Market Roundup
- Australian Treasurer Scott Morrison to become new prime minister
- Moody's says Australia ratings not affected by leadership change
- Japan's inflation stalls, cuts in smartphone fees may threaten BOJ goal
- Fed policymakers see rate hikes, blurring dove-hawk divide
- U.S.-China trade talks end with no breakthrough as tariffs kick in
- U.S. fund investors hike China exposure despite trade strife
- U.S.-Mexico NAFTA talks seen running into next week, autos unresolved
- Sessions hits back at Trump over criticism
- Canada PM says in diplomatic talks with Saudi Arabia
- Foreign CB US debt holdings -$2.470 bln to $3.429 tln Aug 22 week
- Treasuries -$529 mln to $3.059 tln, agencies -$938 mln to $299.655 bln
- Investors pour $3.4 bln into U.S. taxable bond funds in week -Lipper
- U.S. muni bond funds post $378.4 mln in inflows-Lipper
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jul UK Finance Mortgage Apps, 40.541k prev
Key Events Ahead
- (0645 ET/1045 GMT) German Finance Minister Olaf Scholz speaks at Hamburg, Germany
- (1000 ET/1400 GMT) Fed's Powell speaks at Jackson Hole, Wyoming
FX Beat
DXY: The dollar index eased amid concerns that the two days of talks between Washington and Beijing ended without major breakthrough, while the markets braced for a speech by Federal Reserve Chairman Jerome Powell for further clues on the direction of U.S. monetary policy. The greenback against a basket of currencies trades 0.2 percent down at 95.46, having touched a low of 94.93 on Wednesday, its lowest since August 2. FxWirePro's Hourly Dollar Strength Index stood at -11.74 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after easing from a near-2week peak in the previous session following Italian deputy Prime Minister Luigi Di Maio's threat that his party would vote to suspend funding to the European Union next year unless other EU countries agreed to take in migrants. The European currency traded 0.2 percent up at 1.1565, having touched a high of 1.1622 on Wednesday, its highest since August 8. FxWirePro's Hourly Euro Strength Index stood at 127.62 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on the U.S durable goods orders and Fed Chair Powell's speech, amid a lack of economic data from the EZ docket. Immediate resistance is located at 1.1628 (August 8 High), a break above targets 1.1667 (August 2 High). On the downside, support is seen at 1.1500, a break below could drag it till 1.1451 (10-DMA).
USD/JPY: The dollar rallied to a near 3-week peak after Kansas City Fed President Esther George stated that the Federal Reserve should raise interest rates further this year and probably next year as well, despite Trump's criticizing tighter policy. The major was trading 0.1 percent up at 110.40, having hit a high of 111.48 earlier, its highest since August 6. FxWirePro's Hourly Yen Strength Index stood at -79.06 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S durable goods orders and Fed Chair Powell's speech. Immediate resistance is located at 111.52 (August 6 High), a break above targets 111.73 (August 2 High). On the downside, support is seen at 111.02 (21-DMA), a break below could take it lower 110.53 (5-DMA).
GBP/USD: Sterling attempted a minor recovery after tumbling from a 2-week peak in the previous session on concerns that Britain will leave the European Union without having agreed on new trade arrangements. On Thursday, the UK government stepped up its plans for a no-deal Brexit, indicating that British companies trading with the EU will face possible delays at the border if the government fails to negotiate an exit deal. The major traded 0.1 percent up at 1.2826, having hit a high of 1.2936 on Wednesday; it’s highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at -7.58 (Neutral) 0500 GMT. Investors’ attention will remain on the UK BBA Mortgage Approvals, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2917 (50.0% retracement of 1.3173 and 1.2661), a break above could take it near 1.3006 (August 6 High). On the downside, support is seen at 1.2781 (10-DMA), a break below targets 1.2729 (August 20 Low). Against the euro, the pound was trading flat at 90.21 pence, having hit a low of 90.27 earlier, it’s lowest since August 9.
