Market Roundup
- U.N. Security Council unanimously steps up sanctions on North Korea
- Brexit law passes hurdle in reprieve for British PM May
- ECB officials pave way for gradual policy tightening
- Australia Aug NAB Business conditions, 15 vs July 15
- Australia Aug NAB Business confidence, 5 vs July 12
- New Zealand Labour still wants TPP part, but only if it can ban foreign home ownership
- Floridians return to storm-battered homes as Irma flooding spreads
- U.S. high court justice temporarily preserves Trump refugee ban
- Macron's labour reforms face protests across France
- U.S. inflation weakness persists -NY Fed survey
- Japan Softbank USD 7/10-yr, EUR 8/12-yr, Asahi E1.2 bln dual on tap – IFR
- Japan Inc busy with USD, EUR issues, eyeing higher yields abroad, weak JPY
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Aug CPI, -0.1% m/m, 2.2% y/y eyed; last 0.5%, 2.2%
- (0330 ET/0730 GMT) Sweden Aug CPIF, -0.1% m/m, 2.3% y/y eyed: last 0.6%, 2.4%
- (0430 ET/0830 GMT) Great Britain Aug Core CPI, 0.5% m/m, 2.5% y/y eyed; last -0.1%, 2.4%
- (0430 ET/0830 GMT) Great Britain Aug CPI, 0.5% m/m, 2.8% y/y eyed; last -0.1%, 2.6%
- (0430 ET/0830 GMT) Great Britain Aug RPI, 0.5% m/m, 3.7% y/y eyed; last 0.2%, 3.6%
Key Events Ahead
- (0420 ET/0820 GMT) BOE's Salmon speaks in Barcelona
- (0505 ET/0905 GMT) Italy E6.5 bln for 12 months auction
- (0530 ET/0930 GMT) Netherlands E2-3 bln for 10 year auction
- (0535 ET/0935 GMT) Germany E0.5 bln for 29 year auction
- (0945 ET/1345 GMT) ECB's Constancio speaks in Frankfurt
FX Beat
DXY: The dollar rose against the safe-haven Japanese yen, boosted by improving investor risk sentiment as worries over North Korea and Hurricane Irma receded. The greenback against a basket of currencies traded flat at 91.91, having touched a low of 91.01 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at 39.90 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after tumbling below the 1.2000 handle on European Central Bank board member Benoit Coeure comments. The ECB policymaker stated that improved euro zone growth could offset some of the negative effects of the euro's strength, but a persistent exchange rate shock could weighed down inflation. The European currency traded flat at 1.1954, having touched a high of 1.2092 on Friday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -13.59 (Neutral) by 0400 GMT. Investors’ attention will remain on data from the Eurozone economies, ahead of U.S. JOLTS Job Opening data. Immediate resistance is located at 1.2000, a break above targets 1.2090. On the downside, support is seen at 1.1926 (38.2% retracement 1.1823 and 1.2092), a break below could drag it near 1.1887 (23.6% retracement 1.1823 and 1.2092).
USD/JPY: The dollar rallied to a 5-day high against the Japanese yen as investors risk sentiment improved after North Korea did not conduct another nuclear test over the weekend. Moreover, receding worries over the devastating Hurricane Irma and an overnight strong rally in the U.S. equity markets dented the safe haven demand. The major was trading flat at 109.40, having hit a low of 107.31 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at -118.48 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. JOLTS Job Opening data for further momentum. Immediate resistance is located at 109.89 (23.6% retracement of 110.67 and 107.31), a break above targets 110.50. On the downside, support is seen at 108.72, a break below could take it near 108.12 (Previous Session Low).
GBP/USD: Sterling steadied just below the 1.3200 handle, supported by speculation that the Bank of England may sound more hawkish on interest rates this week. The major traded 0.1 percent up at 1.3171, having hit a high of 1.3224 last week, its highest since August 3. FxWirePro's Hourly Sterling Strength Index stood at 104.56 (Highly Bullish) by 0400 GMT. Investors’ focus will remain on the UK consumer price index and producer price index, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3222 (Previous Session High), a break above could take it near 1.3270. On the downside, support is seen at 1.3072 (78.6% retracement of 1.2773 and 1.3150), a break below targets 1.3017 (10-DMA). Against the euro, the pound was trading 0.1 percent up at 90.71 pence, having hit a 3-1/2 week high of 90.70 pence earlier in the session.
