Market Roundup
- New Zealand has NZ$759 Million Current Account Deficit
- Gold prices steady amid cautious sentiment
- Dollar holds gains as oil shock eases
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Industrial Orders MM SA
- (0400 ET/0800 GMT) Italy Industrial Orders YY NSA
- (0400 ET/0800 GMT) Italy Industrial Sales MM SA
- (0400 ET/0800 GMT) Italy Industrial Sales YY WDA
- (0430 ET/0830 GMT) United Kingdom consumer price index
- (0430 ET/0830 GMT) United Kingdom producer price index
- (0500 ET/0900 GMT) EZ consumer price index
- (0500 ET/0900 GMT) EZ construction output
FX Beat
DXY: The dollar index gained, reversing some of its previous session losses ahead of the U.S. Federal Open Market Committee’s (FOMC) monetary policy decision where it is expected to cut the Fed rate by 0.25 percent with likely hints for further rate reductions in late-2019 and 2020 as well. The greenback against a basket of currencies traded 0.1 percent up at 98.31, having touched a low of 97.86 on Friday, its lowest since August 26.
EUR/USD: The euro eased after rising in the previous session on European Central Bank policymaker Francois Villeroy de Galhau's comments, citing that eurozone businesses would benefit if efforts were made to encourage the international use of the shared currency. The European currency traded 0.1 percent down at 1.1075, having touched a high of 1.1084 on Thursday, its highest since August 29. Investors’ attention will remain on a series of data from the Eurozone economies and EZ consumer price index and construction output, ahead of the U.S. housing starts, building permits and Fed interest rate decision. Immediate resistance is located at 1.1109 (September 13 High), a break above targets 1.1151 (July 26 High). On the downside, support is seen at 1.1040 (21-DMA), a break below could drag it below 1.0963 (August 30 High).
USD/JPY: The dollar held firm near a 1-1/2 month peak hit in the previous session, ahead of the Federal Reserve's policy meeting, where it is widely expected to cut its benchmark rate for the second time this year by 25 basis points to 1.75%-2.00% to counter risks posed by the U.S.-China trade war. Investors will also eye the Bank of Japan’s monetary policy meeting, scheduled to be held on September 19 for further direction on the pair. The major was trading 0.1 percent up at 108.27, having hit a high of 108.37 on Tuesday, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing starts, building permits and Fed interest rate decision. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.99 (July 10 High). On the downside, support is seen at 107.51 (10-DMA), a break below could take it lower at 106.78 (21-DMA).
GBP/USD: Sterling steadied near a 6-week high recorded in the prior session as investors cut their short positions, even as Prime Minister Boris Johnson stuck to his pledge to take Britain out of the European Union by Oct. 31. The major traded flat at 1.2494, having hit a high of 1.2526 on Thursday, it’s highest since July 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2522 (July 24 High), a break above could take it near 1.2558 (July 18 High). On the downside, support is seen at 1.2415 (5-DMA), a break below targets 1.2363 (10-DMA). Against the euro, the pound was trading flat at 88.58 pence, having hit a high of 88.38 on Tuesday, it’s highest since June 6.
AUD/USD: The Australian dollar declined, halting an 11-day rally after a forward-looking indicator showed the Australian economy will continue to operate at a below-trend growth pace into late 2019 and early 2020. The Westpac Leading Index fell to -0.30 percent in August from July's revised print of 0.2 percent. The Aussie trades traded 0.2 percent down at 0.6848, having hit a low of 0.6830 on Tuesday, it’s lowest since September 6. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6820, a break below targets 0.6807 (September 6 Low). On the upside, resistance is located at 0.6916 (July 31 High), a break above could take it near 0.6955 (July 26 High).
NZD/USD: The New Zealand dollar slumped, hovering towards a 2-week trough touched in the previous session, after data showed the economy had a current account deficit of NZ$759 million in the second quarter of 2019, following the NZ$675 million surplus in the three months prior. The Kiwi trades 0.3 percent down at 0.6337, having touched a low of 0.6321 earlier, its lowest level since September 3. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6359 (10-DMA), a break above could take it near 0.6429 (August 20 High). On the downside, support is seen at 0.6304 (August 29 Low), a break below could drag it below 0.6269 (Sept. 3 Low).
Equities Recap
Asian shares rose as investors look to the statement and economic projections from Fed policymakers, given signs of deep disagreements among them.
MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.1 percent.
Tokyo's Nikkei eased 0.2 percent to 21,960.71 points, Australia's S&P/ASX 200 index declined 0.2 percent to 6,681.60 points and South Korea's KOSPI surged 0.5 percent to 2,071.76 points.
Shanghai composite index rose 0.3 percent to 2,985.82 points, while CSI 300 index traded 0.4 percent up at 3,907.59 points.
Hong Kong’s Hang Seng traded 0.1 percent lower at 26,769.85 points. Taiwan shares added 0.5 percent to 10,929.45 points.
Commodities Recap
Crude oil prices rose as Saudi Arabia said full oil production would be restored by month’s end. International benchmark Brent crude was trading 0.9 percent higher at $64.54 per barrel by 0519 GMT, having hit a high of $69.64 on Monday, its highest since May 30. U.S. West Texas Intermediate was trading 0.5 percent up at $59.05 a barrel, after rising as high as $63.33 on Monday, its highest since May 21.
Gold prices rose, extending gains for the third straight session as investors maintained a cautious stance ahead of the conclusion of U.S. Federal Reserve’s two-day meeting, where policymakers are expected to cut interest rates. Spot gold was trading 0.1 percent up at $1,502.54 per ounce by 0522 GMT, having touched a low of $1,483.22 last week, its lowest since August 13. U.S. gold futures were down 0.3 percent at $1,508.8 per ounce.
Treasuries Recap
The Japanese government bonds gained during close of Asian trading session Wednesday despite a better-than-expected improvement in the country’s trade balance for the month of August, albeit still in deficit. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 30 basis points to -0.182 percent, the yield on the long-term 30-year suffered 2 basis points to 0.344 percent and the yield on short-term 2-year also slumped 24 basis points to -0.264 percent.
The Australian government bonds remained mixed during Asian trading session ahead of the country’s employment report for the month of August, scheduled to be released on September 19 amid ongoing geopolitical tensions in the Middle East and upcoming Fed’s monetary policy meeting later today. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.136 percent, the yield on the long-term 30-year bond edged barely 1 basis point higher to 1.723 percent and the yield on short-term 2-year slipped 1 basis point to 0.871 percent.
