Market Roundup
- U.S., Mexico reach NAFTA deal, turn up pressure on Canada
- Mexico minister says would tweak bilateral U.S. trade deal without Canada
- U.S. says China's steel wheels subsidized, will impose duties on imports
- Trump called off Pompeo's North Korea visit after belligerent letter -report
- Trump, Merkel support U.S.-EU trade talks in phone conversation -White House
- Trump trade war prompts state warnings to bond investors
- UK professional services firms' mood lowest since Nov 2016 – CBI
- China raises yuan mid-point most in 15 months
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Aug MFG Business Confidence, 106.2 f'cast, 106.9 prev
- (0400 ET/0800 GMT) Italy Aug Consumer Confidence, 115.9 f'cast, 116.3 prev
- (0400 ET/0800 GMT) EZ Jul Money-M3 Annual Grwth, 4.3% f'cast, 4.4% prev
- (0400 ET/0800 GMT) EZ Jul Loans to Households, 2.9% prev
- (0400 ET/0800 GMT) EZ Jul Loans to Non-Fin, 4.1% prev
- (0500 ET/0900 GMT) Italy Jul Producer Prices MM, 0.3% prev
- (0500 ET/0900 GMT) Italy Jul Producer Prices YY, 2.9% prev
Key Events Ahead
- (0400 ET/0800 GMT) The European Central Bank releases monthly data on lending and money supply in Frankfurt
- (0700 ET/1100 GMT) ECB's Peter Praet participates in a panel on "monetary and macroprudential policy interactions" at 33rd Annual Congress of European Economic Association in Cologne, Germany
FX Beat
DXY: The dollar index rebounded after falling to an over 3-week peak earlier in the day after the United States and Mexico made a deal to overhaul the North American Free Trade Agreement. The greenback against a basket of currencies trades 0.1 percent up at 94.86, having touched a low of 94.68, its lowest since August 2. FxWirePro's Hourly Dollar Strength Index stood at -76.38 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro declined after rising to a near 4-week peak, as the greenback gained after the United States and Mexico reached a trade deal that would replace NAFTA. However, the Mexican president said that Canada should be incorporated into the deal. The European currency traded 0.1 percent down at 1.1668, having touched a high of 1.1671 earlier, its highest since August 1. FxWirePro's Hourly Euro Strength Index stood at 77.92 (Slightly Bullish) by 0500 GMT. Investors’ attention will remain on series of data from Eurozone economies, ahead of the U.S. prelim wholesale inventories, good trade balance and Richmond Fed Manufacturing Index. Immediate resistance is located at 1.1747 (July 31 High), a break above targets 1.1790 (July 9 High). On the downside, support is seen at 1.1600 (5-DMA), a break below could drag it till 1.1538 (21-DMA).
USD/JPY: The dollar rose, reversing most of its previous session's losses, after the United States and Mexico agreed to overhaul the North American Free Trade Agreement, boosting optimism for an easing of global trade tensions. However, the agreement put pressure on Canada to agree to new terms on auto trade to preserve a three-nation pact. The major was trading 0.1 percent up at 111.21, having hit a high of 111.48 on Friday, its highest since August 6. FxWirePro's Hourly Yen Strength Index stood at -20.51 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. prelim wholesale inventories, good trade balance and Richmond Fed Manufacturing Index. Immediate resistance is located at 111.52 (August 6 High), a break above targets 111.73 (August 2 High). On the downside, support is seen at 110.77 (10-DMA), a break below could take it lower 110.31 (August 17 Low).
GBP/USD: Sterling edged down, halting a two-day winning streak after a survey from the Confederation of British Industry indicated that the British business and professional services firms sentiment are their most downbeat since November 2016 due to slowing sales growth and fast-rising costs, amid growing uncertainty about the terms on which Britain will leave the European Union in 2019. The major traded 0.1 percent down at 1.2871, having hit a high of 1.2936 on Wednesday; it’s highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at -24.21 (Neutral) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, ahead of UK BRC Shop Price Index for August. Immediate resistance is located at 1.2936 (August 22 High), a break above could take it near 1.3006 (August 6 High). On the downside, support is seen at 1.2802 (10-DMA), a break below targets 1.2729 (August 20 Low). Against the euro, the pound was trading 0.1 percent down at 90.69 pence, having hit a low of 90.70 earlier, it’s lowest since September 2017.
