Market Roundup
- EUR/USD 0.17%, USD/JPY 0.24%, GBP/USD -0.03%, EUR/GBP 0.19%
- DXY -0.1%, DAX 0.32%, FTSE 0.09%, Brent -0.3%, Gold -0.51%
- S&P cuts China's credit rating, citing increasing economic, financial risks
- Euro zone growth gaining momentum but inflation subdued: ECB Bulletin
- German economy to grow robustly in third quarter - finance ministry
- UK posts smallest August budget deficit in 10 years, sales tax revenues strong
- ECB to launch new reference rate after failed reform
- BoJ keeps to script, but new board member dissents as policy on hold
- WTO says global trade rebounding, sees 2017 growth of 3.6 pct
- Oil prices steady ahead of key OPEC meeting
- Gold hits over 3-wk low; strong dollar, Fed rate hike view weigh
Economic Data Ahead
- (0830 ET/1230 GMT) US Initial Jobless Claims (w/e Sep 16) (mkt 300k, prev 284k)
- (0830 ET/1230 GMT) US Continued Claims (w/e Sep 9) (mkt 1.975 mn, prev 1.944 mn)
- (0830 ET/1230 GMT) US Philly Fed Index (Sep) (mkt 17.2, prev 18.9)
- (0830 ET/1230 GMT) CA Wholesale Trade MM (Jul) (mkt -0.9%, -0.5% r'vsd)
- (0900 ET/1300 GMT) US FHFA Home Price Index (Jul) (prev +6.5% y/y)
- (1000 ET/1400 GMT) US Leading Indicators (Aug) (mkt +0.2% m/m, prev +0.3% m/m)
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $675 mn)
- (1330 ET/1930 GMT) FedTrade operation 30-year Ginnie Mae (max $1.15 bn)
FX Beat
DXY: US dollar index gains on Fed rate projections. 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.
EUR/USD: EUR/USD declined sharply yesterday after hawkish Fed statement. The pair dipped till 1.18615 yesterday. It has formed a temporary top around 1.20925 high made on Sep 8th 2017. It is currently trading around 1.19155. The minor resistance is around 1.19500 and any minor break above will take the pair to next level till 1.2000/1.2050/1.20925 (Sep 8th 2017 high). Bullish continuation can be seen only above 1.20925. On the lower side, near term intraday support is around 1.1850 (34- day EMA) and any break below will drag the pair down till 1.18230 (Aug 31st 2017 low)/1.1800.
USD/JPY: USD/JPY bounces off lows as the Greenback surges across the board on hawkish Fed rate projections. BoJ left intact its monetary status quo earlier in the session, matching the broad consensus. The major spiked through the 112 handle, to hit 112.71, highest since July 17th. Technicals support higher, the major is on track to test major trendline resistance at 112.95. We see weakness only on retrace back below 200-DMA. Scope then for test of cloud top 111.60.
GBP/USD: GBP/USD failed to hold on to the recovery above 1.3500 handle, slips lower to currently trade at 1.3488. The major is trading in a extremely narrow range, capped below 5-DMA at 1.3514. On the higher side, near term resistance is around 1.36500 and any break above will take the pair till 1.3700/1.3750. The near term support is around 1.3450 and any break below will drag the pair down till 1.3400/1.3300. The minor weakness only below 1.3150.
USD/CHF: USD/CHF has broken major resistance at 0.9705 high made on Sep 14th 2017 after hawkish Fed statement. The pair has formed a minor bottom at 0.95650 on Sep 15th 2017 and trading higher from that level. It is currently trading around 0.97277. Short term trend is still bullish as long as support 0.9630 (55- day EMA) holds. Any break below will drag the pair down till 0.9580/0.9525/0.9500. The near term resistance is around 0.97730 and any convincing break above will take the pair to next level till 0.9808/0.9866 (200- day MA).
AUD/USD: Aussie depressed further after Governor Phillip Lowe suggested that the RBA could be far from considering any monetary policy tightening. AUD/USD slumps 1.08% on the day, extends downside below 0.80 handle. 50-DMA at 0.7943 is strong support on the downside. Break below will see further downside. On the otherside, decisive close above 20-DMA at 0.7983 could see resumption of upside.
