Market Roundup
- Weak factory data weighs on dollar
- Brexit delay hopes boost the pound
- Oil prices recover amid economic concerns
- Gold prices steady as economic growth fears dent risk sentiment
Economic Data Ahead
- (0315 ET/0715 GMT) Spain Markit Service PMI August
- (0345 ET/0745 GMT) Italy Markit Service PMI August
- (0350 ET/0750 GMT) France Markit Composite PMI August
- (0350 ET/0750 GMT) France Markit Service PMI August
- (0355 ET/0755 GMT) Germany Markit Composite PMI August
- (0355 ET/0755 GMT) Germany Markit Service PMI August
- (0400 ET/0800 GMT) EZ Markit Service PMI August
- (0400 ET/0800 GMT) EZ Markit Composite PMI August
- (0430 ET/0830 GMT) UK Markit Service PMI August
- (0500 ET/0900 GMT) EZ Retail Sales MoM August
- (0500 ET/0900 GMT) EZ Retail Sales YoY August
Key Events Ahead
- (0700 ET/1100 GMT) ECB Lane's speech
FX Beat
DXY: The dollar index eased, extending previous session losses after a private report that showed the U.S. manufacturing sector in August recorded its first monthly contraction since 2016, with new orders and hiring declining sharply as trade tensions weighed on business confidence, raising fears of a recession. The greenback against a basket of currencies traded 0.1 percent down at 98.89, having touched a high of 99.37 on Tuesday, its highest since May 2017.
EUR/USD: The euro consolidated near a 2-1/2 year low hit in the previous session, as investors priced in deeper negative interest rates for longer in the eurozone. The European Central Bank benchmark rate now stands at minus 0.40 percent and the ECB has all but promised a monetary policy stimulus package as economic growth falters. The European currency traded flat at 1.0976, having touched a low of 1.0925 on Tuesday, its lowest since May 2017. Investors’ attention will remain on a series of Markit service PMI's out of Eurozone economies, EZ retail sales and ECB Lane's speech, ahead of the U.S. trade balance and speeches by Fed officials. Immediate resistance is located at 1.1017 (38.2% retracement of 1.1163 and 1.0925), a break above targets 1.1044 (50% retracement). On the downside, support is seen at 1.0930, a break below could drag it below 1.0870.
USD/JPY: The dollar steadied after falling to a near 1-week low in the previous session on worries about U.S.-China trade tensions and a chaotic British exit from the European Union. The major was trading 0.2 percent up at 106.13, having hit a low of 104.44 last week, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance and speeches by Fed officials. Immediate resistance is located at 106.73 (August 23 High), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.65 (August 28 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling rose, extending previous day's rebound in the wake of a parliamentary vote that opened the door for another Brexit delay. On Tuesday, the British pound retreated from multi-year lows after British lawmakers voted to take control of the parliamentary agenda and scheduled another vote today. The major traded 0.2 percent up at 1.2103, having hit a low of 1.1958 on Tuesday, it’s lowest since October 2016. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2134 (50% retracement of 1.2309 and 1.1958), a break above could take it near 1.2175 (61.8% retracement). On the downside, support is seen at 1.2014 (August 12 Low), a break below targets 1.1986 (Jan. 16 2017 Low). Against the euro, the pound was trading 0.2 percent up at 90.64 pence, having hit a low of 91.48 on Tuesday, it’s lowest since August 22.
AUD/USD: The Australian dollar rallied to 1-week peak, as the greenback declined after data showed U.S. manufacturing activity contracted for the first time in three years in August. Moreover, the major was also boosted by data that showed China’s services sector expanded at the fastest pace in three months in August. The Aussie trades 0.3 percent up at 0.6778, having hit a high of 0.6783 earlier, it’s highest since August 26. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6734 (5-DMA), a break below targets 0.6677 (August 7 Low). On the upside, resistance is located at 0.6799 (August 2 1 High), a break above could take it near 0.6822 (August 8 High).
NZD/USD: The New Zealand dollar steadied after rising to a 1-week peak earlier in the day on increased bets on a couple of Federal Reserve rate cuts before Christmas. The Kiwi trades flat at 0.6334, having touched a low of 0.6269 on Tuesday, its lowest level September 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6351 (10-DMA), a break above could take it near 0.6402 (21-DMA). On the downside, support is seen at 0.6283 (August 30 Low), a break below could drag it below 0.6210.
Equities Recap
Asian shares rallied after a report showed growth in the China's service sector accelerating despite broader economic headwinds.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent.
Tokyo's Nikkei rallied 0.1 percent to 20,649.14 points, Australia's S&P/ASX 200 index declined 0.3 percent to 6,553.00 points and South Korea's KOSPI surged 2.2 percent to 1,988.53 points.
Shanghai composite index rose 0.9 percent to 2,957.41 points, while CSI 300 index traded 0.8 percent up at 3,886.00 points.
Hong Kong’s Hang Seng traded 3.5 percent higher at 26,432.36 points. Taiwan shares added 0.9 percent to 10,657.31 points.
Commodities Recap
Crude oil prices recovered some ground after falling to their lowest level in close to a month in the previous session on concerns that a weakening global economy could depress demand. International benchmark Brent crude was trading 0.5 percent higher at $58.63 per barrel by 0450 GMT, having hit a low of $57.21 on Tuesday, its lowest since August 9. U.S. West Texas Intermediate was trading 0.5 percent up at $54.18 a barrel, after falling as low as $52.82 on Tuesday, its lowest since August 9.
Gold prices eased after rising to a near 1-week high earlier on the back of weak U.S. manufacturing data that heightened fears of an economic slowdown and soured risk sentiment. Spot gold was trading 0.3 percent down at $1,543.49 per ounce at 0547 GMT, having touched a high of $1,550.00 earlier, its highest since August 29. U.S. gold futures were steady at $1,555.6 an ounce.
Treasuries Recap
The U.S. Treasury yields fell on Tuesday, with the benchmark 10-year yield hitting its lowest since July 2016.
TheJapanese government bond prices climbed, with the benchmark 10-year yield touching a level just shy of an all-time low hit in 2016. Prices of benchmark 10-year JGB futures rose as much as 0.16 point to 155.38, hitting a record high. The 10-year JGB yield fell half a basis point to minus 0.285 percent, hovering around a record low of minus 0.30 percent hit in 2016. The 20-year JGB yield stood flat at 0.035 percent, the 30-year yield was unchanged at 0.115 percent, while the 40-year yield dropped half a basis point to 0.125 percent.
