- RBA Gov Stevens - Pretty clear economy growing, could be faster, half-way through resource-sector decline, US rates will have to raise at some point, content with domestic monetary policy, even lower AUD not inflationary.
- Fed moves goalposts again on raising rates.
- Japan FinMin Aso - Fed decision likely reflected voice of EM at G20, little impact from S&P Japan downgrade.
- CabSec Suga - Fed's decision to forego hike appropriate.
- BoJ Policy Board Aug 6-7 meeting minutes - Weak EM upping uncertainties but guardedly optimistic, Japan exports-output affected, private consumption soft, further EM deceleration would be problematic, low exports to affect CAPEX, wages would also be affected, consumption key to inflation expectations.
- Lipper - US-based stock funds attract $12.7 bln in latest week.
- China August new home prices -2.3% y/y, nationwide house prices +1.7% y/y, July -3.7%, -0.4%, Aug new home prices +0.3% m/m, rise fourth consecutive month.
- Foreign CB US debt holdings +$2.236 bln to $3.337 trln week-ended Sept 16, Treasury holdings +$3.068 bln to $3.008 trln, agencies -$952 mln to +$284 bln.
- NY Fed - Swaps with foreign CBs $145 mln Sept 16 week, BoJ $4 mln, rest ECB.
- (0400 ET/0800 GMT) Euro zone July current account balance; last E31.1 bln surplus nsa, E25.4 bln sa.
- (0400 ET/0800 GMT) Euro zone July net investment flow; last E47.4 bln inflow.
- (0430 ET/0830 GMT) Italy July current account balance; last bln surplus.
- (1000 ET/1400 GMT) US August leading indicators index, +0.2% m/m eyed; last -0.2%.
- (1200 ET/1600 GMT) US Q2 flow of funds data.
Key Events Ahead
- N/A Buba Dombret speech at Frankfurt EBS Symposium.
- N/A UK DMO GBP2/0.5/2 bln 1/3/6-month treasury bill auctions.
- (0600 ET/1000 GMT) BoS Gov Linde speech in Madrid.
- (0630 ET/1030 GMT) ECB Coeure speech in Paris.
- (0705 ET/1105 GMT) BoE Chief Econ Haldane speech in Portadown, Northern Ireland.
- Saturday SF Fed Williams speech at Armonk, New York Harvard event.
- Saturday St Louis Fed Bullard speech at Nashville conference.
FX Recap
EURUSD: The euro currency rose against the greenback on Friday, as investors digested the outcome of the long-awaited Federal Open Market Committee meeting. The Federal Open Market Committee (FOMC) decided to keep monetary policy settings unchanged on Thursday, with global financial developments deterring the bank from what would have been its first rate hike in more than nine years. As for overseas updates, the European Central Bank published its monthly economic bulletin, saying it expects a weaker recovery than previously anticipated. The bank added that an increase in inflation rates will be slower than earlier projections had suggested. It made intraday high at 1.1433 and low at 1.1390. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.
USDJPY: Pair has popped back below 120 handle in a spike that rallied from 119.66 to 120.40. It has been a quiet and tepid day in Tokyo with some downside pressures in the Yen due to the risk-off environment set by the FOMC outcome and message to markets that they are not able to hike rates while there still remains uncertainty around the outlook stemming from the slowdown in China. Looking ahead, traders are expected to remain cautious amid a data-dry trading calendar ahead while markets continue to assess the Fed's decision. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.
GBPUSD: Pair is supported just below 1.5600 levels. It made intraday high at $1.5589 and low at $1.5556 levels. UK retail sales volumes grew in line with estimates between July and August, helped by increased sales in both small and large retailing, official figures showed on Thursday. Moreover US FED decision helped the pair to drag above $1.56 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.
NZDUSD: The New Zealand dollar more than made back Thursday's losses in the early hours of trade on Friday, after markets had enough time to digest the Federal Open Market Committee (FOMC) statement. US interest rates remained unchanged at near-zero levels on Thursday, somewhat unexpectedly, as the monetary-policy setting committee decided global conditions were not ripe enough to tighten policy. The New Zealand economy expanded 0.4% in the June quarter, according to Statistics New Zealand data released on Thursday, missing the market forecast of 0.6% growth, which was also the Reserve Bank of New Zealand's (RBNZ) estimate. Pair made an intraday high at 0.6386 and low at 0.6336 levels. Pair is currently trading at 0.6384 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUDUSD: The Australian dollar is capped above $0.72, consolidating after the post-FOMC spike to $0.7275. RBA's Glenn Stevens talked the Aussie further down, saying the lower AUD is now having a bigger impact on the economy. Australia's exit from a decade-long mining boom has brought with it many challenges for the resource-rich economy, with growth slowing, unemployment rising, and confidence levels wavering. But policymakers are optimistic that Australia will make it through the commodity downturn without too much pain, with support from monetary policy and the weaker exchange rate. The Australian dollar has plunged 25% against the US dollar over the last two years, and around 18% on a trade-weighted basis. The RBA believes that continuous improvement in non-mining growth is what is needed to bring down the unemployment rate. Australia's unemployment rate has wavered around 6% for the last year, which is better than the RBA forecast six months ago, according to Stevens. Stevens also said that monetary policy is seeking to support Australia's growth transition. Australia's interest rates are currently at record low levels. It made intraday high at 0.7217 and low at 0.7161 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels.
Equity Recap
Japan's benchmark Nikkei 225 index plunged 1.57% to 18,143.29 points within the first hour of trade, while Tokyo's broader Topix gauge shed 1.71% to trade at 1,466.46 points.
Korea's benchmark Kospi index crept up 0.05% to 1,977.47 points on Friday morning in Seoul, Hong Kong's benchmark Hang Seng index advanced 0.19% to 21,897.12 points, and mainland China's benchmark Shanghai Composite grew 0.25% to 3,093.66 points.
The benchmark Australian S&P/ASX 200 index fell 0.21% to 5,136.00 points in Sydney, as oil stocks and banks saw sizeable losses.
New Zealand's benchmark S&P/NZX 50 index rose 0.08% to 5,698.67 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes up 0.60 pct at 5,177.50 points.
Tokyo's Nikkei average unofficially closes down 1.96 pct at 18,070.21.
Treasury Recap
10-year US treasury yield at 2.183 percent vs US close of 2.217 percent on Thursday.
German bund futures open 106 ticks higher at 154.76.
South Africa's Government bonds firmer, yield on benchmark 2026 issue down 10 basis points to 8.4 pct after US Fed keeps rates unchanged.
New Zealand government bonds rose, sending yields as much as 4.5 ticks lower on the long end of the curve.
Australian government bond futures bounced off one-month lows, with the three-year bond contract up 7 ticks at 98.090. The 10-year contract added 9.5 ticks to 97.1950, leading to a bearish flattening of the curve.
Commodity Recap
Gold dropped from a two-week high on Friday, giving back some of the sharp gains from the last two days, as the Federal Reserve's decision to hold U.S. interest rates steady this week added to uncertainty over the timing of an eventual rate hike. Spot gold fell 0.3 percent to $1,127.80 an ounce at 0346 GMT, after climbing to a two-week high of $1,133.20 in the previous session. Still, the metal was on track to snap a three-week losing streak with a near 2-percent gain.
US crude futures weakened on Friday, as the US dollar regained some strength amid ongoing worries over global oil demand, with crude stockpiles still high. Futures for WTI dropped 0.32% to trade at $46.75 per barrel, while Brent futures were traded 0.08% higher at $49.12 per barrel.
