Market Roundup
- BoJ Policy Board Funo – Sticks to old script, remains optimistic on both prices and economy, does note risks to outlook, strong JPY-higher crude costs affecting CAPEX, will use all policy options available – Reuters.
- Japan July industrial output unch m/m, +0.8% forecast, +4.1% forecast for August, previous forecast +2.3%, -0.7% forecast for September.
- Reuters poll – Japan fund managers up bonds in August, trim stocks in general but up North American holdings.
- China ViceFinMin Zhu – Economic fundamentals sound, no foundation for long- term CNY depreciation, will push on with reforms – State TV.
- China Aug Westpac consumer sentiment index -2.2% m/m to 111.5, 6-month low.
- UK Aug GfK consumer confidence index -7, July -12, resilience post-Brexit.
- Australia July private-sector credit +0.4% m/m, +6.0% y/y, housing +0.5%, +6.6%, June +0.2% and +0.5% m/m, +6.2% and +6.7% y/y.
- New Zealand Aug ANZ business confidence +15.5%, own activity outlook +33.7%, July +16.0 and +31.4.
Economic Data Ahead
- (0245 ET/0645 GMT) France Aug CPI - flash, +0.3% y/y forecast; last +0.2%.
- (0245 ET/0645 GMT) France Aug HICP – flash, +0.4% y/y forecast; last +0.4%.
- (0245 ET/0645 GMT) France Jul producer prices; last +0.4% m/m.
- (0245 ET/0645 GMT) France Jul consumer spending, +0.3% m/m forecast; last -0.8%.
- (0300 ET/0700 GMT) Spain Jun current account balance; last E2.8 bln surplus.
- (0355 ET/0755 GMT) Germany Aug unemployment, 2.69 mln nsa forecast; last 2.66 mln nsa, 2.68 mln sa.
- (0355 ET/0755 GMT) Germany Aug unemployment, -5k, 6.1% sa forecast; last -7k, 6.1%.
- (0400 ET/0800 GMT) Norway Q2 GDP – mainland, +0.3% q/q, +0.1% AR forecast; last +0.3%, +1.0%.
- (0400 ET/0800 GMT) Norway Jul credit indicator, +5.0% y/y forecast; last +4.9%.
- (0400 ET/0800 GMT) Italy Jul unemployment, 11.6% forecast; last 11.6%.
- (0400 ET/0800 GMT) Italy Jul wage inflation; last +0.2% m/m, +0.7% y/y.
- (0500 ET/0900 GMT) Eurozone Aug inflation – flash, +0.3% y/y forecast; last +0.2%.
- (0500 ET/0900 GMT) Eurozone Aug – ex-food/energy, +0.9% y/y forecast; last +0.8%.
- (0500 ET/0900 GMT) Eurozone Jul unemployment, 10.0% forecast; last 10.1%.
- (0500 ET/0900 GMT) Italy Aug CPI - flash, +0.3% m/m, -0.1% y/y forecast; last +0.2%, -0.1%.
- (0500 ET/0900 GMT) Italy Aug HICP – flash, -0.2% m/m, -0.1% y/y forecast; last -1.9%, -0.2%.
- (0815 ET/1215 GMT) United States Aug ADP national employment, +175k forecast; last +179k.
- (0830 ET/1230 GMT) Canada Q2 GDP, -1.5% AR forecast; last +2.4%, +0.6% q/q, imp prices -0.3% q/q.
- (0900 ET/1300 GMT) Belgium Q2 GDP – revised; prelim +0.5% q/q.
- (0945 ET/1345 GMT) United States Aug Chicago PMI, 54.0 forecast; last 55.8.
- (1000 ET/1400 GMT) United States Jul pending home sales, +0.6% m/m forecast; last +0.2%, index 111.0.
Key Events Ahead
- N/A UK PM May to gather ministers to hear views on Brexit.
- N/A Norway NOK2 bln 1.5% NST478 government bond auction.
- (0315 ET/0715 GMT) Boston Fed Rosengren/Chicago Fed Evans/ECB Praet speak in Beijing.
- (0400 ET/0800 GMT) Norway FX operations, August net NOK900 mln sales.
- (0500 ET/0900 GMT) Greece E875 mln 26-week bill auction.
- (0530 ET/0930 GMT) Germany E4 bln zero% 2018 Schatz auction.
- (0530 ET/0930 GMT) Portugal E0.75-1.0 bln 3.85% and 2.875% 2021 and 2026 OT auctions.
- (0530 ET/0930 GMT) ECB 3-month LTRO operation, E6 bln allotment forecast, E6.27 bln maturing.
- (0800 ET/1200 GMT) Minny Fed Kashkari speaks at St Paul event.
- (1030 ET/1430 GMT) UK DMO releases Q4 auction schedule.
FX Beat
DXY: The dollar index, against a basket of currencies trades flat at 96.01, having touched an early high of 96.14, it’s highest since Aug. 9.
