Market Roundup
- Australia Q2 GDP q/q, 0.8% vs forecast 0.9%, last 0.3%
- Australia Q2 GDP y/y, 1.8% vs forecast 1.9%, last 1.7%
- Sanctions doubts grow as N. Korea warns of 'gift packages' for U.S.
- Japan July cash earnings -0.3% y/y, June +0.4%, real wages -0.8%, -0.1%
- Cash earnings fall for 1st time in 14 months, real wages most since Jun ’15
- LDP Kishida – Japan can’t afford another tax hike delay – Nikkei
- Japanese insurers seek new European bases to ready for Brexit – Nikkei
- Fed policymakers signal caution on inflation, rate hikes
- Fed's Kaplan sticks to view that balance sheet should shrink
- After Trump threats, ministers working at 'warp speed' claim NAFTA progress
- UK proposes to end free movement of labour after Brexit -Guardian
- Brexit-bound Britain's economy continues to lag Europe
- Number of NZ job ads rises to record high in August -ANZ survey
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Retail Sales SA
Key Events Ahead
- (0300 ET/0700 GMT) Swedish central bank holds monetary policy meeting no. 4
- (0355 ET/0755 GMT) ECB board member Daniele Nouy speaks in Frankfurt, Germany
- (0510 ET/0910 GMT) Greece E1 bln for 13 week auction
- (0535 ET/0935 GMT) Germany E3 bln for 5 year auction
FX Beat
DXY: The dollar fell to multi-week lows against some of its major peers as comments by a Federal Reserve official about low U.S. inflation and rising tension over the Korean peninsula weighed on dollar bulls' sentiment. The greenback against a basket of currencies traded flat at 92.29, having touched a low of 91.62 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -85.41 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro consolidated within narrow ranges as markets eagerly await the European Central Bank policy announcement for fresh direction. On Tuesday, the major rose above the 1.1900 handle on the back of downbeat U.S. factory orders data and dovish Fedspeaks. The European currency traded flat at 1.1913, having touched a high of 1.2070 last week, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -0.03 (Neutral) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of U.S. trade balance, Markit service and composite PMI's. Immediate resistance is located at 1.1983 (August 28 High), a break above targets 1.2070. On the downside, support is seen at 1.1817 (38.2% retracement 1.1661 and 1.2070), a break below could drag it near 1.1757 (23.6% retracement 1.1661 and 1.2070).
USD/JPY: The dollar slumped to a fresh 1-week low as the ongoing tensions surrounding the North Korean missile launch combined with downbeat U.S. macro news and Fed official’s cautious tone on the interest rates weighed heavily on the major. The major was trading 0.1 percent down at 108.69, drifting further away from a high of 110.67 hit on Thursday, its highest since Aug. 16. FxWirePro's Hourly Yen Strength Index stood at 71.60 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. trade balance, Markit service and composite PMI's for further momentum. Immediate resistance is located at 108.79 (78.6% retracement of 110.67 and 108.50), a break above targets 109.33 (61.8% retracement of 110.67 and 108.50). On the downside, support is seen at 108.27 (August 29 Low), a break below could take it near 108.00.
GBP/USD: Sterling rose to a near 1-month high above the 1.3000 handle, as the dollar eased across the board on downbeat U.S. macro news and Fed official’s dovish tone. However, the upside in the major remained capped as investors were cautious ahead of a parliamentary debate over the Prime Minister Theresa May's European Union repeal bill. Sterling traded flat at 1.3037, having hit a high of 1.3044 earlier, its highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at 38.60 (Neutral) by 0500 GMT. Investors’ focus on series of U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3059 (August 7 High), a break above could take it near 1.3100. On the downside, support is seen at 1.2987 (61.8% retracement of 1.2773 and 1.3044), a break below targets 1.2908 (10-DMA). Against the euro, the pound was trading flat at 91.36 pence, having hit an over 2-week high of 91.32 pence in the previous session.
