Market Roundup
- CFTC IMM CTA data – Specs boost US bets to highest since mid-August but JPY net longs to five-month peak, 68.8k contracts, EUR shorts off to 76k, GBP up to 87.7k, market now net short CHF, CAD, AUD longs up, NZD shorts off.
- BoJ Gov Kuroda – Lot of room left to ease policy – Reuters.
- BoJ Tankan – Big mfg DI +6, big non-mfg +18, +7 and +18 forecast, +6 and +16 forecast in December, estimates for +8, +18, FY ‘16/17 CAPEX +6.3%, +6.8% forecast, big mfg sees USD/JPY averaging 107.92 in FY, recurring profits -14.6%.
- Japan Sept manufacturing PMI 50.4, flash 50.3, Aug 49.5, first expansion in 7-mos.
- Moody’s – Japan policy stimulus to support growth, challenges remain.
- Clinton chance of winning presidency 66.7%, Trump 33.3% - FiveThirtyEight.
- Clinton leads Trump by five points in US presidential race – Reuters.
- Donald Trump tax records show he could have avoided taxes for nearly two Decades – New York Times.
- Deutsche Bank, US DOJ continue to discuss mortgage-securities settlement, no deal presented to senior decision-makers – Wall Street Journal.
- Britain’s May says to trigger EU divorce by end of March – Reuters.
- May on collision course with Tory backbenchers over hard Brexit – Guardian.
- EU Tusk – Once Article 50 triggered, other 27 EU states will engage to safeguard their interests – Reuters.
- China Sept official mfg PMI 50.4, as forecast, Aug 50.4; services 53.7, Aug 53.5.
- Australia Sept AIG PMI +2.9 points to 49.8, closer to expansion.
- Australia Sept CoreLogic home prices+1.0% m/m, +7.1% y/y, Aug +1.1%, +7%.
Economic Data Ahead
- (0300 ET/0700 GMT) Norway Sep PMI manufacturing, 52.0 forecast; last 50.8.
- (0315 ET/0715 GMT) Spain Sep PMI manufacturing, 51.4 forecast; last 51.0.
- (0315 ET/0715 GMT) Switzerland Aug retail sales; last -2.2% y/y.
- (0330 ET/0730 GMT) Switzerland Sep PMI manufacturing, 51.5 forecast; last 51.0.
- (0345 ET/0745 GMT) Italy Sep PMI manufacturing, 50.3 forecast; last 49.8.
- (0350 ET/0750 GMT) France Sep PMI manufacturing – final, 49.5 forecast; flash 49.5.
- (0355 ET/0755 GMT) Germany Sep PMI manufacturing – final, 54.3 forecast; flash 54.3.
- (0400 ET/0800 GMT) Italy Q2 ISTAT public deficit/GDP; last 4.7%.
- (0400 ET/0800 GMT) Eurozone Sep PMI manufacturing – final, 52.6 forecast; flash 52.6.
- (0430 ET/0830 GMT) Great Britain Sep PMI manufacturing, 52.1 forecast; last 53.3.
- (0945 ET/1345 GMT) United States Sep Markit PMI manufacturing – final; flash 51.4.
- (1000 ET/1400 GMT) United States Sep ISM PMI manufacturing, 50.3 forecast; last 49.4.
- (1000 ET/1400 GMT) United States Aug construction spending, +0.2% m/m forecast; last unch.
- (1330 ET/1730 GMT) United States Sep total vehicle sales, 17.3 mln AR forecast; last 16.98 mln.
Key Events Ahead
- Australia Labor Day holiday, So.Korea holiday, China markets closed all week.
- N/A Madrid banking seminar, ex-BdF Noyer to attend.
- (0540 ET/0940 GMT) Netherlands E1-2 bln 3 DTC auction.
- (0850 ET/1250 GMT) France E3.1-3.5/1.3-1.7/1.1-1.5 bln 3/6/12-month treasury note auctions.
FX Beat
DXY: The dollar strengthened against the yen as receding fear of Deutsche Bank health boosted investors risk appetite. The dollar index against a basket of currencies trades 0.1 percent up at 95.54, having touched more than a 1-week peak of 95.96 on Friday.
EUR/USD: The euro edged up, extending gains for the fourth straight day after tumbling to near 2-week low in the previous session. On Friday, the major rebounded from a low of 1.1153, after reports indicated that the German lender Deutsche Bank had to pay a less costly fine to the US Department of Justice, which reduced banking sector worries in the Eurozone. Mixed U.S. economic fundaments released on Friday raised doubts over the prospects of Federal rate hike this year, strengthening the bid tone around the euro. The European currency trades flat at 1.1232, hovering towards a high of 1.1279 hit last week. Markets attention will remain on Eurozone and U.S Markit manufacturing PMI for further momentum on the pair. Immediate resistance is located at 1.1257 (Sept 22 High), break above could take it till 1.1284/ 1.1300. On the downside, support is seen at 1.1213 (10-DMA), break below could drag it lower 1.1200.
