Market Roundup
- China: Will hold trade talks with the United States in early October
- Oil prices rise after the U.S.
confirms trade talks with China - Gold slips as risk sentiment improve
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0300 ET/0700 GMT) ECB's De Guindos speech
FX Beat
DXY: The dollar index rebounded from a 1-week low after China’s commerce ministry stated that the talks would be held and both sides agreed that they should work together and take practical actions to create good conditions for consultations. The greenback against a basket of currencies traded 0.1 percent up at 98.51, having touched a low of 98.38 earlier, its lowest since August 29.
EUR/USD: The euro declined, weighed down by expectations for an interest rate cut, the relaunch of asset purchases and other European Central Bank measures to stimulate the economy. The European currency traded 0.1 percent down at 1.1028, having touched a low of 1.0925 on Tuesday, its lowest since May 2017. Investors’ attention will remain on ECB De Guindos' speech, ahead of the U.S. ADP employment change, unemployment benefit claims, factory orders and service PMI from both Markit and ISM. Immediate resistance is located at 1.1044 (50% retracement of 1.1163 and 1.0925), a break above targets 1.1072 (61.8% retracement). On the downside, support is seen at 1.1003 (5-DMA), a break below could drag it below 1.0963 (August 30 High).
USD/JPY: The dollar surged to a 3-week peak after China’s Commerce Ministry stated that its trade team will hold talks with U.S. counterparts in mid-September in preparation for high-level negotiations in early October. The major was trading 0.2 percent up at 106.55, having hit a high of 106.75 earlier, its highest since August 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, unemployment benefit claims, factory orders and service PMI from both Markit and ISM. Immediate resistance is located at 106.97 (August 13 High), a break above targets 107.56 (August 2 High). On the downside, support is seen at 105.73 (September 3 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling eased after rising by more than 1-percent in the previous session on news that the lower house of the British parliament voted to prevent Prime Minister Boris Johnson taking Britain out of the European Union without a deal. The major traded 0.2 percent down at 1.2234, having hit a high of 1.2259 earlier, it’s highest since August 28. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2293 (August 23 High), a break above could take it near 1.2345. On the downside, support is seen at 1.2197 (10-DMA), a break below targets 1.2139 (August 30 Low). Against the euro, the pound was trading 0.1 percent down at 90.11 pence, having hit a high of 89.98 on Wednesday, it’s highest since July 29.
AUD/USD: The Australian dollar rallied to an over 1-month peak after China and the United States agreed to hold talks to end their protracted trade dispute, giving hope that a dispute that has roiled global economies will be resolved. The Aussie trades 0.2 percent up at 0.6811, having hit a high of 0.6825 earlier, it’s highest since August 1. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6762 (21-DMA), a break below targets 0.6717 (August 29 Low). On the upside, resistance is located at 0.6867 (August 1 High), a break above could take it near 0.6899 (July 31 High).
NZD/USD: The New Zealand dollar surged to a 1-week high after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He and agreed to hold ministerial-level trade talks in Washington in the coming weeks. The Kiwi trades flat at 0.6367, having touched a high of 0.6378 earlier, its highest level since August 27. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6394 (21-DMA), a break above could take it near 0.6429 (August 20 High). On the downside, support is seen at 0.6324 (5-DMA), a break below could drag it below 0.6269 (September 3 Low).
Equities Recap
Asian shares surged after China said it will hold trade talks with the United States in early October, raising hopes they can de-escalate their trade war.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent.
Tokyo's Nikkei rallied 2.1 percent to 21,085.94 points, Australia's S&P/ASX 200 index gained 0.9 percent to 6,613.20 points and South Korea's KOSPI surged 0.8 percent to 2,005.30 points.
Shanghai composite index rose 1.1 percent to 2,988.99 points, while CSI 300 index traded 1.1 percent up at 3,928.93 points.
Hong Kong’s Hang Seng traded 0.6 percent lower at 26,369.05 points. Taiwan shares added 0.9 percent to 10,756.93 points.
Commodities Recap
Crude oil prices surged, extending previous session's rebound after the U.S. confirmed that talks with China to reach a trade agreement would be held in the coming weeks. International benchmark Brent crude was trading 0.5 percent higher at $60.77 per barrel by 0533 GMT, having hit a high of $61.14 earlier, its highest since August 29. U.S. West Texas Intermediate was trading 0.5 percent up at $54.24 a barrel, after rising as high as $56.62 earlier, its highest since August 30.
Gold prices declined as risk-on sentiment improved after China and the United States agreed to hold talks to end their protracted trade dispute. Spot gold declined 0.4 percent to $1,545.65 per ounce by 0551 GMT, having touched a high of $1,556.88 on Wednesday, its highest since April 2013. U.S. gold futures dropped 0.4 percent to $1,554.00 per ounce.
Treasuries Recap
The yield on Japan’s benchmark 10-year note, which moves inversely to its price, fell to at -0.265 percent down from August high of -0.130 percent, the yield on the long-term 30-year bond hovered at 0.140 percent while the yield on short-term 2-year traded at -0.287 percent.
The Australian government bonds slumped as a mild easing in geopolitical tensions improved risk appetite, pushing the benchmark 10-year yield to a month high. However, the country’s underlying momentum in the economy remains weak, which would further drag down the bond yields. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged 4-1/2 basis points higher to 0.969 percent, the yield on the long-term 30-year bond also rose 4 basis points to 1.563 percent while the yield on short-term 2-year climbed 3-1/2 basis points to 0.805 percent.
