Market Roundup
- U.S., Canada make late-night push for NAFTA; no deal yet
- Trump ready to ratchet up China trade war with more tariffs -report
- Trump vows to 'get involved' if Justice Dept, FBI don't do their job
- Trump threatens to withdraw U.S. from World Trade Organization -Bloomberg
- Argentina to announce new economic measures after peso freefall
- Japan Aug Core CPI Tokyo (yy), 0.5%, 0.4% prev
- Japan Jul Unemployment Rate, 2.5%, 2.4% f'cast, 2.4% prev
- Japan Jul Industrial Output Prelim (mm) SA, -0.1%, 0.2% f'cast, -1.8% prev
- China Aug NBS Manufacturing PMI, 51.3, 51.0 f'cast, 51.2 prev
- China Aug NBS Non-Mfg PMI, 54.20, 54.00 prev
- China Aug Composite PMI, 53.8, 53.6 prev
- Foreign CB US debt holdings -$787 mln to $3.429 tln Apr 29 week
- Treasuries +$662 mln to $3.059 tln, agencies -$926 mln to $298.729 bln
- U.S. fund investors favor stocks, emerging markets in week -Lipper
- U.S. muni bond funds post $212.1 mln in inflows -Lipper
Economic Data Ahead
- (0500 ET/0900 GMT) EZ Unemployment Rate, 8.2% f'cast, 8.3% prev
Key Events Ahead
- (0700 ET/1100 GMT) National Bank of Austria’s Ewald Nowotny hosts reception at an economic forum. - Alpbach, Austria
- (1300 ET/1700 GMT) Remarks by ECB’s Luis de Guindos at the closing event of Cursos de La Granda organized by University of Oviedo- La Granda, Spain
FX Beat
DXY: The dollar index consolidated within narrow ranges, amid market turmoil and political tensions, while investors braced for the next round of the U.S.-China trade conflict. NAFTA negotiators from Canada and the United States agreed to resolve final differences before a deadline, with Mexican counterparts on standby to rejoin negotiations. The greenback against a basket of currencies trades flat at 94.69, having touched a low of 94.43 on Tuesday, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at -14.36 (Neural) by 0500 GMT.
EUR/USD: The euro steadied after falling in the previous session on concerns that tax cuts and welfare spending proposed by Italy's ruling coalition could worsen its debt situation. The European currency traded 0.1 percent up at 1.1681, having touched a high of 1.1733 on Tuesday, its highest since July 31. FxWirePro's Hourly Euro Strength Index stood at -12.90 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone prelim consumer price index, ahead of the Chicago purchasing managers index and Michigan consumer sentiment index. Immediate resistance is located at 1.1747 (July 31 High), a break above targets 1.1790 (July 9 High). On the downside, support is seen at 1.1599 (10-DMA), a break below could drag it till 1.1539 (21-DMA).
USD/JPY: The dollar edged up after easing to a 1-week low earlier in the session on news that U.S. President Donald Trump is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week. The major was trading flat at 111.01, having hit a high of 111.82 on Wednesday, its highest since August 3. FxWirePro's Hourly Yen Strength Index stood at 17.87 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Chicago purchasing managers index and Michigan consumer sentiment index. Immediate resistance is located at 111.95 (July 31 High), a break above targets 112.17 (July 11 High). On the downside, support is seen at 110.70 (August 9 Low), a break below could take it lower 110.43 (August 15 Low).
GBP/USD: Sterling gained, hovering towards a 4-week peak touched in the previous session, amid renewed Brexit optimism, in the wake of the latest upbeat remarks from the European Union Chief Brexit Negotiator Barnier. On Wednesday, Barnier stated that the EU is prepared to offer Britain an unprecedentedly close relationship after it separates. The major traded 0.1 percent up at 1.3019, having hit a high of 1.3042 the day before; it’s highest since August 3. FxWirePro's Hourly Sterling Strength Index stood at 98.07 (Slightly Bullish) 0500 GMT. Immediate resistance is located at 1.3083 (July 19 High), a break above could take it near 1.3159 (July 24 High). On the downside, support is seen at 1.2927 (5-DMA), a break below targets 1.2859 (21-DMA). Against the euro, the pound was trading 0.05 percent up at 89.69 pence, having hit a high of 89.53 on Thursday, it’s highest since August 21.
