Market Roundup
- China says trade war to 'certainly' hurt US exporters, create opportunities to others
- U.S.' Mattis looks for 'way ahead' after China scraps military talks
- China to set up local govt debt monitoring system - China Daily
- Trump says expects announcement of new summit with N. Korea's Kim 'pretty soon'
- Trump's Supreme Court nominee Kavanaugh rejects 'false accusations'
- After chaotic day, Rosenstein stays in job but will meet with Trump
- Some BOJ policymakers urged greater focus on dangers of prolonged easing - July minutes
- U.S., Japan push back trade talks to Tuesday
- Australian watchdog slams banks for delays in reporting breaches
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0440 ET/0840 GMT) Bank of England's Gertjan Vlieghe gives speech at Imperial College Business School, London
- (0500 ET/0900 GMT) Norway Central Bank Governor Oystein Olsen gives speech at the Centre for Monetary Economics/BI Norwegian Business School in Oslo
- (0645 ET/1045 GMT) Participation of ECB's Peter Praet in lunch discussion "Where next for the euro" at OMFIF in London
- (0800 ET/1200 GMT) Opening remarks by ECB's Benoit Coeure at annual meeting of ECB's Money Market Contact Group in Frankfurt
- (0830 ET/1230 GMT) Federal Reserve Bank of Philadelphia issues Nonmanufacturing Business Outlook Survey for September
- (1040 ET/1440 GMT) ECB's Benoit Coeure chairing session II at 3rd ECB Annual Research Conference in Frankfurt
FX Beat
DXY: The dollar index surged to a 5-day peak as the Federal Reserve begins its two-day policy meeting later on Tuesday at which it is expected to raise interest rates for the eight time since late 2015 and provide clues on the policy outlook for 2019. The greenback against a basket of currencies trades 0.05 percent up at 94.30, having touched a low of 93.81 on Friday, its lowest since July 9. FxWirePro's Hourly Dollar Strength Index stood at 70.26 (Bullish) by 0500 GMT.
EUR/USD: The euro eased after rising to a 3-1/2 month peak in the previous session on the back of European Central Bank chief Mario Draghi's comments. The ECB chief expressed confidence in eurozone inflation and wages growth and reaffirmed the central bank's pledge to keep rates at their current through the summer of next year. The European currency traded 0.05 percent down at 1.1743 having touched a high of 1.1815 on Monday, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 108.43 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on ECB Praet and Coeure's speech, ahead of the U.S. housing price index, and Richmond Fed Manufacturing Index. Immediate resistance is located at 1.1820 (June 11 High), a break above targets 1.1852 (June 14 High). On the downside, support is seen at 1.1721 (5-DMA), a break below could drag it till 1.1662 (August 28 Low).
USD/JPY: The dollar surged to a fresh 2-month peak near the 113.00 handle, as investors looked to policy clues from the U.S. Federal Reserve, which is widely expected to hike rates for the eight time since late 2015. The major was trading 0.1 percent up at 112.88, having hit a high of 112.97, its highest since July 19. FxWirePro's Hourly Yen Strength Index stood at -64.48 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. housing price index, and Richmond Fed Manufacturing Index. Immediate resistance is located at 113.00, a break above targets 113.30 (Jan 5 High). On the downside, support is seen at 112.42 (September 21 Low), a break below could take it lower 112.04 (September 20 Low).
GBP/USD: Sterling declined, giving back some of its previous session gains as Prime Minister Theresa May's leadership came under increasing pressure ahead of her Conservatives' annual conference this week. On Monday, the pair rose above $1.3100 after Britain's Brexit minister Dominic Raab said he was confident Britain would eventually clinch a deal with the European Union. The major traded 0.1 percent down at 1.3105, having hit a low of 1.3055 on Friday; it’s lowest since September 13. FxWirePro's Hourly Sterling Strength Index stood at -61.29 (Bearish) 0500 GMT. Investors’ attention will remain on BoE MPM member Vlieghe's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3150 (5-DMA), a break above could take it near 1.3215 (September 19 High). On the downside, support is seen at 1.3055 (September 21 Low), a break below targets 1.2896 (September 10 Low). Against the euro, the pound was trading 0.1 percent down at 89.62 pence, having hit a low of 89.95 on Friday, it’s lowest since September 7.
AUD/USD: The Australian dollar slumped, extending losses for the third straight session, as the intensifying trade war between the United States and China stoked uncertainty about the outlook for global growth and broader monetary policy for some developed economies. The Aussie trades 0.1 percent down at 0.7247, having hit a high of 0.7303 on Friday; it’s highest since August 30. FxWirePro's Hourly Aussie Strength Index stood at -89.84 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7213 (September 19 Low), a break below targets 0.7175 (August 31 Low). On the upside, resistance is located at 0.7292 (September 30 High), a break above could take it near 0.7315 (August 30 High).
NZD/USD: The New Zealand dollar turned positive after falling to a 5-day low earlier in the day as investors expect the Reserve Bank of New Zealand to hold rates steady on Thursday and reiterate its dovish stance on policy, amid stubbornly low inflation and the risks of an economic slowdown. The Kiwi trades 0.05 percent up at 0.6646, having touched a high of 0.6699 on Friday, its highest level since August 30. FxWirePro's Hourly Kiwi Strength Index was at 58.40 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6727 (August 28 High), a break above could take it near 0.6763 (August 8 High). On the downside, support is seen at 0.6630 (August 23 Low), a break below could drag it below 0.6593 (September 3 Low).
Equities Recap
Asian shares declined as a fresh round of U.S.-China tariffs and a rise in oil prices to near 4-year highs added to concerns about risks to global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent.
Tokyo's Nikkei surged 0.3 percent to 23,940.26 points, Australia's S&P/ASX 200 index declined 0.05 percent to 6,185.90 points.
Shanghai composite index fell 0.6 percent to 2,781.10 points, while CSI300 index traded 0.9 percent down at 3,380.04 points. Taiwan shares added 0.05 percent to 10,978.85 points.
Commodities Recap
Crude oil prices consolidated near 4-year highs hit in the previous session, as looming U.S. sanctions against Iran and unwillingness by the Organization of the Petroleum Exporting Countries (OPEC) to increase output supported the market sentiment. International benchmark Brent crude was trading 0.05 percent up at $81.41 per barrel by 0525 GMT, having hit a high of $81.45 on Monday, its highest since November 2014. U.S. West Texas Intermediate was trading flat at $72.25 a barrel, after rising as high as $72.71 on Monday, its highest since July 11.
Gold prices held within narrow ranges, as investors turned cautious ahead of the 2-day U.S. Federal Reserve meeting beginning later in the day and simmering U.S.-China trade tensions. Spot gold was trading flat at $1,199.17 by 0547 GMT, having hit a low of $1191.71 on Friday, its lowest since September 11. U.S. gold futures were down 0.1 percent at $1,203.10 an ounce.
Treasuries Recap
The Australia government bonds slumped across the curve during Asian session following heavy sell-off in the U.S. Treasuries ahead of the FOMC policy decision, where an interest rate hike is fully priced in. The yield on Australia’s benchmark 10-year note rose 4-1/2 basis points to 2.755 percent (highest since June 14), the yield on the long-term 30-year bond traded 4 basis points higher at 3.241 percent and the yield on short-term 2-year surged 3 basis points to 2.127 percent.
The Canadian government bond prices were lower across the yield curve, with the 10-year falling 15 Canadian cents to yield 2.448 percent. The 10-year yield touched 2.459 percent, the highest since May 22.