NZD/USD: Kiwi ignores sharp drop seen in the NZ credit card spending data regains bid tone after latest poll. The latest opinion poll released by Newshub Reid, showed that the ruling National Party regained lead over the opposition Labour Party in New Zealand’s nation election poll. NZD/USD down 0.63% on the day, currently hovers around 0.73 handle. Technical studies support upside, breakout above daily cloud could see further gains.
Equities Recap
European bank stocks cheered the prospect of higher interest rates, rose over 1.5 percent as a weaker euro helped the pan-European STOXX 600 generally too.
Britain's FTSE 100 trades largely unchanged at 7,272.50 points, Germany's DAX was up 0.34 percent at 12,612.25 points; France's CAC 40 trades 0.52 percent higher at 5,268.80 points.
Spain's IBEX 35 was up 0.14 percent at 10,306.00 points, while Italy's FTSE MIB was up 0.66 percent at 22,502.50 points.
Commodities Recap
Gold slipped to its lowest in over three weeks on rising prospects of a December Fed rate hike. Spot gold was down 0.2 percent at $1,298.06 an ounce by 0634 GMT. U.S. gold futures for December delivery dropped nearly 1.2 percent to $1,301.20 an ounce.
Platinum fell 0.3 percent to $938.49 an ounce, while Palladium gained 0.2 pct to $911.50 an ounce, moving away from its previous session's five-week low.
Silver was down 0.5 percent at $17.04 an ounce, after falling to its lowest since Aug. 25 in the previous session.
Oil prices consolidate gains ahead of key OPEC meeting that could extend production limits. Brent crude oil was down 5 cents at $56.24 a barrel by 0820 GMT. U.S. light crude was 15 cents lower at $50.54.
Treasuries Recap
U.S.: The U.S. Treasuries flat after markets have digested the Federal Open Market Committee’s (FOMC) policy decision, unveiled overnight. Investors are now looking forward to the release of initial jobless claims, due today by 12:30GMT. The yield on the benchmark 10-year Treasury hovered around 2.28 percent, the super-long 30-year bond yields flat at 2.82 percent and the yield on short-term 2-year note also traded range-bound at 1.44 percent.
UK: The UK gilts slumped as investors wait to watch the country’s Prime Minister Theresa May speak on the Brexit update, scheduled on September 21 by 19:00GMT. The yield on the benchmark 10-year gilts, surged 3 basis points to 1.37 percent, the super-long 30-year bond yields rose 1-1/2 basis points to 1.94 percent and the yield on the short-term 2-year traded flat at 0.45 percent.
EUR: The German government bunds plunged after the European Central Bank remained optimistic over the eurozone’s economic growth and as investors wait to watch the ECB President Mario Draghi’s speech, scheduled to be held today and on September 22 by 13:30GMT. The German 10-year bond yields, which moves inversely to its price, jumped 3-1/2 basis points to 0.48 percent, the yield on 30-year note surged nearly 3-1/2 basis points to 1.27 percent and the yield on short-term 2-year traded 2 basis points higher at -0.68 percent.
NZD: The New Zealand bonds gained at the time of closing Thursday as investors poured into safe-haven instruments, away from riskier equities and oil, despite the ruling National Party gaining traction in the latest NZ election polls, released today, ahead of the September 23 general election. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slid 1 basis point to 3.07 percent, the yield on 7-year note also fell 1 basis point to 2.93 percent while the yield on short-term 2-year too ended 1 basis point lower at 2.19 percent.
JGBs: The Japanese government bonds remained little changed Thursday after the Bank of Japan kept monetary policy steady on Thursday and maintained its upbeat view of the economy, signalling its conviction that a solid recovery will gradually accelerate inflation towards its 2 percent target without additional stimulus. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.02 percent, the yield on long-term 30-year slipped 1 basis point to 0.83 percent while the yield on short-term 2-year traded 1 basis point higher at -0.12 percent.
AUS: The Australian bonds plunged Thursday, following weakness in the U.S. counterpart after the Federal Reserve announced its policy decision yesterday, announcing that it will begin its balance sheet normalization next month. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 2.86 percent, the yield on 15-year note also surged 2-1/2 basis points to 3.15 percent and the yield on short-term 2-year also traded 1-1/2 basis points higher at 2.03 percent.