AUD/USD: The Australian dollar slumped to a 1-week low amid worries about escalating tariff tensions between the United States and China. However, the major attempted a minor recover following a better-than-expected China data release that showed manufacturing PMI for August came in at 51.3 and the non-manufacturing PMI came in at 51.0. The Aussie trades 0.1 percent down at 0.7254, having hit a low of 0.7243 earlier; it’s lowest since August 24. FxWirePro's Hourly Aussie Strength Index stood at -113.11 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7237 (August 24 Low), a break below targets 0.7202 (August 15 Low). On the upside, resistance is located at 0.7320 (10-DMA), a break above could take it near 0.7381 (August 21 High).
NZD/USD: The New Zealand dollar plunged, extending previous session losses amid increasing fears of a further escalation of a trade war between the US and China after the US President Trump stated that he is considering moving forward with tariffs on another $200 billion worth of Chinese imports, while China is unlikely to take a back stand. The Kiwi trades 0.1 percent down at 0.6647, having touched a low of 0.6634 on Thursday, its lowest level since 24 August. FxWirePro's Hourly Kiwi Strength Index was at -53.12 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6692 (5-DMA), a break above could take it near 0.6746 (August 9 High). On the downside, support is seen at 0.6619 (August 24 Low), a break below could drag it below 0.6579 (August 17 Low).
Equities Recap
Asian shares plunged as a report U.S. President Donald Trump was preparing to step up a trade war with Beijing intensified global trade issue.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.8 percent.
Tokyo's Nikkei declined 0.05 percent to 22,865.15 points, Australia's S&P/ASX 200 index fell 0.5 percent to 6,319.50 points, and South Korea's KOSPI gained 0.4 percent to 2,315.66 points.
Shanghai composite index fell 0.1 percent to 2,736.03 points, while CSI300 index traded 0.2 percent down at 3,343.31 points.
Hong Kong’s Hang Seng traded 0.9 percent lower at 27,922.51 points. Taiwan shares shed 0.3 percent to 11,063.94 points.
Commodities Recap
Crude oil prices surged amid looming U.S. sanctions against Iran's oil exports, although concerns the trade war between the United States and China could intensify prevented the upside. International benchmark Brent crude was trading 0.6 percent up at $77.97 per barrel by 0521 GMT, having hit a high of $78.05, its highest since July 11. U.S. West Texas Intermediate was trading 0.3 percent higher at $70.25 a barrel, after rising as high as $70.47 the day before, its highest since August 8.
Gold prices gained but remained on track to record their longest monthly losing streak since 2013, weighed down by worries over lingering U.S.-Sino trade tensions. Spot gold was 0.4 percent up at $1,204.61 an ounce at 0524 GMT, having touched a low of $1,196.15 on Thursday, its lowest since August 24 and on track for a fifth straight monthly decline. U.S. gold futures were up 0.2 percent at $1,207.90 an ounce.
Treasuries Recap
The Japanese government bonds slightly gained on the last trading day of the week after the country’s unemployment rate and industrial production for the month of July, both disappointed market sentiments, forcing buyers into safe-haven instruments. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.105 percent, the yield on the long-term 30-year note flat at 0.850 percent and the yield on short-term 2-year remained tad lower at -0.109 percent.
The Australian bond yields slumped during the Asian session, tracking a similar movement in U.S. peer amid ongoing trade negotiations over NAFTA with Canada and Mexico. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 4-1/2 basis points to 2.526 percent, the yield on the long-term 30-year bond plunged 5 basis points to 3.042 percent and the yield on short-term 2-year lost 2 basis points to 1.972 percent.
The Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 38 Canadian cents to yield 2.277 percent. The gap between Canada's 10-year yield and its U.S. equivalent widened 2.8 basis points to a spread of 58.9 basis points in favor of the U.S. bond.