AUD/USD: The Australian dollar eased, extending previous session losses, following the release of weaker Australian NAB Business survey. The report showed business confidence index declined to 5 in August from a reading of 12 registered in July, while business conditions edged up 1-point to 15 for the same period. The Aussie trades 0.1 down at 0.8015, having hit a high of 0.8124 on Friday, it’s strongest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at- 17.46 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7998 (50.0% retracement of 0.7871 and 0.8124), a break below targets 0.7968 (50.0% retracement of 0.7871 and 0.8124). On the upside, resistance is located at 0.8050, a break above could take it near 0.8124 (September 8 High).
NZD/USD: The New Zealand dollar slumped as the prevalent negative trading sentiment around commodity space and an uptick in the U.S. Treasury bond yields weighed heavily on the Kiwi bulls' sentiments. The major trades 0.4 percent down at 0.7222, having touched a high of 0.7337 last week, its highest level since Aug. 21. FxWirePro's Hourly Kiwi Strength Index was at -31.66 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7294 (September 11 High), a break above could take it near 0.7340. On the downside, support is seen at 0.7212 (10-DMA), a break below could drag it till 0.7131 (August 31 Low).
Equities Recap
Asian shares advanced to a 10-year peak, while the dollar steadied against its major peers as North Korean fears eased slightly and the worst-case scenario from Hurricane Irma seem to have been avoided.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.2 percent to hit its highest level since late 2007.
Tokyo's Nikkei rallied 1.2 percent to 19,779.59 points, Australia's S&P/ASX 200 index gained 0.6 percent to 5,748.40 points and South Korea's KOSPI climbed 0.2 percent to 2,362.57 points.
Shanghai composite index rose 0.3 percent to 3,387.46 points, while CSI300 index was trading 0.5 percent up at 3,845.50 points.
Hong Kong’s Hang Seng was trading 0.1 percent higher at 27,982.30 points. Taiwan shares added 0.4 percent to 10,610.35 points.
Commodities Recap
Crude oil prices edged down, reserving most of its previous session gains, as traders weighed up the dampening effect on demand of Hurricane Irma versus refinery restarts in the wake of Hurricane Harvey. International benchmark Brent crude was trading 0.4 percent down at $53.71 per barrel by 0432 GMT, having hit a high of $54.83 on Friday, its strongest since Apr. 19. U.S. West Texas Intermediate was trading 0.2 percent down at $47.98 a barrel, after rising as high as $49.39 last week, its highest since Aug. 14.
Gold prices declined, extending losses for the third straight session, while the equities strengthened and the dollar held gains as investors’ appetite for risk improved. Spot gold was trading 0.2 percent lower to $1,323.68 an ounce by 0439 GMT, having hit its highest since August 2016 at $1,357.54 on Friday. U.S. gold futures for December delivery were down 0.4 percent at $1,330.00 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.128 percent higher by 0.004 bps, while 5-year yield was 0.01 bps up at 1.712 percent.
The Japanese government bonds plunged during early Asian trade on increasing risk appetite of investors after tensions eased, concerning worries over North Korea’s missile attack, which did not happen over the weekend and as the strength of Hurricane Irma weakened as well. The yield on the benchmark 10-year Treasury note jumped nearly 3 basis points to 0.03 percent, the yield on long-term 30-year climbed 2 basis points to 0.83 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at -0.13 percent.
The Australian bonds continued to slump following improving risk sentiments among investors after Wall Street remained sharply higher on Monday in a broad rally led by technology and financial stocks, especially insurers, on relief that Irma weakened to a tropical storm and North Korea did not conduct a nuclear test as was anticipated. The yield on the benchmark 10-year Treasury note jumped 2 basis points to 2.63 percent, the yield on 15-year note also climbed 2 basis points to 2.84 percent and the yield on short-term 2-year traded 1/2 basis point higher at 1.87 percent.
The Canadian government bond prices were lower across the yield curve as demand faded for safe-haven government bonds. The 10-year declined 35 Canadian cents to yield 2.025 percent. The yield reached its highest intraday since July 31 at 2.042 percent.
