Market Roundup
- U.S. Republicans move on tax reform; Fed officials see economic threats
- Storms impact U.S. job market; trade expected to bolster economy
- Divisions over UK PM May's future burst into open with plot to topple her
- Spanish court suspends Catalan parliament session, throwing independence call in doubt
- Japanese workers' wages rise in a positive sign for consumer spending
- Japan Aug Overtime Pay, 1.5% vs 0.1%; Total Cash Earnings 0.9%
- Tokyo governor's new party vows to scrap over-reliance on fiscal, monetary steps
- Influential Australian Senator Nick Xenophon resigns
- U.S. taxable bond funds attract cash for 13th straight week -Lipper
- Foreign CB US debt holdings -$5.714 bln to $3.366 trln Oct 4 week
- Treasuries -$6.696 bln to $3.039 trln, agencies +$783 mln to $262.99 bln
Economic Data Ahead
- (0200 ET/0600 GMT) Germany Aug Industrial Orders, 0.7% eyed, last -0.7%
- (0200 ET/0600 GMT) Norway Aug Manufacturing Output, -0.5% eyed, last 1.9%
- (0300 ET/0700 GMT) Spain Aug Ind Output Cal Adj, 0.9% eyed, last 1.9%
- (0330 ET/0730 GMT) Great Britain Sep Halifax House Prices m/m, 0.1% eyed, last 1.1%
- (0330 ET/0730 GMT) Great Britain Sep Halifax House Prices 3M/Y/Y, 3.6% eyed, last 2.6%
Key Events Ahead
- (0400 ET/0800 GMT) BoE's Salmon speaks in London
- (0730 ET/1130 GMT) BoE'S Hauser speaks in Cambridge
- (0800 ET/1200 GMT) BoE's Haldane speaks in London
- (0930 ET/1330 GMT) ECB's Villeroy speaks in Vienna
FX Beat
DXY: The dollar index rallied, strengthened by hopes for progress on U.S. tax reforms, with traders awaiting the U.S. jobs data further momentum. The greenback against a basket of currencies traded 0.1 percent up at 94.02, having touched a high of 94.11 earlier, its highest since Aug. 16. FxWirePro's Hourly Dollar Strength Index stood at 98.01 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro slumped to a 7-week low after the ECB Sept meeting minutes released yesterday showed that the monetary policy should be highly accommodative under all scenarios. The European currency traded 0.2 percent down at 1.1690, having touched a low of 1.1686 earlier, its lowest since Aug. 17. FxWirePro's Hourly Euro Strength Index stood at -14.25 (Neutral) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the U.S. non-farm payroll report, unemployment data, consumer credit figures, and speeches by FOMC members. Immediate resistance is located at 1.1753 (78.6% retracement of 1.2005 and 1.1686), a break above targets 1.1787 (10-DMA). On the downside, support is seen at 1.1680 (Aug. 18 Low), a break below could drag it near 1.1612 (July 26 Low).
USD/JPY: The dollar rose, extending previous session gains on strong U.S. economic data and higher Treasury yields. Data released on Thursday showed that orders for core capital goods in August were stronger than the previous reading, suggesting robust business spending could help offset some of the economic drag of the Hurricanes. The major was trading 0.2 percent up at 112.99, hovering towards a high of 113.25 hit last week, its highest since mid-Jul. FxWirePro's Hourly Yen Strength Index stood at 103.71 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. non-farm payroll report, unemployment data, consumer credit figures and speeches by FOMC members for further momentum. Immediate resistance is located at 113.20, a break above targets 113.50. On the downside, support is seen at 112.41 (10- DMA), a break below could take it near 112.00.
