Market Roundup
- EUR/USD +0.24%, USD/JPY -0.6%, GBP/USD flat, EUR/GBP +0.25%
- DXY -0.8%, DAX -0.12%, FTSE -0.58%, Brent +0.84%, Gold +0.11%
- Putin says sanctions, pressure alone won't resolve N. Korea crisis
- Germany Jul Industrial orders mm -0.7% vs 1.0%, revised 0.9%, forecast 0.3%
- Hurricane Irma churns through Caribbean islands, possibly en route to Florida
- ECB working on licensing rules for fintechs, Nouy says
- Britain says to pursue balanced post-Brexit immigration policy
- Britain could still reverse Brexit, former minister Heseltine says
- Britain considers tough curbs on EU migration re: leaked UK government document
- Japan July cash earnings -0.3% y/y, June +0.4%, real wages -0.8%, -0.1%.
- Japan Cash earnings fall for 1st time in 14 months, real wages most since Jun ’15
- LDP Kishida – Japan can’t afford another tax hike delay – Nikkei.
- Japanese insurers seek new European bases to ready for Brexit – Nikkei
- Gold steady, supported by North Korea tensions and Fed rate outlook
- Oil markets subdued by storm Harvey fallout; Hurricane Irma heads into Caribbean
Economic Data Ahead
- N/A The Brazilian central bank will meet to set its benchmark Selic rate and is expected to cut interest rates by100 basis points to 8.25 percent.
- (0830 ET/1230 GMT) The United States releases trade balance figures for the month of July. The economy's trade deficit is expected to have widened to $44.6 billion from 43.6 billion in June.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that international trade deficit narrowed to C$3.1 billion in July from C$3.6 billion in June.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that labor productivity rate of Canadian businesses increased by 0.9 percent for the second quarter, after rising 1.4 percent in the first quarter.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of August. The index posted a final reading of 56.9 in July.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of August. The index printed a final reading of 56.0 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 55.8 in August from 53.9 in July.
- (1000 ET/1400 GMT) Bank of Canada will meet to announce its benchmark interest rate, where it is expected to hold interest rates at 0.75 percent.
- (1400 ET/1800 GMT) The Fed issues its Beige Book, a summary of anecdotes on the health of the U.S. economy.
- (1830 ET/2230 GMT) API reports its weekly crude oil stock.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Construction Index for the month of August. The index stood at 60.5 in the month of July.
- (1950 ET/2350 GMT) Japan releases Foreign Exchange Reserves report for the month of August.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending August 28.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending August 28.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $600 mn)
FX Beat
DXY: The dollar fell to a 1-week low against the Japanese yen and the Swiss franc on the back of persisting tension surrounding the Korean peninsula and Fed official’s cautious tone on the interest rates. The greenback against a basket of currencies traded flat at 92.26, having touched a low of 91.62 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -57.62 (Bearish) by 1000 GMT.
EUR/USD: The euro rose, extending gains above the 1.1900 handle, as investors attention turned ahead of the much-awaited European Central Bank policy decision due tomorrow. Markets expect that the ECB will announce the QE tapering plans, shrugging-off the latest headlines that the central bank may be prepared to unwind the QE programme until December. The European currency traded 0.2 percent up at 1.1941, having touched a high of 1.2070 last week, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -23.87 (Neutral) by 1000 GMT. On the lower side, near term intraday support is around 1.1908 (55- H MA) and any break below will drag the pair down till 1.18670/1.18230 (Aug 31st low)/1.17750. The near term resistance is at 1.19795 high made on Friday and any break above will take it till 1.200/1.2070 (Aug 29th, 2017 high).
USD/JPY: The dollar trimmed losses after falling to a 1-week low earlier in the session, amid rising tensions between the U.S. and North Korea. Moreover, Fed officials cautious tone on the central bank's policy tightening path further intensified the selling pressure around the major. The major was trading flat at 108.78, having hit an early low of 108.45, its lowest since Aug. 29. FxWirePro's Hourly Yen Strength Index stood at 99.61 (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 extended gains above the 1.3000 handle to hit a near 1-month high amid renewed U.S. dollar weakness seen across the board. However, the upside in the major remained capped as investors turned cautious ahead of a parliamentary debate over the Prime Minister Theresa May's European Union repeal bill. Sterling traded 0.1 percent up at 1.3047, having hit a high of 1.3051 earlier, its highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at 28.40 (Neutral) by 1000 GMT. The intraday trend is bullish as long as support 1.2985 (233- 4H MA) holds and any break below will drag the pair down till 1.2948 (34- 4H EMA)/1.2900. On the higher side, 1.3050 will be acting as near term resistance and any break above targets 1.3100/1.3160. Against the euro, the pound was trading 0.1 percent down at 91.46 pence, having hit an over 2-week high of 91.32 pence in the previous session.
