Market Roundup
- China Sep Exports YY, 14.5%, 8.9% f’cast, 9.8% prev
- China Sep Imports YY, 14.3%, 15.0% f’cast, 20.0% prev, 19.9% rsvd
- China Sep Trade Balance USD, 31.69 bln, 19.40 bln f’cast, 27.91 bln prev, 27.89 bln rsvd
- Trump, Xi to meet next month at G20 – Washington Post, WSJ
- China not a currency manipulator according to U.S. Treasury's internal findings -media reports
- IMF warns trade friction, market turmoil to hurt Asian growth
- ECB cannot come to Italy's rescue without EU bailout: sources
- Call 'em crazy, but Fed officials likely to keep raising rates
- Support for German coalition parties hits record lows -poll
- Australia's central bank sees plenty of risk at home and abroad
- British PM May briefs inner Cabinet that Brexit deal is close -FT
- U.S. fund investors pull most cash since Feb from 'junk' bonds -Lipper
- Foreign CB US debt holdings +$8.292 bln to $3.444 tln Oct 10 week
- Treasuries +$8.723 bln to $3.069 tln, agencies +94 mln to $306.913 bln
Economic Data Ahead
- (0500 ET/0900 GMT) EZ Aug Industrial Production, 0.4% m/m, -0.2% y/y f’cast; -0.8%, -0.1% prev
Key Events Ahead
- (0510 ET/0910 GMT) ECB executive board member Sabine Lautenschlager speaks at Valletta, Malta
- (0930 ET/1330 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks at Ann Arbor, Michigan
- (1000 ET/1400 GMT) BoE Executive Director Andy Haldane speaks at King's College London event in London
- (1145 ET/1545 GMT) Federal Reserve Bank of Atlanta President Raphael Bostic participates in a discussion in Atlanta
FX Beat
DXY: The dollar index declined to a 2-week low as declining U.S. treasury yields and further losses on Wall Street undermined investor sentiment. The greenback against a basket of currencies trades 0.05 percent down at 95.01, having touched a low of 94.96 earlier, its lowest since Sept. 28. FxWirePro's Hourly Dollar Strength Index stood at -109.38 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro surged to a near 2-week peak as the minutes of the last European Central Bank meeting suggested the central bank was on track to normalise its ultra-loose monetary policy this year despite concerns about slowing growth in Europe. The European currency traded 0.1 percent up at 1.1605, having touched a high of 1.1610 earlier, its highest since October 1. FxWirePro's Hourly Euro Strength Index stood at 98.40 (Slightly Bearish) by 0500 GMT. Investors’ attention will remain on the Eurozone industrial production, ahead of the U.S. import and export price index, monthly budget statement, and Fed officials' speeches. Immediate resistance is located at 1.1651(September 28 High), a break above targets 1.1698 (September 17 High). On the downside, support is seen at 1.1563 (October 1 Low), a break below could drag it till 1.1522 (5-DMA).
USD/JPY: The dollar surged after falling to a 3-week low in the previous session on the back of weaker-than-forecast rise in U.S. consumer prices triggering traders to cut back their bets on the U.S. Federal Reserve stepping up the pace of its planned rate hikes. The major was trading 0.2 percent up at 112.38, having hit a low of 111.83 on Thursday, its lowest since September 18. FxWirePro's Hourly Yen Strength Index stood at 6.32 (Neutral) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. import and export price index, monthly budget statement, and Fed officials' speeches. Immediate resistance is located at 112.58 (September 20 High), a break above targets 112.98 (September 25 High). On the downside, support is seen at 111.75 (September 14 Low), a break below could take it lower 111.35 (September 5 Low).
