Market Roundup
- Trump: military option for N. Korea not preferred, but would be 'devastating'
- Fed's Yellen says gradual hikes should continue, despite weak inflation
- Republicans fail again to kill off Obamacare in U.S. Senate
- Trump shows interest in bipartisan tax reform as Obamacare repeal collapses
- China's Aug industrial profit growth accelerates as commodity prices surge
- China's Q3 growth slips but still solid, commodity reversal a big risk-Beige Book survey
- Putting May on notice, Corbyn says Britain's Labour ready for government
- After German election, France's Macron paints sweeping vision for Europe
- New Zealand's First Party says will not decide coalition partner before Oct. 7
- Tokyo Gov Koike announces manifesto for new Hope Party, to rival Abe’s LDP
Economic Data Ahead
- (0245 ET/0645 GMT) France Sep Consumer Confidence, 103 eyed; last 103
- (0400 ET/0800 GMT) Italy Sep Consumer Confidence, 110.8 eyed; last 110.8
- (0400 ET/0800 GMT) Italy Sep Mfg Business Confidence, 108.1 eyed; last 108
- (0400 ET/0800 GMT) EU Aug Money-M3 Annual Growth, 4.6% eyed; last 4.5%
Key Events Ahead
- (0310 ET/0710 GMT) ECB's Nouy speaks in Madrid
- (0400 ET/0800 GMT) ECB releases monthly data on lending and money supply
- (0500 ET/0900 GMT) Norges Bank Deputy Governor Nicolaisen speaks in Bodoe
- (0515 ET/0915 GMT) Norges Bank Governor Olsen speaks in Kristiansand
- (0630 ET/1030 GMT) UK 0.950 bln for 19 year auction
FX Beat
DXY: The dollar gained across the board after Fed Chair Janet Yellen stated that the central bank needs to stick to gradual rate hikes despite broad uncertainty about the path of inflation. The greenback against a basket of currencies traded 0.1 percent up at 93.10, having touched a high of 93.29 the day before, its highest since Aug. 31. FxWirePro's Hourly Dollar Strength Index stood at 162.48 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro declined, extending losses for the third consecutive session, as political uncertainty following the German election at weekend and remarks from the Federal Reserve chief on rate hikes weighed heavily on the major. The European currency traded 0.1 percent down at 1.1780, having touched a low of 1.1757 the day before, its lowest since Aug. 23. FxWirePro's Hourly Euro Strength Index stood at -72.50 (Bearish) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of series of Fed official speeches, durable goods and pending home sales data. Immediate resistance is located at 1.1884 (5-DMA), a break above targets 1.1925 (21-DMA). On the downside, support is seen at 1.1757 (Previous Session Low), a break below could drag it near 1.1730.
USD/JPY: The dollar rose, extending gains above the 112.00 handle after Fed Chair Janet Yellen said on Tuesday that the Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation. The major was trading 0.2 percent up at 112.40, having hit a high of 112.71 last week, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at 45.23 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. durable goods, pending home sales data and series of Fed officials' speeches for further momentum. Immediate resistance is located at 112.70, a break above targets 113.10. On the downside, support is seen at 112.11 (5- DMA), a break below could take it near 111.52 (10-DMA)..
GBP/USD: Sterling slumped, extending losses for the fourth straight session on the back of hawkish comments from Fed Chair Yellen and concerns of a slowdown in the British economy. The major traded 0.3 percent down at 1.3422, having hit a low of 1.3409 on Tuesday, its lowest since Sept. 15. FxWirePro's Hourly Sterling Strength Index stood at -36.17 (Neutral) by 0400 GMT. Investors’ focus will remain on the UK CBI Distributive Trades Survey, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3500, a break above could take it near 1.3550. On the downside, support is seen at 1.3409 (Previous Session Low), a break below targets 1.3400. Against the euro, the pound was trading 0.1 percent down at 87.73 pence, having hit a high of 87.54 pence in the previous session, its highest since July.
AUD/USD: The Australian dollar tumbled near six-week lows amid broad based U.S dollar strength, in the wake of Yellen’s hawkish comments and Trump’s tax overhaul plans. The Aussie trades 0.3 percent down 0.7858, having hit a low of 0.7856 earlier, it’s lowest since Aug. 16. FxWirePro's Hourly Aussie Strength Index stood at -106.07 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7840, a break below targets 0.7800. On the upside, resistance is located at 0.7947 (5-DMA), a break above could take it near 0.8000.
NZD/USD: The New Zealand dollar eased for the third consecutive session, in the wake of an inconclusive election result last Saturday. Moreover, divergent monetary policy between the Federal Reserve and the Reserve Bank of New Zealand undermined the bid tone around the major. The Kiwi trades 0.1 percent down at 0.7200, having touched a low of 0.7167 the day before, its lowest level since Sept. 5. FxWirePro's Hourly Kiwi Strength Index was at -148.62 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7248 (21-DMA), a break above could take it near 0.7277 (Previous Session High). On the downside, support is seen at 0.7167 (Previous Session Low), a break below could drag it till 0.7130.
Equities Recap
Asian shares rose, while the greenback against a basket of currencies hovered near one-month highs as investors hoped for progress on major tax reform in the United States and on growing expectations of a U.S. interest rate increase in December.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.
Tokyo's Nikkei fell 0.3 percent to 20,262.20 points, Australia's S&P/ASX 200 index lost 0.2 percent to 5,661.70 points and South Korea's KOSPI declined 0.04 percent to 2,373.27 points.
Shanghai composite index eased 0.02 percent to 3,342.97 points, while CSI300 index was trading 0.1 percent up at 3,824.87 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 27,626.97 points. Taiwan shares added 0.7 percent to 10,327.36 points.
Commodities Recap
Crude oil prices rose having touched a 26-month high in the previous session amid threats from Turkey that it could cut crude exports from Iraq's Kurdistan region. International benchmark Brent crude was trading 0.2 percent up at $58.65 per barrel by 0437 GMT, having hit a high of $59.48 on Tuesday, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.1 percent up at $52.12 a barrel, after rising as high as $52.41 the day before, its highest since April.
Gold prices steadied after falling over 1 percent in the previous session on the back of hawkish comments from U.S. Federal Reserve Chair Janet Yellen. Spot gold rose 0.1 percent to $1,294.22 per ounce at 0449 GMT, having declined 1.3 percent in the previous session, its biggest loss in over two weeks. U.S. gold futures for December delivery fell 0.35 percent to $1,297.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.246 percent higher by 0.017 bps, while 5-year yield was 0.018 bps up at 1.868 percent.
The Japanese government bonds weakened, as investors expected to witness a rise in the country’s consumer price-led inflation index (CPI) for the month of August, scheduled to be released on September 28 by 23:30GMT. 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 also climbed 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.13 percent.
The Australian bonds traded lower, tracking weakness in the U.S. counterpart, but moved little after investors heard from the U.S. Fed Chair Janet Yellen. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.79 percent, the yield on the 15-year note climbed nearly 1 basis point to 3.06 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.96 percent.
The New Zealand bonds firmed at the time of closing as investors are closely eyeing the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled later today for detailed direction into the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.98 percent, the yield on 7-year note also slipped 1 basis point to 2.84 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.12 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year dipped 1 Canadian cent to yield 1.604 percent and the 10-year declined 15 Canadian cents to yield 2.114 percent. On Friday, the 10-year yield touched its highest since October 2014 at 2.135 percent.