USD/JPY: The dollar advanced as worries about Deutsche Bank eased, weakening the bid tone around the safe-haven yen. However, gains were limited as developments surrounding Brexit procedure dampened investors’ appetite for risk assets, thereby supporting demand for yen. The Bank of Japan's quarterly tankan survey of business sentiment released earlier showed that Japan's large manufacturers anticipate the dollar to average 107.92 yen for the fiscal year through March 2017. On Friday, the major declined to a low of 100.74 following mix set of U.S. economic data. The pair trades 0.1 percent up at 101.36, having touched an intraday high of 101.78. Investors will track broader market sentiment, ahead of U.S. Markit and ISM manufacturing PMI reports due later in the day. Immediate resistance is located at 101.80, break above targets 102.40/ 102.70. On the downside, support is seen at 100.88 (10-DMA), break below could take it near 100.65.
GBP/USD: Sterling slumped to a 7-week low, opening on a bearish gap after Britain set a March deadline to start its exit procedure from the European Union. Prime Minister Theresa May stated that the process for the UK to leave the EU would trigger by the end of March 2017 and Britain looks set to leave the EU by summer 2019. Sterling trades 0.2 percent lower at 1.2943, having touched a low of 1.2912, its lowest since August 16. Investors' will closely watch Britain's Markit manufacturing PMI for further cues on the major. Immediate resistance is located at 1.2984 (5-DMA), break above could take it near 1.3030. On the downside, support is seen at 1.2912 (Session Low) , break below targets 1.2900. Against the euro, the pound trades 0.3 percent down at 86.79 pence, hovering towards a 6- week low of 87.16 hit last week.
AUD/USD: The Australian dollar consolidated between a narrow range amid holiday-thinned market. On Friday, the major tumbled below the 0.7600 handle to a near 2-week low, largely on the back of risk-off market sentiment, however, it retreated following latest Deutsche Bank news. The Aussie trades flat at 0.7652, attempting to extend gains above the 0.7650 level. Trading in the major is likely to remain subdued as investors cautiously await fresh cues on the outlook for domestic interest rates. Reserve Bank of Australia meets on Tuesday for its October policy meeting and is expected to stand pat. Data released earlier showed Australia's TD securities inflation growing at 0.4 percent in the month of September, while on annualized basis it stood at 1.3 percent. Immediate support is seen at 0.7611 (Sept 26 Low), break below could drag it till 0.7580. On the upside, resistance is located at 0.7674, break above targets 0.7700.
NZD/USD: The New Zealand dollar declined, reversing most of previous session gains, as markets risk sentiment deteriorate amid lower oil prices and renewed Brexit worries. Investors price-in almost 80 percent probability of Reserve Bank of New Zealand to cut OCR next month, which undermined the sentiment around the Kiwi. The major trades 0.4 percent lower at 0.7257, pulling away from a peak of 0.7330 hit last week. Traders will track overall markets sentiment ahead of U.S macro fundamentals and RBNZ Governor Wheeler Speech. Immediate resistance is located at 0.7309 (20-DMA), break above targets 0.7330/ 0.7350. On the downside, support is seen at 0.7228 (Previous Session Low), break below could drag it till 0.7200.
Equities Recap
Asian shares gained as risk sentiment strengthened after reports released on Friday indicating that Deutsche Bank was negotiating a much smaller fine with the U.S. Department of Justice.
MSCI's broadest index of Asia-Pacific shares outside Japan traded 0.8 percent higher and it advanced 8.8 percent in the third quarter, its best performance since early 2012.
Tokyo's Nikkei rose 0.90 percent at 16,598.67 points, Australia's S&P/ASX 200 index gained 0.75 percent at 5,476.80 points and South Korea's KOSPI shed 0.93 percent at 2,049.42 points.
Hong Kong’s Hang Seng was trading 1.15 percent higher at 23,564.22 points. Taiwan shares climbed 0.7 percent at 9,234.20 points.
Chinese and South Korean markets will be closed in observance of National Day.
Commodities Recap
Crude oil prices were little changed, within the sight of $50 per barrel mark as markets doubt that last week's agreement by exporters to cut output was enough to rein in production that has surpassed consumption for the last three years. Global benchmark Brent crude was trading flat at $49.98 per barrel at 0357 GMT, having touched 5-week high of $50.24 in the previous session. U.S. West Texas Intermediate crude edged down 0.1 percent at $47.97 a barrel, after rising to 48.29 last week, its highest since August 23.
Gold edged down, extending losses for the fifth consecutive session following a volatile session on Friday as concerns about Deutsche Bank's health eased. Spot gold nudged down to $1,314.32 an ounce by 0405 GMT, having touched a low of $1313.09 in the previous session, its weakest since 21 Sept. U.S. gold futures also eased t at $1,321.20 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.6031 percent lower by 0.003 bps, while 5-year was 0.004 bps up at 1.1557 percent.
The Australian government slumped as Melbourne Institute’s Australian consumer inflation index rose for the second successive month in September that released pressure from the Reserve Bank of Australia for further monetary easing. The yield on the benchmark 10-year Treasury note rose 7 basis points to 2.031 percent, the yield on 15-year note jumped nearly 6 basis points to 2.361 percent and the yield on short-term 2-year climbed 3-1/2 basis points to 1.588 percent.
The New Zealand government bonds closed lower as investors awaited the Reserve Bank of New Zealand Governor Graeme Wheeler's speech. The yield on the benchmark 10-year bond rose 3 basis points to 2.325 percent, the yield on 7-year note ended 2 basis points higher at 2.080 percent and the yield on short-term 2-year note climbed 1-1/2 basis points to 1.925 percent.