GBP/USD: Sterling consolidated near a 3-week peak on hopes that a trade deal between the European Union and Britain can be reached before European Union summit on October 18. The major traded flat at 1.3231, having hit a high of 1.3245 on Thursday; it’s highest since September 21. FxWirePro's Hourly Sterling Strength Index stood at 99.22 (Slightly Bullish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3276 (September 21 High), a break above could take it near 1.3300. On the downside, support is seen at 1.3153 (5-DMA), a break below targets 1.3108 (21-DMA). Against the euro, the pound was trading 0.1 down at 87.64 pence, having hit a high of 87.23 on Wednesday, it’s highest since June 21.
AUD/USD: The Australian dollar edged down despite better-than-expected Chinese data, with September exports up 14.5 percent on a year, while imports rose a robust 14.3 percent. The Aussie trades flat at 0.7121, having hit a high of 0.7130 on Wednesday; it’s highest since October 3. FxWirePro's Hourly Aussie Strength Index stood at 5.26 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7081 (5-DMA), a break below targets 0.7042 (October 2 Low). On the upside, resistance is located at 0.7178 (21-DMA), a break above could take it near 7223 (September 18 High).
NZD/USD: The New Zealand dollar declined after rising to an over 1-week, as concerns over a slowdown in China and contagion from emerging markets dented investor sentiment. The Kiwi trades 0.1 percent down at 0.6516, having touched a high of 0.6533, its highest level since October 3. FxWirePro's Hourly Kiwi Strength Index was at 72.44 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6569 (21-DMA), a break above could take it near 0.6600. On the downside, support is seen at 0.6466 (5-DMA), a break below could drag it below 6381 (Jan. 15 Low).
Equities Recap
Asian shares recovered and were on course for their first gains in two weeks, while the greenback eased to a 2-week low following weaker-than-expected U.S. consumer price index.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 1.3 percent.
Tokyo's Nikkei surged 0.5 percent to 22,694.66 points, Australia's S&P/ASX 200 index gained 0.2 percent to 5,895.70 points and South Korea's KOSPI rallied 1.5 percent to 2,161.63 points.
Shanghai composite index rose 0.8 percent to 2,602.85 points, while CSI300 index traded 1.5 percent down at 3,171.42 points.
Hong Kong’s Hang Seng traded 1.9 percent higher at 25,739.99 points. Taiwan shares added 2.4 percent to 10,045.81 points.
Commodities Recap
Crude oil prices surged over 1 percent after falling to a near 3-week low in the previous sessions driven by indications that supply concerns have been overblown. International benchmark Brent crude was trading 1.01 percent up at $81.08 per barrel by 0508 GMT, having hit a low of $79.78 the day before, its lowest since September 24. U.S. West Texas Intermediate was trading 0.9 percent up at $71.66 a barrel, after falling as low as $70.54, its lowest since September 21.
Gold prices declined but held near an over 2-month high touched in the previous session as a rout in global stock markets boosted the safe-haven metal's demand. Spot gold was 0.4 percent down at $1,219.68 an ounce at 0515 GMT, having hit a high of $1226.19 on Thursday, its highest since July 31, recording its best one-day percentage gain since June 2016. U.S. gold futures were down 0.3 percent at $1,224.50 an ounce.
Treasuries Recap
The Japanese government bonds remained tad lower towards the end of Asian session amid a muted trading day that witnessed data of little economic significance after investors’ risk sentiments improved slightly, with the Nikkei 225 trading range-bound following yesterday’s losses. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.146 percent, the yield on the long-term 30-year note hovered around 0.907 percent and the yield on short-term 2-year too traded 1/2 basis point higher at -0.114 percent.
The Australian government bonds slumped across the curve during Asian session as investors’ sentiment recovered after 9-day of stocks rout. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose over 3 basis points to 2.763 percent, the yield on the long-term 30-year bond also surged 3-1/2 basis points to 3.242 percent and the yield on short-term 2-year climbed 4 basis points to 2.063 percent.
The Canadian government bond prices were higher across the yield curve. The 10-year climbed 33 Canadian cents to yield 2.496 percent. The gap between Canada's 10-year yield and its U.S. counterpart widened by 4 basis points to a spread of 65 basis points in favor of the U.S. bond.