EUR/USD: The euro edged up, pulling away from a near 3-week low of 1.1132 hit in the previous session. However, the upside was capped as US Consumer Confidence rose to 101.0 for the month of August against 97.0 expected, underpinning the bid tone around the dollar. The European currency trades 0.2 percent up at 1.1161, retreating from an early low of 1.1136. Markets attention will remain on Friday's U.S. August non-farm payrolls report, to assess whether the U.S. economy is strong enough to hold up monetary tightening. Investors await Eurozone consumer price index data, ahead of U.S. ADP employment figures and the Chicago purchasing managers' index due later in the day for further momentum on the major. Immediate resistance is located at 1.1192 (5-DMA), break above could take it over 1.1200. On the lower side, support is seen at 1.1130, break below targets 1.1100.
USD/JPY: The greenback touched a 1-month high against the yen as investors slashed speculation that the U.S. Federal Reserve would not hike interest rates anytime soon. The dollar has been on a bullish mode since Friday's hawkish comments by Fed Chair Janet Yellen renewed expectations the central bank could increase interest rates as early as September. The major trades up at 102.95 yen, extending an overnight rally as far as 103.21, it’s highest since July 29. Data released on Tuesday, showed that U.S. consumer confidence index rose to an 11-month high in August, while house price grew at a moderate rate in June, helping the dollar to extend gains. Markets will continue to track broad market sentiment ahead of series of U.S. economic data. Immediate resistance is located at 102.50, break above targets 103.00. On the downside, support is seen at 102.02 (5-DMA), break below could take it lower 101.85.
GBP/USD: Sterling edged up, recovering most of its previous session losses, amid risk on market profile. The major strengthened after data released overnight by GfK Group showed that Britain's consumer confidence index for the month of August came in better-than-expected at -7, against projection of -8 and previous -12. Sterling trades 0.2 percent higher at 1.3101, having touched an early high of 1.3116. Investors will closely watch UK's Nationwide Housing price data for further cues on the pair. Immediate resistance is located at 1.3140 (10-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 85.12 pence.
AUD/USD: The Australian dollar retreated from a near 1-month low, supported by upbeat private sector credit data. Australia's private sector credit rose at an annualized rate of 6 percent in July compared to the expected growth of 6.1 percent, indicating that the private sector can afford large expenses, which could support economic growth. The Aussie trades 0.2 percent up at 0.7520, hovering away from a 4-week low of 0.7500 hit in the previous session. Investors await set of U.S. macro fundamentals, including ADP employment report and pending home sales data, ahead of Australia's retail sales and capital expenditure due tomorrow. Immediate support is seen at 0.7500 (Previous Session Low), break below could drag it near 0.7480/ 0.7451. On the upside, resistance is located at 0.7553 (5-DMA), break above targets 0.7600.
NZD/USD: The New Zealand dollar gained, after a private survey by ANZ bank showed that business sentiment rose in August, as firms' outlook for their own activity had risen. The economy's activity outlook rose 33.7 percent versus previous 31.4, while business confidence stood at 15.5 percent against prior 16.0 percent. The Kiwi trades 0.4 percent higher at 0.7243, pulling away from a 2-week low of 0.7204 struck in the previous session. Investors will continue to digest upbeat domestic data, ahead of series of U.S. economic reports. Immediate resistance is located at 0.7266 (10-DMA), break above targets 0.7300. On the downside, support is seen at 0.7200 (Previous Session Low), break below could drag it till 0.7164.
Equities Recap
Asian shares eased, after Wall Street posted modest losses, while investors await August U.S. non-farm payrolls due on Friday for further clues on timing of the Federal Reserve interest rate hike.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 percent.
Tokyo's Nikkei rose 0.97 pct at 16,887.40, Australia's S&P/ASX 200 index fell 0.70 pct at 5,439.80 points and South Korea's KOSPI shed 0.5 percent at 2,029.13 points.
Shanghai composite index added 0.2 percent at 3,079.82 points, while CSI300 index was trading 0.3 percent higher at 3,323.05 points.
Hong Kong’s Hang Seng was trading 0.1 percent lower at 22,992.41 points. Taiwan shares declined 0.4 percent at 9,068.85 points.
Commodities Recap
Crude oil prices edged down in early Asian trade, extending previous session losses, as the U.S. dollar hovered around 3-week highs, while industry stocks report suggested an increase in U.S. crude inventories. International Brent crude oil was trading flat at $48.67 per barrel at 0407 GMT, while U.S. West Texas Intermediate crude was at $46.29 a barrel, up by 01 percent, having hit a 2-week low earlier in the session.
Gold steadied near 2-month lows touched in the previous session, with the dollar firm following upbeat U.S. data, while investors await nonfarm payroll figures due later this week for fresh clues on the Federal Reserve rate hike timing. Spot gold added 0.3 percent to $1,314.59 per ounce at 0419 GMT, having declined 1 percent to hit $1,309.07 on Tuesday, it’s lowest since June 28. U.S. gold futures slipped 0.2 percent to $1,313.90.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5566 percent up by 0.007 bps, while 5-year was at 1.1896 percent higher by 0.009 bps.
The Australian government bonds traded nearly flat, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note hovered around 1.890 percent mark and the yield on short-term 2-year remained steady at 1.449 percent.
Canadian government bond prices were slightly higher across the maturity curve, with the 2-year up half a Canadian cent to yield 0.587 percent, and the benchmark 10-year adding 4 Canadian cents to yield 1.022 percent.