AUD/USD: The Australian dollar eased from a 1-month high hit in the prior session after data showed the economy expanded by 0.8 percent in the second quarter when speculators had expected for even stronger reading. However, the prevalent bullish sentiment around commodity space, especially copper, provided some support to the major. The Aussie trades flat at 0.7993, having hit a high of 0.8028 on Tuesday, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at -29.63 (Neutral) by 0500 GMT. Investors will continue to digest the domestic GDP figures, ahead of U.S. economic releases. Immediate support is seen at 0.7949 (10-DMA), a break below targets 0.7914 (21-DMA). On the upside, resistance is located at 0.8028 (Previous Session High), a break above could take it near 0.8050.
NZD/USD: The New Zealand dollar steadied after rising by 1 percent to a near 1-week high in the previous session, despite disappointing auction showing weakening prices for whole milk powder. The Kiwi trades flat at 0.7233, having touched a high of 0.7263 on Tuesday, its highest level since Aug. 30. FxWirePro's Hourly Kiwi Strength Index was at 94.64 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7277 (August 30 High), a break above could take it near 0.3000. On the downside, support is seen at 0.7185 (5-DMA), a break below could drag it till 0.7131 (August 31 Low).
Equities Recap
Asian shares slumped, following an overnight slide on Wall Street, while the dollar fell to a 1-week low against the safe-haven Japanese yen on the back of tensions in the Korean Peninsula and downbeat U.S. economic data.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.7 percent.
Tokyo's Nikkei declined 0.2 percent to 19,352.83 points, Australia's S&P/ASX 200 index fell 0.4 percent to 5,685.20 points and South Korea's KOSPI eased 0.3 percent to 2,320.35 points.
Shanghai composite index rose 0.02 percent to 3,385.13 points, while CSI300 index was trading 0.2 percent down at 3,850.74 points.
Hong Kong’s Hang Seng was trading 0.6 percent lower at 27,563.73 points. Taiwan shares shed 0.6 percent to 10,547.86 points.
Commodities Recap
Crude oil prices steadied after rising to multi-week highs in the previous session, despite crude demand remaining subdued on the back of refinery closures following Hurricane Harvey which hit the U.S. Gulf coast 10 days ago. International benchmark Brent crude was trading up at $53.14 per barrel by 0502 GMT, having hit a high of $53.62 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading flat at $48.55 a barrel, after rising as high as $48.96 the day before, its highest since Aug. 14.
Gold prices consolidated near yearly peaks as geopolitical risks over North Korea remained elevated. Spot gold was little changed at $1,338.19 per ounce by 0507 GMT, after touching its highest level since early September at $1,344.26 in the previous session. U.S. gold futures for December delivery were nearly unchanged at $1,345.00.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.071 percent higher by 0.002 bps, while 5-year yield was 0.002 bps up at 1.649 percent.
The Australian 10-year bond yields slumped to 3-1/2 week low after the country’s second-quarter gross domestic product (GDP) missed market expectations, albeit rising from the previous reading in Q1. The yield on the benchmark 10-year Treasury note slumped 6-1/2 basis points to 2.61 percent, the yield on 15-year note plunged nearly 7 basis points to 2.90 percent and the yield on short-term 2-year traded 4-1/2 basis points lower at 1.84 percent.
The New Zealand bonds climbed sharply at the time of closing as investors have largely shrugged off the recovery in dairy prices at the latest GlobalDairyTrade price auction held overnight, tracking the biggest rally in its U.S. counterpart since March, following a plethora of domestic, global as well as natural disturbances that pushed investors into safe-haven assets. At the time of closing, the yield on the benchmark 10-year Treasury note slumped 7 basis points to 2.81 percent, the yield on 7-year note also plunged 6-1/2 basis points to 2.65 percent and the yield on short-term 2-year ended 5 basis points lower at 1.97 percent.
The Canadian government bond prices were mixed across a flatter yield curve, with the two-year price dipping 1.5 Canadian cents to yield 1.349 percent and the 10-year rising 47 Canadian cents to yield 1.861 percent. The two-year yield climbed 5.5 basis points above its U.S. equivalent, the widest gap for the spread since May 2015.
