Market Roundup
- Mexico, U.S. closing in on NAFTA deal, talks to resume Monday
- Much detail, little progress in U.S.-China talks, sources say
- Yuan at 2-1/2 week high as China signals support, revives fix factor
- China says will fend off internet finance risks
- China Jul industrial profits rose 16.2% y/y vs 20% prev
- Trump cancels Pompeo's trip to North Korea over stalled nuclear diplomacy
- Powell sets Fed's course with data-based judgment
- Japanese PM Abe seen headed for extended term despite policy doubts
- Germany's public debt could fall below EU ceiling this year -Scholz
Economic Data Ahead
- (0400 ET/0800 GMT) Germany Aug Ifo Business Climate New, 101.9 f'cast, 101.7 prev
- (0400 ET/0800 GMT) Germany Aug Ifo Curr Conditions New, 105.4 f'cast, 105.3 prev
- (0400 ET/0800 GMT) Germany Aug Ifo Expectations New, 98.5 f'cast, 98.2 prev
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index steadied as comments by the Federal Reserve Chair Jerome Powell at a closely watched Jackson Hole symposium reaffirmed the case for gradual rate hikes. The greenback against a basket of currencies trades 0.05 percent up at 95.22, having touched a low of 94.93 on Wednesday, its lowest since August 2. FxWirePro's Hourly Dollar Strength Index stood at 19.95 (Neutral) by 0500 GMT.
EUR/USD: The euro surged to an over 3-week peak after German Finance Minister Olaf Scholz on Sunday stated that Germany's public sector debt could drop below the European Union's debt ceiling before the end of the year. The European currency traded 0.05 percent up at 1.1621, having touched a high of 1.1653 earlier, its highest since August 2. FxWirePro's Hourly Euro Strength Index stood at 54.20 (Bullish) by 0500 GMT. Investors’ attention will remain on German IFO survey's, ahead of the Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index. Immediate resistance is located at 1.1667 (August 2 High), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1561 (5-DMA), a break below could drag it till 1.1472 (10-DMA).
USD/JPY: The dollar eased, after rising to a near 3-week peak in the previous session on a well-received speech from Federal Reserve Chairman Jerome Powell that supported a gradual approach to raising interest rates. However, the ongoing trade tensions between Washington and Beijing weighed heavily on investor sentiment. The major was trading 0.2 percent down at 111.03, having hit a high of 111.48 on Friday, its highest since August 6. FxWirePro's Hourly Yen Strength Index stood at -82.18 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Chicago Fed National Activity Index and Dallas Fed Manufacturing Business 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 110.68 (5-DMA), a break below could take it lower 110.31 (August 17 Low).
GBP/USD: Sterling consolidated within narrow ranges amid mounting concerns Britain could leave the European Union without new trading arrangements before its scheduled exit day in March 2019. The major traded flat at 1.2846, having hit a high of 1.2936 on Wednesday; it’s highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at -89.03 (Slightly Bearish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, as UK markets remain closed on account of Summer Bank Holiday. 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 1.2789 (10-DMA), a break below targets 1.2729 (August 20 Low). Against the euro, the pound was trading flat at 90.37 pence, having hit a low of 90.58 earlier, it’s lowest since September 2017.
AUD/USD: The Australian dollar slightly edged down after data showed profit growth for China's industrial firms eased for a third straight month in July, indicating that demand in the Chinese economy is cooling as U.S. trade pressure mounted. The Aussie trades 0.1 percent down at 0.7317, having hit a low of 0.7238 on Friday; it’s lowest since August 16. FxWirePro's Hourly Aussie Strength Index stood at 52.01 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7295 (10-DMA), a break below targets 0.7202 (August 15 Low). On the upside, resistance is located at 0.7355 (August 23 High), a break above could take it near 0.7381 (August 21 High).
NZD/USD: The New Zealand dollar declined as U.S-China trade talks last week were short on progress as U.S. negotiators highlighted cases of American firms harmed by Chinese practices, while China argued it was meeting its WTO obligations. The Kiwi trades 0.1 percent down at 0.6681, having touched a high of 0.6720 on Wednesday, its highest level since 9 August. FxWirePro's Hourly Kiwi Strength Index was at 61.72 (Bullish) 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 0.6611 (August 9 Low), a break below could drag it below 0.6579 (August 17 Low).
Equities Recap
Asian shares rallied as investor risk sentiment revived after the China central bank tweaked its management of the yuan.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.1 percent.
Tokyo's Nikkei surged 0.9 percent to 22,799.64 points, Australia's S&P/ASX 200 index rose 0.4 percent to 6,268.90 points, and South Korea's KOSPI gained 0.4 percent to 2,300.80 points.
Shanghai composite index rose 1.7 percent to 2,776.50 points, while CSI300 index traded 2.3 percent up at 3,400.03 points.
Hong Kong’s Hang Seng traded 2.1 percent higher at 28,242.54 points. Taiwan shares added 0.8 percent to 10,902.21 points.
Commodities Recap
Crude oil prices surged, amid looming U.S. sanctions against Iran's oil sector, although concerns that a U.S.-China trade dispute will dent global economic growth limited upside. International benchmark Brent crude was trading 0.2 percent up at $75.77 per barrel by 0507 GMT, having hit a high of $76.39 on Friday, its highest since July 11. U.S. West Texas Intermediate was trading 0.2 percent higher at $68.68 a barrel, after rising as high as $69.29 on Friday, its highest since August 8.
Gold prices consolidated near recent peaks after recording their biggest 1-day percentage gain in over a year the session before, as the U.S. dollar eased on comments from the Federal Reserve chairman in support of a gradual approach to hiking interest rates. Spot gold was flat at $1,206.18 an ounce as of 0511 GMT, having gained about 1.7 percent to hit a high of $1208.52 on Friday, its highest since August 13. U.S. gold futures were almost flat at $1,213 an ounce.
Treasuries Recap
The Japanese government bonds traded tad higher as investors wait to watch the country’s retail sales and industrial production for the month of July, scheduled to be released on August 29 and 30 by 23:50GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.096 percent, the yield on the long-term 30-year note fell 1 basis point to 0.832 percent and the yield on short-term 2-year remained flat at -0.114 percent.
The Australian bonds remained range-bound at the start of the trading week as investors remained side-lined in a muted session that witnessed data of little economic significance. Also, the country’s domestic political situation still remains topsy-turvy, with a change in leadership, following a parliamentary chaos last week. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, traded flat at 2.546 percent, the yield on the long-term 30-year bond hovered around 3.072 percent and the yield on short-term 2-year rose 1/2 basis point to 2.008 percent.
The New Zealand bonds closed higher as investors remained side-lined amid a muted trading week that is scheduled to witness data of little economic significance. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.605 percent, the yield on the long-term 20-year note slid 1/2 basis point to 2.915 percent and the yield on short-term 2-year closed nearly flat at 1.705 percent.
