Market Roundup
- Australian consumer mood deteriorates
- Oil prices gain after a bigger-than-expected decline in U.S. stockpiles
- Gold prices inch higher ahead of ECB
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index rebounded from a 2-1/2 week low as optimism toward U.S.-China trade talks and moves in Britain to avoid a chaotic exit from the European Union boosted risk appetite. The greenback against a basket of currencies traded 0.1 percent up at 98.39, having touched a low of 97.86 earlier, its lowest since August 26.
EUR/USD: The euro rose, reversing some of its previous session losses, ahead of the European Central Bank's meeting on Thursday, where the central bank is expected to cut interest rates even further into negative territory and possibly restart asset purchases. The European currency traded 0.1 percent up at 1.1052, having touched a high of 1.1084 on Thursday, its highest since August 29. Investors’ attention will remain on data out from the Eurozone economies, ahead of the U.S. producer price index and wholesale inventories. Immediate resistance is located at 1.1067 (21-DMA), a break above targets 1.1116 (August 27 High). On the downside, support is seen at 1.1000, a break below could drag it below 1.0963 (August 30 High).
USD/JPY: The dollar rallied to a near 6-week peak, as a rebound in government bond yields prompted some investors to cut back on bearish bets on the global economy. The selling pressure intensified around the Japanese yen after Reuters reported Bank of Japan policymakers are more open to discussing the possibility of expanding stimulus at their board meeting on Sept. 18-19. The major was trading 0.2 percent up at 107.78, having hit a high of 107.84 earlier, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index and wholesale inventories. Immediate resistance is located at 107.97 (July 19 High), a break above targets 108.37 (July 16 High). On the downside, support is seen at 106.99 (5-DMA), a break below could take it lower at 106.59 (10-DMA).
GBP/USD: Sterling surged, extending gains for the third straight session after data showed July’s UK average earnings hit an 11-year high, rising from 3.8 percent to 4 percent, while July’s ILO unemployment rate ease from 3.9 percent to 3.8 percent, its lowest in 45 years. The major traded 0.1 percent up at 1.2364, having hit a high of 1.2384 on Monday, it’s highest since July 26. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2400, a break above could take it near 1.2456 (July 17 High). On the downside, support is seen at 1.2312 (5-DMA), a break below targets 1.2224 (10-DMA). Against the euro, the pound was trading flat at 89.34 pence, having hit a high of 89.04 on Monday, it’s highest since July 25.
AUD/USD: The Australian dollar advanced to a 6-week peak boosted by optimism that a high-level meeting of U.S. and Chinese negotiators at Washington next month can deliver a breakthrough in the trade war. However, the upside was limited after a survey by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment declined 1.7 percent in September, after gaining 3.6 percent in August. The Aussie trades traded 0.2 percent up at 0.6875, having hit a high of 0.6884 earlier, it’s highest since July 31. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6835 (5-DMA), a break below targets 0.6777 (August 9 Low). On the upside, resistance is located at 0.6899 (July 31 High), a break above could take it near 0.6955 (July 26 High).
NZD/USD: The New Zealand dollar surged, extending gains for the eighth straight session, on news that a new round of U.S.-China trade talks was scheduled for next month. The Kiwi trades 0.1 percent up at 0.6432, having touched a high of 0.6444 on Monday, its highest level since August 16. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6471 (August 13 High), a break above could take it near 0.6498 (August 9 High). On the downside, support is seen at 0.6385 (21-DMA), a break below could drag it below 0.6325 (September 4 Low).
Equities Recap
Asian shares surged as hopes of diminishing U.S.-China tensions and reduced risk of no-deal Brexit boosted investor risk sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
Tokyo's Nikkei rose 0.9 percent to 21,597.76 points, Australia's S&P/ASX 200 index rallied 0.4 percent to 6,638.00 points and South Korea's KOSPI surged 0.8 percent to 2,048.89 points.
Shanghai composite index declined 0.3 percent to 3,012.32 points, while CSI 300 index traded 0.7 percent down at 3,932.80 points.
Hong Kong’s Hang Seng traded 1.6 percent higher at 27,115.98 points. Taiwan shares added 0.3 percent to 10,790.35 points.
Commodities Recap
Crude oil prices rose after an industry report said U.S. crude stockpiles fell last week by more than twice the amount that analysts in a Reuters poll had forecast. International benchmark Brent crude was trading 0.1 percent higher at $62.84 per barrel by 0509 GMT, having hit a high of $63.74 on Tuesday, its highest since August 1. U.S. West Texas Intermediate was trading up at $57.84 a barrel, after rising as high as $58.74 on Tuesday, its highest since July 31.
Gold prices edged higher, halting a 4-day losing streak, as investors cautiously awaited European Central Bank’s meeting where it is widely expected to cut interest rates. Spot gold was trading 0.4 percent up at $1,490.87 per ounce by 0515 GMT, having touched a low of $1,483.22 earlier, its lowest since August 13. U.S. gold futures were little changed at $1,498.8 an ounce.
Treasuries Recap
The Japanese government bond prices fell, with Benchmark 10-year JGB futures falling 0.27 point to 154.40. The 10-year JGB yield rose 3 basis points to minus 0.200 percent, the highest since Aug. 9. The 20-year JGB yield rose 1.5 bps to 0.160 percent, while the 30-year JGB yield increased 1.5 bps to 0.290 percent. At the short end of the curve, the two-year JGB yield rose 1.5 bps to minus 0.280 percent.
