Market Roundup
- Japan PM advisor Hamada – Japan vs ccy speculators, MoF hesitant to back tough talk with action but should intervene courageously – Project Syndicate.
- BOJ needs massive move to shock & awe, $2 trillion investor says – Bloomberg.
- Japan July retail sales -0.2% y/y, -0.9% forecast, still weak, June -1.3%.
- Japan July household spending +2.5% m/m, -0.5% y/y, +1.1% and -0.9% forecast.
- Japan July unemployment 3.0%, jobs-applicants ratio 1.37, 3.1% and 1.38 forecast, June 3.1% and 1.37, jobless rate lowest in 21 years.
- Japan July crude imports -8.5% y/y, LNG -5.4%, thermal coal -14.2%
- Beneath Yuan’s quiet, China worries rise - Wall Street Journal.
- Australia July bldg approvals +11.3% m/m, unch forecast, private houses -0.5%.
- New Zealand July dwelling consents -10.5% m/m, -0.5% y/y, June +21.9% m/m.
Economic Data Ahead
- (0300 ET/0700 GMT) Switzerland Aug KoF indicator, 102.0 forecast; last 102.7.
- (0300 ET/0700 GMT) Spain Aug HICP – flash, -0.3% y/y forecast; last -0.7%.
- (0315 ET/0715 GMT) Switzerland Q2 non-farm payrolls; last 4.88 mln.
- (0400 ET/0800 GMT) Italy Jun retail sales, -0.2% m/m forecast; last +0.3% m/m, -1.3% y/y.
- (0430 ET/0830 GMT) Great Britain Jul money supply M4; last +1.1%.
- (0430 ET/0830 GMT) Great Britain Jul mortgage approvals, 61.9k forecast; last 64.77k.
- (0430 ET/0830 GMT) Great Britain Jul mortgage lending, GBP3.2 bln forecast; last GBP3.35 bln.
- (0430 ET/0830 GMT) Great Britain Jul consumer credit, GBP1.7 bln forecast; last GBP1.84 bln.
- (0500 ET/0900 GMT) Eurozone Aug consumer confidence index – final, -8.5 forecast; last -7.9.
- (0500 ET/0900 GMT) Eurozone Aug industrial sentiment index, -2.7 forecast; last -2.4.
- (0500 ET/0900 GMT) Eurozone Aug economic sentiment index, 104.1 forecast; last 104.6.
- (0500 ET/0900 GMT) Eurozone Aug services sentiment index, 11.2 forecast; last 11.1.
- (0500 ET/0900 GMT) Eurozone Aug business climate index, 0.36 forecast; last 0.39.
- (0530 ET/0930 GMT) Belgium Aug CPI; last +0.12% m/m, +2.28% y/y.
- (0800 ET/1200 GMT) Germany Aug HICP – flash, +0.1% m/m, +0.5% y/y forecast; last +0.4%, +0.4%.
- (0900 ET/1300 GMT) United States Jun CaseShiller 20, -0.1% m/m, +5.2% y/y sa forecast; last -0.1%, +5.2%.
- (1000 ET/1400 GMT) United States Aug consumer confidence index, 97.0 forecast; last 97.3.
- (1030 ET/1430 GMT) United States Aug Dallas Fed services revenues, outlook indices; last 10.3, -1.3.
Key Events Ahead
- N/A US SecState Kerry, ComSec Pritzker at New Delhi US-India dialogue.
- (0500 ET/0900 GMT) Italy E2.5-3 and 2.5-3 bln 0.45% and 1.25% 2021 and 2026 BTP auctions.
- (0500 ET/0900 GMT) Italy E1.25-1.75 bln 0.26% 2023 CCTeu auction.
- (0530 ET/0930 GMT) ECB zero% 7-day refi, E44 bln allotment forecast, E42.8 bln maturing.
- (0540 ET/0940 GMT) Belgium 3 and 6-month treasury certificate auctions.
- (0630 ET/1030 GMT) FOMC ViceChair Fischer Bloomberg interview.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.2 percent higher at 95.77, hovering towards previous session's high of 95.834, it’s highest since Aug. 12.
EUR/USD: The euro continues to decline as investors eagerly wait to see if U.S. employment data due later this week would support Federal Reserve Chair Janet Yellen's recent hawkish comments. Data released overnight showed that U.S. consumer spending increased for a fourth consecutive month, suggesting that a pickup in growth could lead the Fed to raise interest rates later this year. The European currency trades 0.1 percent lower at 1.1174, hovering towards a 2-week low of 1.1158 struck in the previous session. Investor’s attention will remain on Eurozone sentiment indices, ahead of U.S. consumer confidence figures for further momentum on the major. Immediate resistance is located at 1.1200, break above could take it till 1.1219 (5-DMA) / 1.1250. On the lower side, support is seen at 1.1153, break below targets 1.1100.
