Market Roundup
- Australia central bank holds rates at 1.5 pct
- Japan Apr Nikkei Mfg PMI, 53.8, last 53.3
- Trump delays metal tariffs on Canada, EU, Mexico, exempts some others
- Israel says Iran lied on nuclear arms, pressures U.S. to scrap deal
- Trump says Korea's Peace House, Singapore could be Kim summit sites
- Australian manufacturers enjoy strong start to Q2 - surveys
- New Zealand 2018 budget set to deliver surplus, special spending boost -finmin
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Apr Markit/CIPS Mfg PMI, f'cast 54.8, last 55.1
- (0430 ET/0830 GMT) Great Britain Mar BOE Consumer Credit, f'cast 1.450 bln, last 1.647 bln
- (0430 ET/0830 GMT) Great Britain Mar Mortgage Lending, f'cast 3.600 bln, last 3.718 bln
- (0430 ET/0830 GMT) Great Britain Mar Mortgage Approvals, f'cast 63.000k, last 63.910k
Key Events Ahead
- N/A U.S. Federal Reserve's FOMC starts its two-day meeting on interest rates
- (1445 ET/1845 GMT) BoC’s Poloz speaks at Yellowknife Chamber of Commerce
FX Beat
DXY: The dollar index held firm near 4-month peak as investors awaited the Federal Reserve's policy decision and crucial U.S. employment data due later in the week for fresh cues on the strength of the economy. The greenback against a basket of currencies trades 0.1 percent up at 91.90, having touched a high of 91.99 on Friday, its highest since Jan. 11. FxWirePro's Hourly Dollar Strength Index stood at 96.57 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro consolidated near a 3-1/2-month low set on Friday, amid volume-thin day with the major European markets shuttered for Labor Day. Moreover, downbeat German Harmonized Index of Consumer Prices, which decelerated to 1.4 percent year-on-year to April versus the 1.5 percent expected, hurt euro bulls’ sentiment. The European currency traded 0.05 percent down at 1.2074, having touched a low of 1.2055 last week, its lowest since Jan. 12. FxWirePro's Hourly Euro Strength Index stood at -73.59 (Slightly Bearish) by 0400 GMT. Investors’ attention will remain on the U.S. manufacturing PMI's from both Markit and ISM, as Eurozone's economic calendar remains absolutely data empty.Immediate resistance is located at 1.2140 (5-DMA), a break above targets 1.2210 (Apr. 26 Low). On the downside, support is seen at 1.2055 (Apr 28 Low), a break below could drag it till 1.2025.
USD/JPY: The dollar steadied near recent highs as the Federal Reserve concludes its two-day meeting on Wednesday, where it is widely expected to stand pat on policy, while investors will be watching for hints of a rate hike in June. Moreover, markets attention will also remain on Friday's April U.S. non-farm payrolls report, which could provide further signs of strength in the world's biggest economy. The major was trading 0.05 percent up at 109.37, having hit a high of 109.53 on Friday, its highest since Feb. 8. FxWirePro's Hourly Yen Strength Index stood at 30.82 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. manufacturing PMI's from both Markit and ISM. Immediate resistance is located at 1 09.75 (Feb. 1 High), a break above targets 110.28 (Feb. 2 High). On the downside, support is seen at 108.96 (Apr. 27 Low)), a break below could take it lower 108.54 (Apr. 24 Low).
GBP/USD: Sterling consolidated near a 2-month low hit in the prior session as investors unwound bullish positions on the British currency following weak economic growth data and comments from the Bank of England that have led traders to price-out a rate hike next week. Markets now await UK manufacturing PMI, which is expected to show manufacturing sector activity decelerated in April. The major traded 0.05 percent down at 1.3755, having hit a low of 1.3712 on Thursday, it’s lowest since Mar. 1. FxWirePro's Hourly Sterling Strength Index stood at -110.45 (Highly Bearish) by 0400 GMT. Investors’ focus will remain on the UK manufacturing PMI, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3869 (5-DMA), a break above could take it near 1.3986 (10-DMA). On the downside, support is seen at 1.3700, a break below targets 1.3660. Against the euro, the pound was trading 0.1 percent down at 87.75 pence, having hit a low of 88.26 pence on Monday, it’s lowest since Mar. 16.
