Market Roundup
- Gold prices hold firm above $1,500
- Brent oil futures climb above $60 on U.S. inventory draw
- Fed minutes in focus
- U.S. yields capped before Jackson Hole
Economic Data Ahead
- (0500 ET/0900 GMT) UK public sector net borrowing July
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index bounced back after falling to a near 1-week low earlier in the session on the prospect of more easing by the Federal Reserve. The greenback against a basket of currencies traded 0.1 percent up at 98.28, having touched a high of 98.45 on Tuesday, its highest since August 1.
EUR/USD: The euro consolidated within narrow ranges after rebounding from a 2-1/2 week low hit in the previous session following Italy’s Prime Minister Giuseppe Conte's resignation. The upside in the major appears fragile as the German economy may have continued to shrink over the summer as industrial production declined. The European currency traded flat at 1.1095, having touched a low of 1.1065 on Tuesday, its lowest since August 1. Investors’ attention will remain on the U.S. existing home sales and FOMC minutes, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1128 (38.2% retracement of 1.1230 and 1.1065), a break above targets 1.1147 (50.0% retracement). On the downside, support is seen at 1.1060 (July 31 Low), a break below could drag it below 1.1026 (August 1 Low).
USD/JPY: The dollar gained as investors await the minutes of the Federal Reserve’s July meeting for possible clues on further U.S. interest rate cuts. Markets also eye the central bank’s Jackson Hole seminar later this week and a Group of Seven summit this weekend for clues on what additional steps policymakers may take to boost economic growth. The major was trading 0.2 percent up at 106.55, having hit a low of 105.05 last week, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. existing home sales and FOMC minutes. Immediate resistance is located at 107.01 (21-DMA), a break above targets 107.56 (August 2 High). On the downside, support is seen at 105.89 (August 8 Low), a break below could take it lower at 105.29 (Aug. 9 Low).
GBP/USD: Sterling eased after rising to a 1-1/2 week peak in the previous session on German Chancellor Angela Merkel comments, citing that the European Union would think about practical solutions regarding the post-Brexit Irish border. The major traded 0.2 percent down at 1.2139, having hit a high of 1.2179 on Tuesday, it’s highest since August 8. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2210 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2331 (61.8% retracement). On the downside, support is seen at 1.2099 (10-DMA), a break below targets 1.2041 (August 13, Low). Against the euro, the pound was trading 0.2 percent down at 91.38 pence, having hit a high of 90.90 on Friday, it’s highest since July 31.
AUD/USD: The Australian dollar traded with narrow ranges after the Reserve Bank of Australia on Tuesday signalled that it'll wait for a while before making any potential decision to cut its interest rate further from current levels. The Aussie trades flat at 0.6778, having hit a low of 0.6677 earlier in the month, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6735 (August 13 Low), a break below targets 0.6700. On the upside, resistance is located at 0.6831 (38.2% retracement of 0.7082 and 0.6677), a break above could take it near 0.6879 (50% retracement).
NZD/USD: The New Zealand dollar eased to a fresh 2-week low as the local central bank is considered more prone to cut interest rates than Australia's. The Kiwi trades 0.2 percent down at 0.6403, having touched a low of 0.6402 earlier, its lowest level August 7. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6534 (38.2% retracement of 0.6790 and 0.6376), a break above could take it near 0.6583 (50% retracement). On the downside, support is seen at 0.6400, a break below could drag it below 0.6365.
Equities Recap
Asian shares traded flat as worries about global recession and trade wars vied with hopes for a lot more monetary and fiscal stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan consolidated with narrow ranges.
Tokyo's Nikkei declined 0.3 percent to 20,618.57 points, Australia's S&P/ASX 200 index fell 0.9 percent to 6,483.30 points and South Korea's KOSPI gained 0.2 percent to 1,964.65 points.
Shanghai composite index rose 0.01 percent to 2,880.25 points, while CSI 300 index traded 0.2 percent down at 3,781.79 points.
Hong Kong’s Hang Seng traded 0.05 percent higher at 26,235.96 points. Taiwan shares added 0.05 percent to 10,525.80 points.
Commodities Recap
Crude oil prices surged, extending gains for the fourth straight session after a data report showed a larger-than-expected drop in U.S. crude inventories, although ongoing worries about a possible global recession capped gains. International benchmark Brent crude was trading 0.5 percent higher at $60.33 per barrel by 0548 GMT, having hit a high of $60.37 earlier, its highest since August 14. U.S. West Texas Intermediate was trading 0.5 percent up at $56.34 a barrel, after rising as high as $56.57 on Tuesday, its highest since August 14.
Gold prices declined as investors wait the minutes of the Federal Reserve’s July meeting for possible clues on further U.S. interest rate cuts. Spot gold eased 0.3 percent to $1,502.90 per ounce by 0556 GMT, having touched a low of $1,492.74 on Tuesday, its lowest since August 13. U.S. gold futures were flat at $1,516.20 an ounce.
Treasuries Recap
The Japanese government bonds closed flat as investors keep a close eye on the country’s national consumer price inflation (CPI) for the month of July, scheduled to be released on August 22 by 23:30GMT and the August manufacturing PMI, due early on the same day for further direction in the debt market. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 9 basis points to -0.238 percent, the yield on the long-term 30-year suffered 1-1/2 basis points to 0.181 percent and the yield on short-term 2-year plunged 16 basis points to -0.299 percent.
The Australian government bonds jumped during Asian session following investors’ improved appetite after global recession fears eased, tracking hopes of stimuli from major economies like China and Germany to support the ailing economies. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2-1/2 basis points to 0.930 percent, the yield on the long-term 30-year bond slipped 1/2 basis point to 1.545 percent while the yield on short-term 2-year traded 1-1/2 basis points lower at 0.734 percent.