USD/JPY: The greenback re-gained the 102.00 handle, as upbeat U.S. consumer spending reinforced Fed officials' hawkish message. The major came under renewed selling pressure after data released overnight showed that Japanese household spending declined less than expected in July, while unemployment rate hit a 2-decade low, underpinning the bid tone around the yen. However, with the economy hardly growing and inflation slipping further away from the Bank of Japan's 2 percent target, investors anticipate the bank to ease further next month. The dollar trades 0.2 percent up at 102.11, hovering towards a near 3-week high of 102.39 hit in the previous session. Markets will continue to track broad market sentiment ahead of U.S. economic data. Immediate resistance is located at 102.50, break above targets 103.00. On the downside, support is seen at 101.70, break below could take it lower 101.50.
GBP/USD: Sterling declined, extended losses for the fourth consecutive session, as the dollar continued to strengthen across the broad. The major touched a 1-week low of 1.3059, in the previous session, as increasing expectations of U.S. interest rate hike underpinned the bid tone in the greenback. Sterling trades 0.1 percent lower at 1.3085, pulling further away from a peak of 1.3278 hit on Aug 26, following release of upbeat gross domestic product and business investment figures. Investors will closely watch Britain's consumer credit and mortgage approval data for further cues on the pair. Immediate resistance is located at 1.3147 (5-DMA), break above could take it near 1.3200. On the downside, support is seen at 1.3059 (Previous Session Low), break below targets 1.3022/1.3000. Against the euro, the pound trades flat at 85.37 pence.
AUD/USD: The Australian dollar extended gains, pulling further away from a near 4-week low of 0.7525 struck in the previous session. The major strengthened after data released earlier showed Australia's building permits rising 11.3 percent in the month of July after posting a decline of 4.7 in June. On an annualized basis, it rose 3.1 percent from prior -5.9 percent. The Aussie trades 0.1 percent up at 0.7573, attempting to re-gain the 0.7600 handle. Investors will continue to digest upbeat domestic data, ahead of set of U.S. macro fundamentals and RBA Assit. Gov Debelle's speech due tomorrow in early Asian session. Immediate support is seen at 0.7550, break below could drag it near 0.7525/ 0.7500. On the upside, resistance is located at 0.7585 (5-DMA), break above targets 0.7600.
NZD/USD: The New Zealand dollar recovered after hitting a 2-week low in the previous session, however, the recovery was fragile as downbeat building permits data weakened sentiments around the Kiwi. New Zealand's building consents declined 10.5 percent in July, after rising 21.9 percent in the previous month, which pointed to still strong construction activity. The major trades near 0.7250, having touched an early high of 0.7264. The pair will be driven by overall market sentiment ahead of series of U.S. economic data and NZ's Activity Outlook index due tomorrow. Immediate resistance is located at 0.7268 (10-DMA), break above targets 0.7300. On the downside, support is seen at 0.7210, break below could drag it lower 0.7200.
Equities Recap
Asian shares gained as investors remained uncertain that the Federal Reserve really would hike interest rates as soon as September.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, recouping around half of previous session losses.
Tokyo's Nikkei declined 0.07 pct at 16,725.36, Australia's S&P/ASX 200 index rose 0.31 pct at 5,485.90 points and South Korea's KOSPI gained 0.4 percent at 2,040.90 points.
Shanghai composite index added 0.2 percent at 3,075.73 points, while CSI300 index was trading 0.2 percent up at 3,314.83 points.
Hong Kong’s Hang Seng was trading 0.8 percent higher at 23,015.50 points. Taiwan shares closed flat at 9,110.56 points.
Commodities Recap
Crude oil edged up, easing some of its previous session losses, however, markets remain uncertain that the upcoming producers meeting would be able to agree on an output freeze. International Brent crude oil was trading 0.3 percent up at $49.34 per barrel at 0404 GMT, while U.S. West Texas Intermediate crude was at $47.13 a barrel, up by 0.4 percent.
Gold steadied after declining to a near 5-week low as the dollar's rally lost some steam late Monday, while investors await U.S. nonfarm payroll data due later this week for the timing of any rate hike this year. Spot gold was little changed at $1,323.40 per ounce at 0411 GMT, retreating from a low of $1,314.70, last seen since July 26. U.S. gold futures were flat at $1,327.30.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5851 percent up by 0.019 bps, while 5-year was at 1.1960 percent higher by 0.019 bps.
The Australian government bonds gained on upswing in investor demand, following a market selloff on Friday after the Federal Reserve Chair Janet Yellen spoke at the annual Jackson Hole Symposium, hinting at rising possibilities of an interest rate hike. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 5 basis points to 1.890 percent and the yield on short-term 2-year dipped 2 basis points to 1.451 percent.
The New Zealand government bonds closed lower as investors moved away from safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond rose 2-1/2 basis points to 2.265 percent and the yield on 7-year note ended 2-1/2 basis points higher at 1.970 percent and the yield on short-term 2-year note also bounced 3 basis points to 1.840 percent.
Canadian government bond prices were higher in sympathy with U.S. Treasuries. The 2-year bond rose 3.5 Canadian cents to yield 0.589 percent and the benchmark 10-year climbed 60 Canadian cents to yield 1.029 percent. The curve flattened, as the spread between the 2-year and 10-year yields narrowed by 4.5 basis points to 44 basis points, its narrowest since January 2008, indicating outperformance for longer-dated bonds.