AUD/USD: The Australian dollar rebounded from a 1-week low after Scott Morrison won the leadership vote to become the new Australian Prime Minister, ending a political crisis that weighed on investor sentiment this week. The Aussie trades 0.5 percent up at 0.7278, having hit a low of 0.7238 earlier; it’s lowest since August 16. FxWirePro's Hourly Aussie Strength Index stood at -25.76 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7202 (August 15 Low), a break below targets 0.7180. On the upside, resistance is located at 0.7323 (5-DMA), a break above could take it near 0.7381 (August 21 High).
NZD/USD: The New Zealand dollar gained after data showed domestic unadjusted trade balance came in narrower than expected. The economy posted a monthly trade deficit of NZ$143.00 million in July, while the annual deficit was NZ$4.44 billion, with exports and imports totalled at NZ$5.35 billion and NZ$5.49 billion, respectively. The Kiwi trades 0.2 percent up at 0.6648, having touched a high of 0.6720 on Wednesday, its highest level since 9 August. FxWirePro's Hourly Kiwi Strength Index was at 17.49 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6690 (21-DMA), a break above could take it near 0.6720 (August 22 High). On the downside, support is seen at 0.6611 (August 9 Low), a break below could drag it below 0.6579 (August 17 Low).
Equities Recap
Asian shares slumped after U.S.-China trade talks ended without progress, while the greenback edged down ahead of a speech by Federal Reserve Chairman Jerome Powell at an annual meeting of central bankers in Jackson Hole, Wyoming.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.6 percent.
Tokyo's Nikkei surged 0.9 percent to 22,601.77 points, Australia's S&P/ASX 200 index rose 0.05 percent to 6,247.30 points, and South Korea's KOSPI gained 0.4 percent to 2,291.98 points.
Shanghai composite index rose 0.4 percent to 2,734.93 points, while CSI300 index traded 0.4 percent up at 3,332.75 points.
Hong Kong’s Hang Seng traded 0.3 percent lower at 27,708.43 points. Taiwan shares shed 0.5 percent to 10,809.35 points.
Commodities Recap
Crude oil prices rallied to multi-week peaks as U.S. sanctions on Iran are expected to cut significant volumes of crude from the market. International benchmark Brent crude was trading 0.6 percent up at $75.15 per barrel by 0512 GMT, having hit a high of $75.18 earlier, its highest since July 31. U.S. West Texas Intermediate was trading 0.7 percent higher at $68.33 a barrel, after rising as high as $68.39, its highest since August 8.
Gold prices surged after falling nearly 1 percent in the previous session on the back expectations of higher U.S. interest rates and a robust dollar amid the Sino-U.S. trade war. Spot gold was 0.3 percent up at $1,188.52 an ounce at 0516 GMT, having hit a high of $1201.46 on Wednesday, its highest since August 14. U.S. gold futures were down 0.1 percent at $1,192.60 an ounce.
Treasuries Recap
The Japanese government bonds traded nearly flat during late Asian session after the country’s national consumer price inflation (CPI) for the month of July disappointed market estimates, although remaining unchanged from that in June. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1/2 basis point to 0.099 percent, the yield on the long-term 30-year note hovered around 0.843 percent and the yield on short-term 2-year too traded steady at -0.113 percent.
The Australian bonds slumped on the last trading day of the week as investors cashed in profits after a short-lived rally following political uncertainties. In the context of recent political developments, Scott Morrison has won party showdown and will replace Malcolm Turnbull to be the next Prime Minister. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 2 basis points to 2.547 percent, the yield on the long-term 30-year bond also jumped 2 basis points to 3.064 percent and the yield on short-term 2-year climbed 2-1/2 basis points to 2.007 percent.
The Canadian government bond prices were lower across a flatter yield curve, with the two-year down 2.5 Canadian cents to yield 2.125 percent and the benchmark 10-year falling 1 Canadian cent to yield 2.259 percent. The gap between the two-year and 10-year yields shrank by 1.4 basis points to a spread of 13.4 basis points, its narrowest since October 2007.