AUD/USD: The Australian dollar declined after rising for two consecutive sessions, as the greenback rose following a breakthrough in U.S.-Mexico trade talks that removed one potential risk to the global outlook. The People's Bank of China (PBOC) raised its daily guidance rate for the yuan by the most in nearly 15 months, as a trade war with the United States intensified. The Aussie trades 0.3 percent down at 0.7329, having hit a low of 0.7238 on Friday; it’s lowest since August 16. FxWirePro's Hourly Aussie Strength Index stood at -6.93 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7303 (10-DMA), a break below targets 0.7252 (August 17 Low). On the upside, resistance is located at 0.7381 (August 21 High), a break above could take it near 0.7411 (August 3 High).
NZD/USD: The New Zealand dollar eased below the 0.6700 handle, as the Reserve Bank of New Zealand Governor Orr at the Jackson Hole reiterated that the central bank intends to hold policy rates low for an extended period of time. The Kiwi trades 0.2 percent down at 0.6680, having touched a high of 0.6720 on Wednesday, its highest level since 9 August. FxWirePro's Hourly Kiwi Strength Index was at -75.45 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6720 (August 22 High), a break above could take it near 0.6763 (August 8 High). On the downside, support is seen at 0.6640 (10-DMA), a break below could drag it below 0.6579 (August 17 Low).
Equities Recap
Asian shares rose, while the dollar surged against a basket of currencies amid hopes global tariff tensions were receding after the United States and Mexico reached a deal to overhaul the North American Free Trade Agreement.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.
Tokyo's Nikkei surged 0.1 percent to 22,813.47 points, Australia's S&P/ASX 200 index rose 0.6 percent to 6,304.70 points, and South Korea's KOSPI gained 0.07 percent to 2,300.90 points.
Shanghai composite index fell 0.2 percent to 2,774.35 points, while CSI300 index traded 0.3 percent down at 3,395.43 points.
Hong Kong’s Hang Seng traded 0.05 percent higher at 28,267.51 points. Taiwan shares added 0.8 percent to 10,989.55 points.
Commodities Recap
Crude oil prices eased after rising to multi-week peaks earlier in the day on risks of supply disruptions, as places such as Venezuela, Africa and Iran triggered expectations of a tightening market. International benchmark Brent crude was trading 0.2 percent down at $76.16 per barrel by 0517 GMT, having hit a high of $76.49 earlier, its highest since July 11. U.S. West Texas Intermediate was trading 0.2 percent higher at $68.75 a barrel, after rising as high as $69.29 on Friday, its highest since August 8.
Gold prices edged down from a 2-week high hit earlier in the session, as the dollar steadied after China's central bank raised its daily guidance rate for the yuan by the most in nearly 15 months. Spot gold fell 0.2 percent to $1,208.74 an ounce at 0520 GMT, having hit a high of $1212.33, its highest since August 13. U.S. gold futures were down 0.1 percent at $1,215.40 an ounce.
Treasuries Recap
The Australian bond yields jumped during the Asian session, tracking a similar movement in U.S. Treasuries after United States President Donald Trump announced that they have struck a trade deal with Mexico. This led to a rise in investors’ confidence and thus a shift away from safe-haven assets. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 2-1/2 basis points to 2.575 percent, the yield on the long-term 30-year bond surged 2 basis points to 3.102 percent and the yield on short-term 2-year rose nearly 1 basis point to 2.022 percent.
The New Zealand 10-year bond yield closed at a 3-week high Tuesday as investors’ risk sentiments improved, following a trade deal between the United States and Mexico. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 3 basis points to 2.633 percent, the yield on the long-term 20-year note slid nearly 1 basis point to 2.950 percent and the yield on short-term 2-year too closed 1 basis point down at 1.715 percent.
The Canadian government bond prices were lower across a steeper yield curve, with the two-year down 3.5 Canadian cents to yield 2.139 percent and the 10-year falling 33 Canadian cents to yield 2.298 percent. The gap between Canada's 10-year yield and its U.S. equivalent narrowed by 1.7 basis points to a spread of 55.0 basis points in favor of the U.S. bond, its smallest gap since May 22.