USD/CHF: The Swiss franc rallied to a 1-week high as worries over North Korea's nuclear ambitions and dovish comments from a Federal Reserve official weighed heavily on the greenback. The major trades down at 0.9544, having touched a low of 0.9527 earlier, it’s lowest since Aug. 29. FxWirePro's Hourly Swiss Franc Strength Index stood at -35.01 (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 0.9540 and any convincing break below will drag the pair till 0.95295/0.9500.
AUD/USD: The Australian dollar declined from a 1-month high after the latest domestic growth figures failed to impress market participants. The Aussie trades 0.3 percent down at 0.7971, having hit a high of 0.8028 on Tuesday, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at -54.43 (Bearish) 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 tumbled as investors turned cautious ahead of a European Central Bank meeting, while the dollar fell to fresh 1-week low against the Japanese yen and the Swiss franc amid rising tensions on the Korean peninsula.
The pan-European STOXX 600 index lost 0.4 percent to 372.22 points, while the FTSEurofirst 300 index slumped 0.4 percent to 1,462.62 points.
Britain's FTSE 100 trades 0.6 percent down at 7,328.68 points, while mid-cap FTSE 250 declined 0.5 percent to 19,623.51 points.
Germany's DAX fell 0.04 percent at 12,119.18 points; France's CAC 40 trades 0.2 percent lower at 5078.07 points.
Commodities Recap
Crude oil prices rallied to multi week highs, with the crude demand and shipments subdued due to refinery closures following Storm Harvey. International benchmark Brent crude was trading 1.3 percent up at $53.81 per barrel by 1013 GMT, having hit a high of $53.97 earlier, its strongest since May 25. U.S. West Texas Intermediate was trading 0.6 percent higher at $48.87 a barrel, after rising as high as $49.00, its highest since Aug. 14.
Gold prices held steady near yearly highs, underpinned by geopolitical tensions over North Korea and expectations that low inflation in the United States could delay another interest rate hike. Spot gold was trading 0.1 percent up at $1,340.12 per ounce by 1017 GMT, after touching its highest since September 2016 at $1,344.26 in the previous session. U.S. gold futures for December delivery edged 0.1-percent lower to $1,343.40.
Treasuries Recap
The U.S. Treasuries fell as investors await the ISM non-manufacturing PMI for the month of August scheduled to be released today by 14:00GMT. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.08 percent, the super-long 30-year bond yields tad higher at 2.69 percent and the yield on short-term 2-year note traded nearly 1 basis point higher at 1.29 percent.
The UK gilts witnessed a downward performance Wednesday as investors wait to watch the country’s manufacturing production for the month of July, scheduled to be released on September 8 by 08:30GMT amid an otherwise silent trading day that witnessed no data of prime economic significance. The yield on the benchmark 10-year gilts rose nearly 1-1/2 basis points to 1.02 percent, the super-long 30-year bond yields also climbed around 1-1/2 basis points to 1.69 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.19 percent.
The German government bonds remained tad higher as investors wait to watch the country’s industrial production for the month of July, scheduled to be released on September 7 by 06:00GMT, besides, the European Central Bank’s (ECB) monetary policy decision, due by 11:45GMT, which will add further direction to the debt market. The German 10-year bond yields rose 1 basis point to 0.35 percent, the yield on the 30-year note climbed 1/2 basis point to 1.12 percent and the yield on short-term 2-year traded a little over 1 basis point higher at -0.75 percent.
The Japanese government bonds remained range-bound 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 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 climbed sharply at the time of closing as investors have largely shrugged off the recovery in dairy prices at the latest GlobalDairyTrade price auction held overnight, tracking the biggest rally in its U.S. counterpart since March, following a plethora of domestic, global as well as natural disturbances that pushed investors into safe-haven assets. At the time of closing, the yield on the benchmark 10-year Treasury note slumped 7 basis points to 2.81 percent, the yield on 7-year note also plunged 6-1/2 basis points to 2.65 percent and the yield on short-term 2-year ended 5 basis points lower at 1.97 percent.
The Australian 10-year bond yields slumped to 3-1/2 week low after the country’s second-quarter gross domestic product (GDP) missed market expectations, albeit rising from the previous reading in Q1. The yield on the benchmark 10-year Treasury note slumped 6-1/2 basis points to 2.61 percent, the yield on 15-year note plunged nearly 7 basis points to 2.90 percent and the yield on short-term 2-year traded 4-1/2 basis points lower at 1.84 percent.
