Market Roundup
- Japan Aug mfg PMI rev 52.2, flash 52.8, July final 52.1, orders/exports up
- Japan Q2 CAPEX +1.5% y/y, excl software -2.8% q/q however, downward GDP rev?
- Japan Q2 recurring corporate profits +22.6% y/y and 6.7% rise in Q2 sales
- BoJ cuts 3-5 year JGB buying to slow mid-term yield drop – MNI
- Japan, US weigh benefits of seeking oil embargo on Pyongyang - Nikkei
- Pyongyang turns yen into a very strange safe haven – Reuters BreakingViews
- China Aug Caixin Mfg final PMI, 51.6 vs forecast 50.9, last 51.1
- China's c. bank bans longer-tenor NCDs to close bank funding loophole
- New Zealand Q2 terms of trade rise 1.5 pct, undershoot expectations
- New Zealand heads for topsy-turvy election, poll shows, with housing, immigration in focus
- Australia home prices cool in August as Sydney stalls-CoreLogic
- U.S. stock ETFs attract most cash since June -Lipper
- Foreign CB US debt holdings +$3.3 bln to $3.3 tln August 30
- Treasuries +$1.1 bln to $3.0 tln, agencies +$2.19 bln to $264 bln
- U.S. bombers drill over Korean peninsula after latest N. Korea launch
Economic Data Ahead
- (0230 ET/0630 GMT) Sweden Aug PMI Manufacturing m/m, 60.0 eyed, last 60.4
- (0300 ET/0700 GMT) Norway Aug Manufacturing PMI SA, 56.9 eyed, last 57.3
- (0315 ET/0715 GMT) Spain Manufacturing PMI, 54.4 eyed, last 54.0
- (0330 ET/0730 GMT) Switzerland Manufacturing PMI, 60.5 eyed, last 60.9
- (0345 ET/0745 GMT) Italy Aug Markit/ADACI Mfg PMI, 55.3 eyed, last 55.1
- (0350 ET/0750 GMT) France Aug Markit Mfg PMI, 55.8 eyed, last 55.8
- (0355 ET/0755 GMT) Germany Aug Markit/BME Mfg PMI, 59.4 eyed, last 59.4
- (0400 ET/0800 GMT) Italy Q2 GDP final, 0.4% q/q, 1.5% y/y; last 0.4%, 1.5%
- (0400 ET/0800 GMT) EU Aug Markit Mfg final PMI, 57.4 eyed, last 57.4
- (0430 ET/0830 GMT) Great Britain Aug Markit/CIPS Mfg flash, 55.0 eyed, last 55.1
Key Events Ahead
- N/A Number of centers in Asia closed for the Muslim Haj- Singapore, Indonesia, Malaysia
- (0515 ET/0915 GMT) ECB's Constancio speaks in Cernobbio, Italy
- (0605 ET/1005 GMT) Great Britain Stg2.0/2.0/2.0 for 1/3/6 month auction
FX Beat
DXY: The dollar steadied across the board after weakening in the prior session as disappointing U.S. economic data diminished expectations of an interest rate increase in December. The greenback against a basket of currencies traded 0.2 percent up at 92.74, having touched a low of 91.62 on Tuesday, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at 58.42 (Bullish) by 0500 GMT.
EUR/USD: The euro eased after rebounding from a 6-day low hit in the previous session, as the latest reports cited that concerns are mounting amongst the ECB policymakers on the recent Euro appreciation. The European currency traded 0.1 percent down at 1.1896, having touched a high of 1.2070 on Tuesday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -36.92 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone Markit manufacturing PMI, ahead of the U.S. Non-farm payroll, employment report and ISM manufacturing PMI. Immediate resistance is located at 1.1983 (August 28 High), a break above targets 1.2070. On the downside, support is seen at 1.1817 (38.2% retracement 1.1661 and 1.2070), a break below could drag it near 1.1757 (23.6% retracement 1.1661 and 1.2070).
USD/JPY: The dollar steadied after easing from a 2-week high in the prior session as U.S. consumer spending rose slightly less than expected in July and annual inflation advanced at its slowest pace in more than 1-1/2 years. The major was trading 0.1 percent up at 110.04, having hit a high of 110.67 on Thursday, its highest since Aug. 16. FxWirePro's Hourly Yen Strength Index stood at -76.77 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. Non-farm payroll, employment report and ISM manufacturing PMI for further clues on the strength of the economy. Immediate resistance is located at 110.43 (August 30 High), a break above targets 111.33 (July 28 High). On the downside, support is seen at 109.76 (21-DMA), a break below could take it near 109.47 (10-DMA).
