Market Roundup
- Saudi Arabia ForMin al-Jubeir – Reasonable to go along with other producers in oil output changes, moving towards common position – Reuters.
- Japan MoF survey - Q2 CASPEX +3.1% y/y but -0.5% ex-software, Q2 recurring profits -10.0%, sales -3.5%.
- Japan Aug mfg PMI – final 49.5, flash 49.6, still highest in six months, July final 49.3, output up albeit slightly for first time six months.
- MoF flow data week-ended Aug 27 – Japanese buy net Y333.5 bln foreign stocks, Y105.7 bln bonds, sell Y32.0 bln bills; foreign investors sell net Y6.8 bln Japanese stocks, buy Y268.7 bln bonds, sell Y209.5 bln bills.
- Negative rates force Nomura to end short-term investment fund – Nikkei.
- Tokyo commodity bourse teams up with Chinese futures brokerage – Nikkei.
- China Aug Caixin mfg PMI off to 50.0, neutral, 50.1 forecast, July 50.6.
- China Aug off'l mfg PMI 50.4, 49.4 forecast, July 49.9; services 53.5, July 53.9.
- Australia Aug AIG PMI -9.5 pts, 46.9, expansion over, lowest since June ’15.
- Australia Aug CoreLogic home value index +1.1% m/m, +7.0% y/y.
- Australia July retail sales unch m/m, +0.3% forecast, June +0.1%.
- Australia Q2 new CAPEX -5.4% q/q, -4.2% forecast, ‘16/17 estimate A$105.2 bln, previous A$91.3 bln, Q2 building CAPEX -10.3%, plant/machinery +2.8%.
- New Zealand Q2 terms of trade index -2.1% q/q, -2.0% forecast, export volumes +10.2%, import prices +0.2%, export prices -1.9%, +4.5%, unch and -2.5% forecast.
Economic Data Ahead
- (0300 ET/0700 GMT) Norway Aug PMI mfg, 54.5 forecast; last 54.8.
- (0315 ET/0715 GMT) Switzerland Jul retail sales; last -3.9% y/y.
- (0315 ET/0715 GMT) Spain Aug PMI mfg, 50.9 forecast; last 51.0.
- (0330 ET/0730 GMT) Switzerland Aug PMI mfg, 50.5 forecast; last 50.1.
- (0345 ET/0745 GMT) Italy Aug PMI mfg, 51.1 forecast; last 51.2.
- (0350 ET/0750 GMT) France Aug PMI mfg, 48.5 forecast; flash 48.5.
- (0355 ET/0755 GMT) Germany Aug PMI mfg, 53.6 forecast; flash 53.6.
- (0400 ET/0800 GMT) Eurozone Aug PMI mfg, 51.8 forecast; flash 51.8.
- (0400 ET/0800 GMT) Norway Jul retail sales ex-autos, +0.3% forecast; last -0.6%.
- (0430 ET/0830 GMT) Great Britain Aug PMI mfg, 49.0 forecast; last 48.2.
- (0730 ET/1130 GMT) United States Aug Challenger layoffs; last 45.35k.
- (0830 ET/1230 GMT) United States Q2 productivity/LCI – revised, -0.6%, +2.1% forecast; last -0.5%, +2.0%.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 265k forecast; last 261k.
- (0945 ET/1345 GMT) United States Aug Markit PMI mfg – final; flash 52.1.
- (1000 ET/1400 GMT) United States Jul construction spending, +0.5% m/m forecast; last -0.6%.
- (1000 ET/1400 GMT) United States Aug ISM PMI mfg, 52.0 forecast; last 52.6.
- (1330 ET/1730 GMT) United States Aug total vehicle sales, 17.25 mln AR forecast; last 17.88 mln.
Key Events Ahead
- N/A Finland E3 bln 7-year bond syndication via BarCap, BNP, BAML et al.
- (0330 ET/0730 GMT) France FinMin Sapin press conference.
- (0430 ET/0830 GMT) Spain E3.5-4.5 bln 0.25/1.3/2.9% 2019/26/46 Bono auctions.
- (0430 ET/0830 GMT) Spain E250-750 mln 1.0% 2030 index-linked Bono auction.
- (0450 ET/0850 GMT) E8-9 bln 0.25/1.25/3.25% 2026/36/45 OAT auctions.
- (0530 ET/0930 GMT) UK DMO GBP2.75 bln 0.5% 2022 Gilt auction.
- N/A ECB/Austria CB Nowotny, FinMin Schelling speak at Alpbach event.
- (1225 ET/1625 GMT) Cleveland Fed Mester speaks in Lexington, Kentucky.
- (1300 ET/1700 GMT) NY Fed webcast on consumer expectations.
FX Beat
DXY: The dollar index, against a basket of currencies trades flat at 96.05, having touched a 3-week high of 96.26, in the previous session.
EUR/USD: The euro edged down after rebounding from a 3-week low of 1.1123 in the previous session, as the dollar weakened against major peers. The pair rose to an intra-day high of 1.1166, however, it gave back some gains to trade flat at 1.1153. On Wednesday, the pair hit fresh 3-week low after data showed Eurozone's consumer price index declined in the month of August. However, it recovered and erased intraday losses despite a higher-than-expected U.S. ADP reading. Markets will close watch Markit manufacturing PMI's from Eurozone economies and U.S. ISM manufacturing PMI ahead of highly influential NFP report due on Friday. Immediate resistance is located at 1.1183, break above could take it over 1.1200. On the lower side, support is seen at 1.1130, break below targets 1.1100.
