Market Roundp
• US Aug House Starts m/m Change, 9.2%, 0.9% previous, -0.3% revised.
• US Aug Build Permits Change m/m, -5.7%, 0.9% previous.
• US Q2 Current Account, -101.5B, -124.1B previous, -103.5B forecast, -121.7B.
• US Aug Housing Starts Number, 1.282M, 1.168M previous, 1.235 pass, 1.174M reviewed .
• US Aug Build Permits Number, 1.229M, 1.303M previous, 1.310M forecast.
• US 14 Sep w/e MBA Mortgage Applications Survey Composite Index, 1.6%, -1.8% previous.
• US 14 Sep w/e MBA Purchase Index, 234.2, 233.5 previous.
• US 14 Sep w/e MBA Refinance Index, 917.1, 884.3 previous.
• China says won't weaken currency to boost exports, as U.S. tariffs mount.
• U.S., China have lots of 'ammunition' and trade spat could escalate -WTO chief.
• May, at summit, urges EU to "evolve" Brexit position.
• Needs more work: EU criticises May's Brexit plan.
• ECB's Draghi calls for euro area fiscal instrument to fight crises.
• India considers dollar window for oil firms, bonds to ease rupee pressure- source.
• Canada's Trudeau urges some U.S. flexibility in NAFTA talks .
• Trump enthusiastic at N.Korea missile pledge, others doubtful.
Looking Ahead - Economic Data (GMT)
• 19 Sep 22:45 New Zealand Q2 GDP Production Based q/q SA, 0.5% previous, 0.7% forecast
• 19 Sep 22:45 New Zealand Q2 GDP Production Based y/y SA, 2.7% previous, 2.5% forecast
• 19 Sep 22:45 New Zealand Q2 GDP Production Based Annual Avg, 2.7% previous, 2.7% forecast
• 19 Sep 22:45 New Zealand Q2 GDP Expenditure Based q/q SA, 0.3% previous 0.7% forecast
• 20 Sep 01:30 Australia Aug Reserve Assets Total, 59,025.00M
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Riksbank Deputy Governor Cecilia Skingsley holds a presentation on the economic situation and current monetary policy.
• 07:30 Swiss National Bank (SNB) Monetary policy assessment Zurich.
• 08:00 Norway's Central Bank holds Announcement of the Executive Board's interest rate decision and publication of Monetary Policy followed by press conference in Oslo.
• 15:15 Bundesbank President Jens Weidmann speaks in Freiburg, Germany.
• 16:00 Federal Reserve issues Quarterly Financial Accounts of the United States (Z.1) I Washington.
• 17:20 ECB chief economist Peter Praet Address a conference organized by SUERF in New York City, USA.
Currency Summaries
EUR/USD is likely to find support at 1.1621 levels and currently trading at 1.1674 levels. The pair has made session high at 1.1693 and hit lows at 1.1648 levels. The euro slipped lower against the U.S. dollar on Wednesday as a flare-up in trade tensions between the United States and China drove traders to buy the U.S. currency. Risk appetite held up across markets. Emerging-market currencies firmed, led by the Indian rupee after China said it would not retaliate with competitive currency devaluations. Heightened trade-related tensions in recent months have been generally supportive of the U.S. dollar versus currencies viewed as riskier. The trade war escalated as U.S. President Donald Trump levied tariffs on $200 billion worth of Chinese goods and Beijing retaliated with duties on about $60 billion worth of U.S. goods.On Tuesday, China hit back at the United States, announcing tariffs on about $60 billion worth of U.S. goods, but reducing the volume of tariffs that it will collect on the products. Investors are awaiting next week's Federal Reserve meeting. Traders kept an eye on Brexit-related news out of Salzburg, Austria, where British Prime Minister Theresa May was meeting with European Union leaders at a summit. The dollar index , which measures the greenback against a basket of six other major currencies, fell 0.11 percent to 94.532.
GBP/USD is supported in the range of 1.3059 levels and currently trading at 1.3144 levels. It reached session high at 1.3187 and dropped to session low at 1.3095 levels. Britain's pound declined against the dollar on Wednesday after The Times reported that Britain's Prime Minister Theresa May had rejected an improved offer from the European Union to solve the Irish border issue. The British currency sank to the day's low after the report said May will appeal to EU leaders at a summit in Austria to move away from the bloc's chief Brexit negotiator Michel Barnier's position. May received less than glowing praise for her Brexit plan on Wednesday, with top EU official Donald Tusk saying Britain must rework its proposals for Northern Ireland and trade. Sterling slid more than half a cent against the dollar after The Times' report to a low of $1.3098 before edging slightly higher to trade at $1.3152.The pound had earlier risen to a nine-week high of $1.3215 as data showed inflation unexpectedly accelerated in August. Brussels and London have made positive noises in recent days on major obstacles, including how to keep an open border between the British province of Northern Ireland and EU-member Ireland, though investors have shied away from taking big bets.That has helped sterling rally more than 4 percent from 2018 lows hit in August when fears that Britain would crash out of the EU without a trade deal spooked investors.