GBP/USD: Sterling slumped to a fresh 1-month low as Conservatives Party members urged the UK PM Theresa May to step down from her position, as they raised doubts over her approach towards the Brexit deal. The major traded 0.2 percent down at 1.3088, having hit a low of 1.3073 earlier, its lowest since Sept. 7. FxWirePro's Hourly Sterling Strength Index stood at -118.02 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on MPC member Haldane's speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3200, a break above could take it near 1.3291. On the downside, support is seen at 1.3032 (Sept. 7 Low), a break below targets 1.3000. Against the euro, the pound was trading 0.1 percent low at 89.38 pence, having hit a low of 89.43 pence earlier in the day, its lowest since Sept. 14.
AUD/USD: The Australian dollar tumbled to a 2-1/2 month low after a report cited that RBA board member Ian Harper sees scope for a rate cut if consumption across the economy loses momentum entirely. The Aussie trades 0.5 percent down 0.7755, having hit a low of 0.7743 earlier, it’s lowest since Jul. 14. FxWirePro's Hourly Aussie Strength Index stood at -22.19 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7725 (Jul. 14 Low), a break below targets 0.7700. On the upside, resistance is located at 0.7800, a break above could take it near 0.7862 (10-DMA).
NZD/USD: The New dollar fell to 4-month lows as the U.S. dollar gained across the board following strong U.S. economic data releases. The Kiwi trades 0.2 percent down at 0.7098, having touched a low of 0.7091 earlier in the session, its lowest level since Sept. 4. FxWirePro's Hourly Kiwi Strength Index was at -94.00 (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 0.7166 (5-DMA), a break above could take it near 0.7277 (Sept. 26 High). On the downside, support is seen at 0.7091 (Session Low), a break below could drag it till 0.7050.
Equities Recap
Asian shares advanced as optimism over U.S. tax reform plans boosted Wall Street shares to record highs, while the greenback hovered near a seven-week peak on data indicating solid U.S. economic growth.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.3 percent and was poised for a 1.6 percent gain on the week.
Tokyo's Nikkei rose 0.3 percent to 20,686.68 points, Australia's S&P/ASX 200 index gained 1.04 percent to 5,710.70 points.
China and South Korea markets remained closed for public holidays.
Hong Kong’s Hang Seng was trading 0.3 percent higher at 28,466.12 points. Taiwan shares added 0.1 percent to 10,526.55 points.
Commodities Recap
Crude oil prices eased as traders monitored a tropical storm heading for the Gulf of Mexico, however, the prospect of extended oil production cuts by the OPEC and other producers led by Russia supported prices. International benchmark Brent crude was trading 0.1 percent down at $56.92 per barrel by 0416 GMT, having hit a low of $55.36 on Wednesday, its weakest since Sept. 20. U.S. West Texas Intermediate was trading 0.1 percent down at $50.70 a barrel, after falling as low as $49.75 on Wednesday, its lowest since Sept. 19.
Gold prices steadied after falling to an 8-week low in the previous session, as the U.S. dollar stood firm near a seven-week high ahead of key U.S. jobs data later in the day. Spot gold was trading flat at $1,267.41 an ounce at 0419 GMT, having hit its lowest since August 9 at $1,267.66 on Thursday. U.S. gold futures for December delivery were down 0.2 percent at $1,270.90 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.355 percent higher by 0.005 bps, while 5-year yield was 0.005 bps up at 1.952 percent.
The Japanese government bonds traded lower after Congressional Republicans moved to hasten an overhaul of the U.S. tax code on Thursday, while Federal Reserve officials warned in rare public remarks that President Donald Trump’s tax plan could lead to inflation and unsustainable federal debt. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the yield on long-term 30-year climbed 1-1/2 basis points to 0.88 percent and the yield on short-term 2-year traded tad higher at -0.13 percent.
The Australian bonds slumped, tracking similar movement in the U.S. Treasuries after the House of Representatives approved a budget, the first step toward tax reform. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 3 basis points to 2.82 percent, the yield on the 15-year note climbed 3-1/2 basis points to 3.10 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.93 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 2 Canadian cents to yield 1.523 percent and the 10-year rising 15 Canadian cents to yield 2.103 percent. The gap between Canada's two-year yield and its U.S. equivalent narrowed by 1.9 basis points to a spread of 3.2 basis points.