USD/JPY: The Japanese yen gained, pulling away from a 1-month low hit on Wednesday. The greenback had climbed to a 1-month high of 103.53 yen on the back of stronger-than-expected U.S. ADP National Employment Report for August, however, it edged down after the August Chicago purchasing managers' index fell short of expectations. The major trades 0.1 percent lower at 103.27, having touched an intra-day low of 103.05. Downbeat Chinese manufacturing PMI and weaker-than-expected Australia's capex and retails sales triggered fresh bout of risk-off sentiment, strengthening the bid tone around the yen. Investors will continue to track broad market sentiment ahead of U.S. unemployment claims data and manufacturing PMI figures. Immediate resistance is located at 103.50, break above targets 104.00. On the downside, support is seen at 102.65 (5-DMA), break below could take it near 102.00.
GBP/USD: Sterling edged up, extending previous session rally, supported by recovering consumer confidence and rising British house prices in August. Recent upbeat data indicated that the economy is holding up well to June's shock vote to leave the European Union, strengthening the bid tone around the pound. Sterling trades higher at 1.3143, as markets await Britain's manufacturing purchasing managers' survey, which is expected to bounce back slightly from the Brexit shock. Immediate resistance is located at 1.3185, break above could take it over 1.3200. On the downside, support is seen at 1.3118 (5-DMA), break below targets 1.3100/1.3076. Against the euro, the pound trades flat at 84.84 pence.
AUD/USD: The Australian dollar gained, after declining below the 0.7500 handle on Wednesday following higher-than-expected U.S. ADP reading. The major rose, despite Chinese Caixin PMI missing estimates and Australia posting downbeat economic data. Data released earlier showed that Australia's retail sales growth stood flat in July, against expected growth of 0.3 percent., while Capex slumped 5.4 percent in Q2, beating the estimate of 4.2 percent drop. However, the currency was supported by signs of improvement in business investment as firms upgraded their plans for the 2016/17 financial year to spend A$105.2b vs projection of A$97b. The Aussie trades 0.3 percent higher at 0.7541, having touched an early high of 0.7547. Investors await set of U.S. macro fundamentals, including jobless claims and manufacturing PMI for further cues. Immediate support is seen at 0.7500, break below could drag it near 0.7462. On the upside, resistance is located at 0.7577 (10-DMA), break above targets 0.7600.
NZD/USD: The New Zealand dollar extended gains, supported by data that showed export volumes rising in the second quarter. However, the long-term path remains at the mercy of a looming U.S. non-farm payroll report. New Zealand’s terms of trade index for the second quarter declined 2.1 percent, against expectations of 2.0 percent drop, while export volumes grew 10.2 percent. Moreover, import prices rose 0.2 percent and export prices stood at -1.9 percent versus projections of 0.2 percent and -2.5 percent, respectively. The Kiwi trades 0.1 percent up at 0.7254, hovering further away from a 2-week low of 0.7204 struck on Tuesday. Investors will continue to digest domestic data, ahead of set of U.S. economic reports. Immediate resistance is located at 0.7290, break above could take it over 0.7300. On the downside, support is seen at 0.7200, break below target 0.7164.
Equities Recap
Asian shares edged down, as Chinese manufacturing surveys did little to inspire investors, while markets await to see if U.S. employment data could strengthen the case of imminent Federal Reserve interest rates hike.
MSCI's broadest index of Asia-Pacific shares outside Japan extended early losses and was down 0.5 percent.
Tokyo's Nikkei rose 0.23 pct at 16,926.84, Australia's S&P/ASX 200 index fell 0.31 pct at 5,416.20 points and South Korea's KOSPI shed 0.5 percent at 2,029.13 points.
Shanghai composite index shed 0.13 percent at 3,082.16 points, while CSI300 index was trading 0.2 percent lower at 3,321.68 points.
Hong Kong’s Hang Seng was trading 0.7 percent higher at 23,149.09 points. Taiwan shares declined 0.8 percent at 9,001.15 points.
Commodities Recap
Crude oil prices steadied, largely rebounding on a weaker U.S. dollar after declining around 3 percent in the previous session following an unexpected large build in U.S. crude and distillate stocks last week. International Brent crude oil gained 0.4 percent to $47.13 a barrel by 0400 GMT, after falling 2.8 percent in the previous session. U.S. West Texas Intermediate crude rose 0.3 percent to $44.92 a barrel after dropping 3.6 percent on Wednesday.
Gold recovered, retreating from a 2-month low hit in the previous session as the dollar lost some ground, with investors waiting for fresh clues on the timing of next U.S. interest rate hike from a nonfarm payrolls report due tomorrow. Spot gold edged up 0.1 percent to $1,309.65 per ounce at 0406 GMT, having hit a low of $1,304.14 on Wednesday, its lowest since June 24U.S. gold futures was up 0.1 percent at $1,312.80.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5817 percent up by 0.014 bps, while 5-year was at 1.1993 percent higher by 0.019 bps.
The Australian government bonds slumped as investors witnessed a mixed bag of economic results, but there were adequate signs of development in business investment to keep traders away from safe-haven buying. The yield on the benchmark 10-year Treasury note rose more than 1 basis point to 1.903 percent and the yield on short-term 2-year bounced 2 basis points to 1.471 percent.
The New Zealand government bonds closed modestly lower after showed that the Chinese official manufacturing PMI expanded at its fastest pace in two years. The yield on the benchmark 10-year bond rose 2-1/2 basis points to 2.265 percent and the yield on 7-year note ended 2-1/2 basis points higher at 1.970 percent and the yield on short-term 2-year note also bounced 3 basis points to 1.840 percent.
Canadian government bond prices were mixed, with the 2-year bond up 1.5 Canadian cents to yield 0.579 percent and the benchmark 10-year flat to yield 1.022 percent.
