Market Roundup
- Japan Aug mfg PMI rev 52.2, flash 52.8, July final 52.1, orders/exports up
- Japan Q2 CAPEX +1.5% y/y, excl software -2.8% q/q however, downward GDP rev?
- Japan Q2 recurring corporate profits +22.6% y/y and 6.7% rise in Q2 sales
- BoJ cuts 3-5 year JGB buying to slow mid-term yield drop – MNI
- Japan, US weigh benefits of seeking oil embargo on Pyongyang - Nikkei
- Pyongyang turns yen into a very strange safe haven – Reuters BreakingViews
- China Aug Caixin Mfg final PMI, 51.6 vs forecast 50.9, last 51.1
- China's c.bank bans longer-tenor NCDs to close bank funding loophole
- New Zealand Q2 terms of trade rise 1.5 pct, undershoot expectations
- New Zealand heads for topsy-turvy election, poll shows, with housing, immigration in focus
- Australia home prices cool in August as Sydney stalls-CoreLogic
- U.S. stock ETFs attract most cash since June -Lipper
- Foreign CB US debt holdings +$3.3 bln to $3.3 tln August 30
- Treasuries +$1.1 bln to $3.0 tln, agencies +$2.19 bln to $264 bln
- U.S. bombers drill over Korean peninsula after latest N. Korea launch
Economic Data Ahead
- (0230 ET/0630 GMT) Sweden Aug PMI Manufacturing m/m, 60.0 eyed, last 60.4
- (0300 ET/0700 GMT) Norway Aug Manufacturing PMI SA, 56.9 eyed, last 57.3
- (0315 ET/0715 GMT) Spain Manufacturing PMI, 54.4 eyed, last 54.0
- (0330 ET/0730 GMT) Switzerland Manufacturing PMI, 60.5 eyed, last 60.9
- (0345 ET/0745 GMT) Italy Aug Markit/ADACI Mfg PMI, 55.3 eyed, last 55.1
- (0350 ET/0750 GMT) France Aug Markit Mfg PMI, 55.8 eyed, last 55.8
- (0355 ET/0755 GMT) Germany Aug Markit/BME Mfg PMI, 59.4 eyed, last 59.4
- (0400 ET/0800 GMT) Italy Q2 GDP final, 0.4% q/q, 1.5% y/y; last 0.4%, 1.5%
- (0400 ET/0800 GMT) EU Aug Markit Mfg final PMI, 57.4 eyed, last 57.4
- (0430 ET/0830 GMT) Great Britain Aug Markit/CIPS Mfg flash, 55.0 eyed, last 55.1
Key Events Ahead
- N/A Number of centers in Asia closed for the Muslim Haj- Singapore, Indonesia, Malaysia
- (0515 ET/0915 GMT) ECB's Constancio speaks in Cernobbio, Italy
- (0605 ET/1005 GMT) Great Britain Stg2.0/2.0/2.0 for 1/3/6 month auction
FX Beat
DXY: The eased versus its major peers amid rising global tension that North Korea could conduct more missile tests. The greenback against a basket of currencies traded 0.1 percent down at 92.51, having touched a low of 91.62 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -66.87 (bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains on expectations that the ECB would begin exiting its massive quantitative easing policy sooner rather than later. The European currency traded 0.2 percent up at 1.1909, having touched a high of 1.2070 last week, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -27.12 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone Markit Service and Composite PMI's, ahead of U.S. factory orders and speeches from Fed’s Brainard, Kashkari and Kaplan. 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 tumbled to a 1-week low on rising geopolitical tensions after North Korea conducted a powerful nuclear test on Sunday. The major was trading 0.3 percent down at 109.34, 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 98.02 (Slightly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. factory orders and speeches from Fed’s Brainard, Kashkari and Kaplan for further momentum. Immediate resistance is located at 110.43 (August 30 High), a break above targets 111.33 (July 28 High). On the downside, support is seen at 109.20 (Session Low), a break below could take it near 109.02 (August 28 Low).