GBP/USD: Sterling consolidated within thin ranges, as investors remained on the sidelines amid growing uncertainty over Britain’s exit from the European Union and weak economic data. The major traded 0.1 percent down at 1.2919, having hit a high of 1.2978 on Tuesday, its highest since August 14. FxWirePro's Hourly Sterling Strength Index stood at 25.31 (Neutral) by 0400 GMT. Investors’ focus will remain on UK Markit Manufacturing PMI, ahead of series of U.S. fundamental drivers. Immediate resistance is located at 1.2978 (August 29 High), a break above could take it near 1.3053 (August 8 High). On the downside, support is seen at 1.2876 (10-DMA), a break below targets 1.2850. Against the euro, the pound was trading flat at 92.06 pence, having hit a multi-month low of 93.06 pence earlier in the week.
AUD/USD: The Australian dollar eased, reversing some of its previous session gains, despite better-than-expected China manufacturing data. The Chinese Caixin Manufacturing PMI came in at 51.6 versus expectations of 50.9 and previous reading of 51.1, indicating that the new business rose at the quickest rate for over three years. The Aussie trades 0.1 percent down at 0.7935, having hit a high of 0.7995 on Wednesday, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at 60.21 (Bullish) by 0500 GMT. Investors will continue to digest upbeat Chinese data, ahead of U.S. economic releases. Immediate support is seen at 0.7866 (August 24 Low), a break below targets 0.7838 (August 11 Low). On the upside, resistance is located at 0.7962 (August 17 High), a break above could take it near 0.7995 (Previous Session High).
NZD/USD: The New Zealand dollar slumped, extending losses for the fourth consecutive session, as the recent dovish comments by the RBNZ Governor Wheeler combined with downbeat NZ business confidence numbers and overseas trade index, continued to hurt Kiwi bulls sentiment. The Kiwi trades 0.1 percent down at 0.7166, having touched a low of 0.7161 the prior day, its lowest level since Jun. 6. FxWirePro's Hourly Kiwi Strength Index was at -136.07 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7224 (5-DMA), a break above could take it near 0.7263 (August 28 High). On the downside, support is seen at 0.7126 (August 6 Low), a break below could drag it till 0.7100.
Equities Recap
Asian shares gained following overnight gains on Wall Street, while the greenback steadied as investors remained cautious ahead of the U.S. jobs report due later in the session.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
Tokyo's Nikkei rallied 0.2 percent to 19,684.00 points, Australia's S&P/ASX 200 index rose 0.1 percent to 5,719.90 points and South Korea's KOSPI fell 0.1 percent to 2,360.79 points.
Shanghai composite index rose 0.1 percent to 3,364.95 points, while CSI300 index was trading 0.06 percent up at 3,824.71 points.
Hong Kong’s Hang Seng was trading 0.05 percent lower at 27,956.76 points. Taiwan shares added 0.1 percent to 10,594.82 points.
Commodities Recap
Crude oil prices steadied, after rebounding from multi-week lows the day before amid ongoing turmoil in the oil industry with nearly a quarter of U.S. refining capacity offline. International benchmark Brent crude was trading flat at $52.763per barrel by 0449 GMT, having hit a low of $50.53 on Wednesday, its weakest since Aug. 17. U.S. West Texas Intermediate was trading 0.3 percent down at $46.92 a barrel, after falling as low as $45.52 the prior day, its lowest since Jul. 24.
Gold prices inched lower on mild profit-taking following a rally in the previous session, while investors awaited U.S. jobs data for direction on interest rates. Spot gold was trading 0.1 percent down at $1,319.36 per ounce as of 0456 GMT and was on track for a weekly gain of more than 2 percent. U.S. gold futures for December delivery were up 0.4 percent at $1,326.80.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.127 percent higher by 0.005 bps, while 5-year yield was 0.003 bps up at 1.710 percent.
The Japanese government bonds remained flat as investors covered previous short positions amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury note hovered around 0.01 percent, the yield on the long-term 30-year flat at 0.83 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.17 percent.
The Australian bonds climbed on the last trading day of the week, tracking strength in the U.S. Treasuries after consumer spending data showed continuing low inflation, and as tensions with North Korea kept up demand for the safe haven bonds. The yield on the benchmark 10-year Treasury note slumped nearly 4 basis points to 2.69 percent, the yield on 15-year note also plunged 4 basis points to 2.98 percent and the yield on short-term 2-year also traded 1/2 basis point lower at 1.88 percent.
The New Zealand bonds rallied at the time of closing amid a silent trading session that witnessed data of little economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note slid 1 basis point to 2.89 percent, the yield on 7-year note also fell 1 basis point to 2.73 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.03 percent.
The Canadian government bond prices were mostly lower across the yield curve, with the two-year price down 7 Canadian cents to yield 1.275 percent and the 10-year falling 13 Canadian cents to yield 1.851 percent. The gap between the Canadian 2-year yield and its U.S. equivalent narrowed by 4.3 basis points to a spread of -5.5 basis points, its narrowest since July 31.