AUD/USD: The Australian dollar steadied after Reserve Bank of Australia left interest rates at record lows, forecasting inflation would remain muted even as the economy gained momentum this year. The central bank kept benchmark rates at 1.5 percent for a 21st successive month. The Aussie trades 0.2 percent up at 0.7539, having hit a low of 0.7525 the day before; it’s lowest since Dec. 12. FxWirePro's Hourly Aussie Strength Index stood at -20.63 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7519 (Dec. 12 Low), a break below targets 0.7501 (Dec 8 Low). On the upside, resistance is located at 0.7566 (5-DMA), a break above could take it near 0.7606 (Apr. 25 High).
NZD/USD: The New Zealand dollar slumped to a fresh 4-month low as the greenback surged amid divergent monetary policy outlooks between the Fed and RBNZ. The Fed is expected to hike rates as soon as next month on better U.S. economic prospects, while the Reserve Bank of New Zealand is likely to stand pat this year. The Kiwi trades 0.05 percent down at 0.7032, having touched a low of 0.7031 earlier, its lowest level since Dec. 27. FxWirePro's Hourly Kiwi Strength Index was at 4.00 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7090, a break above could take it near 0.7157. On the downside, support is seen at 0.7020, a break below could drag it below 0.7000.
Equities Recap
Asian shares edged up as Australian shares hit 7-week peak after the United States extended the deadline for its steel and aluminium tariffs to take effect.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent.
Tokyo's Nikkei rallied 0.2 percent to 22,513.39 points, Australia's S&P/ASX 200 index surged 0.6 percent to 6,016.70 points.
Major markets remained closed on account of Labour Day.
Commodities Recap
Crude oil prices rose, extending previous session gains, supported by comments from Israeli Prime Minister Benjamin Netanyahu that he was sure U.S. President Donald Trump would do the appropriate thing in reviewing Iran's nuclear deal with western powers. International benchmark Brent crude was trading 0.2 percent up at $74.86 per barrel by 0417 GMT, having hit a high of $75.59 on Monday, its highest since Nov. 2014. U.S. West Texas Intermediate was trading 0.3 percent up at $68.74 a barrel, after rising as high as $69.53 in mid-April, its highest since Nov. 2014.
Gold prices declined, hovering close to a nearly six-week low touched in the previous session, as the U.S. dollar held firm near a 3-1/2-month high after the U.S. 10-year Treasury yield rose above the psychologically key 3.0 percent threshold to four-year highs. Spot gold fell 0.2 percent to $1,312.16 per ounce at 0420 GMT, having eased to $1,310.09 on Monday, their lowest since March 21. U.S. gold futures for June delivery eased 0.3 percent to $1,315.10 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.960 percent higher by 0.025 bps, while 5-year yield was 0.017 bps up at 2.805 percent.
The Japanese 10-year government bond yield touched a 2-week low during late Asian session, as investors are glued to tracking the Bank of Japan’s (BoJ) dovish tone in the latest monetary policy statement released last Friday amid a dearth of economically significant data throughout this week. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 2 basis point to 0.03 percent, the yield on the long-term 30-year note plunged nearly 2-1/2 basis points to 0.72 percent and the yield on short-term 2-year traded nearly 1 basis point lower at -0.13 percent.
The Australian government bonds gained slightly across the curve after the Reserve Bank of Australia (RBA) monetary policy decision. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 2 basis points to 2.762 percent, the yield on the long-term 30-year Note also dipped 2 basis points to 3.280 percent and the yield on short-term 2-year down nearly 1/2 basis point to 2.061 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 1.5 Canadian cents to yield 1.891 percent and the 10-year rising 14 Canadian cents to yield 2.308 percent. The Canadian gross domestic product data for February is due on Tuesday and March trade data is due on Thursday.
