated Q&A session before the "1st Tuesday Speaker Series" at the Carlson School of Management in Minneapolis.
- (1900 ET/2300 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated Q&A session before the Dallas Business Club in Dallas, Texas.
FX Beat
DXY: The dollar slumped across the board as tensions over North Korea continued to dampen market sentiment. The greenback against a basket of currencies traded 0.1 percent down at 92.52, having touched a low of 91.62 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -39.22 (Neutral) by 1000 GMT.
EUR/USD: The euro extended previous session gains, boosted by on growing expectations that any concerns the European Central Bank flags about its strengthening at a meeting this week will have a limited impact. However, downbeat Eurozone July retail sales report capped the upside in the major. The European currency traded 0.1 percent up at 1.1902, having touched a high of 1.2070 last week, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -130.63 (Highly Bearish) by 1000 GMT. On the lower side, near term intraday support is around 1.1875 (trend line joining 1.16816 and 1.18440) and any break below will drag the pair down till 1.18230 (Aug 31st low)/ 1.17750. The near term resistance is at 1.19230 and any break above will take the pair till 1.19795 high made after U.S Nonfarm payroll/1.200/1.2070 (Aug 29th, 2017 high).
USD/JPY: The dollar slumped to a fresh 1-week low against the Japanese yen amidst persisting geopolitical effervescence following recent news headlines citing the chances of another ICBM launch by North Korea anytime soon. The major was trading 0.4 percent down at 109.29, having hit a low of 109.20 earlier, its lowest since Aug. 29. FxWirePro's Hourly Yen Strength Index stood at 96.03 (Slightly Bullish) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. The pair is facing minor resistance at 110.67 (55- day EMA) and any convincing break above will take it till 111.15 (100- day MA)/112.
GBP/USD: Sterling steadied above the 1.2950 handle despite data showing UK services PMI a tad below expectations at 53.2 for the month of August and lower than July’s 53.8 reading. Moreover, the ongoing weakness in the U.S. dollar across the board continued to support the British pound. Sterling traded 0.3 percent up at 1.2960, having hit a high of 1.2995 on Friday, its highest since August 14. FxWirePro's Hourly Sterling Strength Index stood at -58.34 (Bearish) by 1000 GMT. The near term resistance is around 1.3000 and any break above will take the pair to next level till 1.30308/1.3050/1.3100. On the lower side, near term support stands at 1.2840 (61.8% fibo) and any break below will drag it down till 1.2800/1.27730. Against the euro, the pound was trading 0.1 percent up at 91.85 pence, having hit a multi-month low of 93.06 pence last week.
USD/CHF: The Swiss franc eased after rising to a 6-week high earlier in the session, as geopolitical tension over North Korea slightly eased. The major trades 0.1 percent up at 0.9583, having touched a high of 0.9679 on Thursday, it’s highest since Aug. 23. FxWirePro's Hourly Swiss Franc Strength Index stood at 20.63 (Neutral) by 1000 GMT. Major near term intraday resistance is around 0.9630 and any break above confirms minor bullishness, a jump till 0.9680/0.9700/0.9725 likely. The near term support is around 0.95450 and any break below will drag the pair till 0.95295/0.9500.
AUD/USD: The Australian dollar rose towards one-month highs after the release of upbeat exports data and following Reserve Bank of Australia's decision to leave interest rates at a record low of 1.50 percent, as expected. The Aussie trades 0.5 percent up at 0.7976, having hit a high of 0.7995 on Wednesday, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at 88.90 (Slightly Bullish) by 1000 GMT. On the lower side, near term support is around 0.7875 (61.8% retracement) and any break below will drag the pair till 0.7800. The near term resistance is around 0.8000 and any break above targets 0.8070 /0.8100/0.8150.
Equities Recap
European shares edged up, underpinned by commodities-related sectors and health stocks, while dollar slumped to a 1-week low against the Japanese yen amid persisting geopolitical tensions.
The pan-European STOXX 600 index climbed 0.2 percent to 374.99 points, while the FTSEurofirst 300 index advanced 0.3 percent to 1,473.69 points.
Britain's FTSE 100 trades 0.1 percent up at 7,416.19 points, while mid-cap FTSE 250 gained 0.4 percent to 19,774.99 points.
Germany's DAX rose 0.7 percent at 12,191.52 points; France's CAC 40 trades 0.2 percent higher at 5,111.33 points.
Commodities Recap
Crude oil prices gained as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude. International benchmark Brent crude was trading 0.9 percent up at $52.64 per barrel by 1017 GMT, having hit a high of $52.91 on Friday, its strongest since Aug. 18. U.S. West Texas Intermediate was trading 1.2 percent up at $47.91 a barrel, after rising as high as $47.93 earlier, its highest since Aug 28.
Gold prices steadied around their highest levels in nearly a year, as North Korea's nuclear test underpinned the metal's safe haven demand. Spot gold traded flat at $1,332.75 per ounce by 1022 GMT after touching its strongest since late September at $1,339.76 per ounce in the previous session. U.S. gold futures for December delivery were up 0.8 percent at $1,340.80.
Treasuries Recap
The U.S. Treasuries rose as investors await a host of FOMC member speeches later in the day. The yield on the benchmark 10-year Treasury slipped 1 basis point to 2.14 percent, the super-long 30-year bond yields flat at 2.77 percent and the yield on short-term 2-year note traded 2 basis points lower at 1.32 percent.
The UK gilts plunged Tuesday even after the country’s Services PMI for the month of August plunged to an 11-month low, coming in at 53.2, from 53.8 in July, missing expectations of 53.5. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.07 percent, the super-long 30-year bond yields hovered around 1.73 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.20 percent.
The German government bonds lost strength Tuesday after the country’s composite as well as services Purchasing Managers’ Index (PMI) for the month of August reached its highest in two months, signaling solid expansion in business activities. The German 10-year bond yields, which moves inversely to its price, rose nearly 1 basis point to 0.37 percent, the yield on the 30-year note climbed 1-1/2 basis points to 1.17 percent and the yield on short-term 2-year traded flat at -0.73 percent.
The Japanese government bonds remained range-bound Tuesday as investors wait to watch the country’s super-long 30-year auction scheduled to be held on September 7 by 03:45GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained flat at 0.003 percent, the yield on long-term 30-year steady around 0.82 percent and the yield on short-term 2-year hovered around -0.15 percent.
The New Zealand bonds slumped Tuesday as investors wait to watch the country’s GlobalDairyTrade price auction, scheduled to be held later today amid a silent trading week that will witness little data of major economic significance. The yield on the benchmark 10-year Treasury note, rose 1-1/2 basis points to 2.87 percent, the yield on 7-year note also climbed 1-1/2 basis points to 2.87 percent and the yield on short-term 2-year traded 1 basis point higher at 2.03 percent.
The Australian bonds slumped Tuesday after the Reserve Bank of Australia (RBA) remained on hold at its monetary policy decision, revealed today, where it remained on hold, citing recovery in global economic growth. The yield on the benchmark 10-year Treasury note jumped nearly 2-1/2 basis points to 2.68 percent, the yield on the 15-year note climbed 2 basis points to 2.97 percent and the yield on short-term 2-year traded 3 basis points higher at 1.89 percent.