USD/CAD is supported at 1.2886 levels and is trading at 1.2912 levels. It has made session high at 1.3008 and lows at 1.2909 levels.The Canadian dollar strengthened to its highest in nearly three weeks against its U.S. counterpart on Wednesday as Canadian dollar was boosted ahead of talks to revamp the NAFTA trade pact. Canadian Foreign Minister Chrystia Freeland is due to hold fresh talks on the North American Free Trade Agreement with U.S. Trade Representative Robert Lighthizer in Washington as a U.S.-imposed deadline of Oct. 1 looms. Canada sends about 75 percent of its exports to the United States and runs a current account deficit, so its economy could be hurt if a deal on NAFTA is not reached, or by an escalating trade dispute between the United States and China. The near three-week high for the Canadian dollar came after stronger-than-expected domestic manufacturing data on Tuesday supported prospects for another Bank of Canada interest rate hike next month. Also supportive of the loonie was recent strength in the price of oil, one of Canada's major exports. U.S. crude oil futures rose 0.1 percent to $69.93, holding near its highest level over the last two months, as concerns producers may fail to cover a supply shortfall once U.S. sanctions on Iran come into force outweighed an increase in U.S. inventories.
USD/JPY is supported around 111.72 levels and currently trading at 112.25 levels. It peaked to hit session high at 112.39 and made session lows at 112.12 levels. The dollar edged lower against the Japanese yen on Wednesday as tariff dispute between the United States and China kept investor cautious. The prolonged trade dispute between Washington and Beijing has rattled financial markets across the globe. The U.S. dollar edged lower against Japanese yen as investors held off on embracing the greenback amid the latest round of tariffs by China and the United States. Japanese yen has declined since August, hurt by the intensifying dispute and on rising U.S. interest rates with investors buying the dollar in the belief the United States has less to lose from the dispute.On the data front, U.S. homebuilding increased more than expected in August, a positive sign for the housing market which has underperformed the broader economy amid rising interest rates for home loans.Housing starts rose 9.2 percent to a seasonally adjusted annual rate of 1.282 million units in August, the Commerce Department said on Wednesday. Analysts polled had expected an annual rate of 1.235 million units. The dollar was last trading 0.15 percent lower against the yen at 112.24.
Equities Recap
A rally in European shares extended for a second day on Wednesday thanks to gains in trade-sensitive mining and autos stocks as investors saw a China-U.S. trade war approaching its endgame.
The UK's benchmark FTSE 100 ended up by 0.4 percent, FTSEurofirst 300 ended the day up by 0.35 percent, Germany's Dax ended up by 0.5 percent, and France’s CAC finished the up by 0.6 percent.
The S&P 500 and the Dow Jones industrial average rose on Wednesday, with the Dow hitting its highest level since late January as rising Treasury yields boosted the financial sector and trade jitters abated.
Dow Jones closed down by 0.21 percent, S&P 500 ended down 0.06 percent, Nasdaq finished the day up by 0.41 percent.
Treasuries Recap
The U.S. 10-year Treasury note yield hit fresh four-month highs on Wednesday, nearing its 2011 peak as the market shrugged off trade fears and mounting inflation and strong economic data raised expectations of a hawkish Federal Reserve meeting next week.
The U.S. 10-year Treasury note yield hit fresh four-month highs on Wednesday, nearing its 2011 peak as the market shrugged off trade fears and mounting inflation and strong economic data raised expectations of a hawkish Federal Reserve meeting next week.
The three-day rally in longer-dated maturities steepened the yield curve, with the spread between 2-year and 10-year yields hitting a high of 27.6 basis points, up from Monday's open at 19.10 basis points.
The spread between the 5- and 30-year yields hit a high of 27.9 basis points, up from Monday's open at 22.8 basis points.
Commodities Recap
Gold rose on Wednesday as the dollar weakened, indicating investors are starting to worry about the impact of the U.S.-China trade war on the U.S. economy, luring some buyers back into precious metals investments.
Spot gold climbed 0.5 percent to $1,203.68 per ounce by 1:33 p.m. EDT (1733 GMT). U.S. futures for December delivery settled up $5.40, or 0.5 percent, at $1,208.30 per ounce.
U.S. oil futures surged nearly 2 percent on Wednesday as they were bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing global supply concerns over U.S. sanctions on Iran that come into force in November.
U.S. crude futures settled up $1.27, or 1.8 percent, at $71.12 a barrel. Brent futures also rose but the gains were more muted, as the global benchmark ended 37 cents, or 0.5 percent, higher at $79.40 a barrel.