GBP/USD: Sterling continued to consolidate within thinned ranges, as domestic political uncertainty and the downbeat UK construction sector data kept the battered pound under pressure. The major traded flat at 1.2933, having hit a high of 1.2995 on Friday, its highest since August 14. FxWirePro's Hourly Sterling Strength Index stood at -60.50 (Bearish) by 0400 GMT. Investors’ focus will remain on UK Markit Service PMI, ahead of series of U.S. fundamental drivers. Immediate resistance is located at 1.2978 (August 29 High), a break above could take it near 1.3053 (August 8 High). On the downside, support is seen at 1.2916 (21-DMA), a break below targets 1.2887 (10-DMA). Against the euro, the pound was trading 0.2 percent down at 92.06 pence, having hit a multi-month low of 93.06 pence last week.
AUD/USD: The Australian dollar rallied after Reserve Bank of Australia left its cash rate at 1.5 percent, a widely expected decision given policy makers have signalled a steady outlook for some time to come. The Aussie trades 0.3 percent up at 0.7967, having hit a high of 0.7995 on Wednesday, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at 43.59 (Neutral) by 0500 GMT. Investors will continue to digest RBA policy decision, ahead of U.S. economic releases. Immediate support is seen at 0.7910 (21-DMA), a break below targets 0.7866 (August 24 Low). On the upside, resistance is located at 0.7985 (Session High), a break above could take it above 0.8000.
NZD/USD: The New Zealand dollar rose, extending previous session gains following the release of a much stronger-than expected China’s Caixin services PMI report. China’s Caixin Services PMI came in at 52.7 for the month of August versus a previous reading of 51.5 and expectations of 51.8. The Kiwi trades 0.1 percent up at 0.7168, having touched a low of 0.7131 on Thursday, its lowest level since Jun. 6. FxWirePro's Hourly Kiwi Strength Index was at -88.69 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7188 (5-DMA), a break above could take it near 0.7263 (August 28 High). On the downside, support is seen at 0.7126 (August 6 Low), a break below could drag it till 0.7100.
Equities Recap
Asian shares traded within a narrow range, while the dollar fell to a 1-week low against the safe-haven Japanese yen as growing worries over North Korea continued to hurt market sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent.
Tokyo's Nikkei declined 0.6 percent to 19,388.23 points, Australia's S&P/ASX 200 index fell 0.02 percent to 5,701.10 points and South Korea's KOSPI eased 0.3 percent to 2,322.51 points.
Shanghai composite index rose 0.2 percent to 3,387.60 points, while CSI300 index was trading 0.4 percent up at 3,859.57 points.
Hong Kong’s Hang Seng was trading 0.2 percent higher at 27,806.89 points. Taiwan shares added 0.2 percent to 10,593.95 points.
Commodities Recap
Crude oil prices continued to trade in a volatile market as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey boosted demand for crude. International benchmark Brent crude was trading 0.1 percent down at $52.12 per barrel by 0429 GMT, having hit a high of $52.91 on Friday, its strongest since Aug. 18. U.S. West Texas Intermediate was trading up at $47.39 a barrel, after falling as low as $45.57 on Thursday, its lowest since Jul. 24.
Gold prices edged up, hovering towards their highest in nearly a year as the demand for safe-haven assets continued to support the precious metal in the wake of North Korea's nuclear test. Spot gold was 0.2 percent up at $1,336.54 per ounce by 0435 GMT, after touching its strongest since late September at $1,339.76 in the previous session. U.S. gold futures for December delivery were up 0.6 percent at $1,338.80.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.136 percent lower by 0.021 bps, while 5-year yield was 0.026 bps down at 1.707 percent.
The Japanese government bonds remained range-bound as investors wait to watch the country’s super-long 30-year auction scheduled to be held on September 7 by 03:45GMT. The yield on the benchmark 10-year Treasury note remained flat at 0.003 percent, the yield on long-term 30-year steady around 0.82 percent and the yield on short-term 2-year hovered around -0.15 percent.
The Australian bonds slumped after the Reserve Bank of Australia (RBA) remained on hold at its monetary policy decision, revealed today, where it remained on hold, citing recovery in global economic growth. The yield on the benchmark 10-year Treasury note jumped nearly 2-1/2 basis points to 2.68 percent, the yield on the 15-year note climbed 2 basis points to 2.97 percent and the yield on short-term 2-year traded 3 basis points higher at 1.89 percent.
The New Zealand bonds slumped as investors wait to watch the country’s GlobalDairyTrade price auction, scheduled to be held later today amid a silent trading week that will witness little data of major economic significance. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.87 percent, the yield on 7-year note also climbed 1-1/2 basis points to 2.87 percent and the yield on short-term 2-year traded 1 basis point higher at 2.03 percent.
