Market Roundup
- Fonterra increases its 2016/17 f/c farmgate milk price by 50 cents to NZD4.75 per kgMS
- Cites global demand & supply rebalance, higher GDT prices of late, but higher NZD/USD offsets gains
- NZDMO prices NZ$2bn 2.75% April 15 2037s, 2.915%Y, 2033s+27bp - IFR News
- Offering attracted order book in excess of NZD2.5bil, will issue NZD2bil settles 30 Aug
- Typically half goes to offshore, maybe higher given global negative sovs elsewhere
- PBOC sets yuan mid-point at 6.6602 / dlr vs last close 6.6610 Reuters news
- PBOC met with major banks on Wednesday to discuss liquidity management – sources
- PBOC asked banks to spread out tenors of their loans, encouraged lending in installments - sources
- PBOC told banks Beijing would keep monetary policy stance basically unchanged - sources
Economic Data Ahead
- (0245 ET/0645 GMT) France Business Climate Aug
- (0245 ET/0645 GMT) France Ind Investment (CurYear) Q3
- (0300 ET/0700 GMT) Spain GDP YY Q2 prev 3.20%
- (0300 ET/0700 GMT) Spain GDP QQ Q2 prev 0.70%
- (0400 ET/0800 GMT) Germany Ifo Expectations Aug poll 102.50
- (0400 ET/0800 GMT) Germany Ifo Business Climate Aug poll 108.50
- (0400 ET/0800 GMT) Germany Ifo Current Conditions Aug poll 114.90
Key Events
No Significant Event Scheduled
FX Beat
DXY: The dollar index, against a basket of currencies trades lower at 94.70, ahead of a speech by Federal Reserve Chair Janet Yellen at a global central bankers' meeting.
EUR/USD: The euro gained, after declining to a 1-week low of 1.1245 in the previous session. The major came under renewed selling pressure, as investors continued to assess the prospects of another Fed’s rate hike this year ahead of Yellen’s speech in Jackson Hole on Friday. The European currency trades 0.1 percent higher at 1.1271, pulling away from a 1-week low. Investors will remain cautious ahead of Fed Chair Yellen's speech, which would provide further clues on U.S. interest rate policy. Markets attention will also remain on U.S unemployment claims and durable goods orders for insights on the strength of the economy. Immediate resistance is located at 1.1300, break above could take it till 1.1330/ 1.1370. On the lower side, support is seen at 1.1240, break below targets 1.1200
USD/JPY: The greenback edged up, extending previous session gains ahead of the global central bankers' gathering in Jackson Hole, Wyoming, at which Federal Reserve Chair Janet Yellen might offer fresh hints on U.S. interest rates outlook for this year. The Japanese government kept its assessment of the economy unchanged in August, however, highlighted a slightly more downbeat view on consumer inflation than previous month, as prices declined on weak household spending and the appreciating yen weighed down import costs. The dollar trades higher at 100.50 yen, pulling away from a low of 99.94 yen hit on Tuesday. Investors are reluctant on placing any directional bet on the major ahead of the highly-influential Fed Janet Yellen speech. Looking ahead in the day, U.S durable goods data and jobless claims is due later in the NY session. Immediate support is seen at 100.09 (Previous Session Low), break below could take it till 99.64. On the higher side, resistance is located at 100.93, break above targets 101.45/ 102.00.
GBP/USD: Sterling edged down after hitting a 3-week high above the 1.3200 handle. The major strengthened as speculators cut bets against the currency following upbeat data, which indicated the economy was still strong after the Brexit vote. Sterling trades flat at 1.3223, hovering within the sight of 3-week high. Markets attention now remains on Confederation of British Industry's Distributive Trades Survey release for further momentum. Immediate resistance is located at 1.3300, break above could take it near 1.3345. On the down side, support is seen at 1.3172 (5-DMA), break below targets 1.3128/1.3101. Against the euro, the pound trades 0.2 percent lower at 85.23 pence.
AUD/USD: The Australian dollar rose as investors await speech by Federal Reserve Chair Janet Yellen for insights on the outlook of U.S. monetary policy. The major has gained more than 5 percent in the last two months, however, has been subdued in August largely due to divergent monetary policy between both the continents. The Aussie trades 0.2 percent up at 0.7629, hovering away from a 3-week low of 0.7583 touched earlier in the week. In absence of relevant data from the Australian economy, markets focus will remain U.S. macro data, including the durable goods and unemployment claims, ahead of Jackson Hole Symposium for fresh direction on the pair. Immediate resistance is located at 0.7650, break above targets 0.7700. On the lower side, support is seen at 0.7600, break below could drag it near 0.7583/ 0.7550.
NZD/USD: The New Zealand dollar extended gains for the fourth consecutive session, after dairy leader Fonterra lifted its forecast payout to its farmer shareholders. The dairy co-operative increased its 2016-17 season forecast by NZ$0.50 to $4.75/ kgms, which brought the total payout available to farmers to NZ$$5.25 to NZ$5.35. The Kiwi trades 0.2 percent higher at 0.7324, hovering towards it 2016 high of 0.7344. Investors are now looking forward to Yellen's speech in Jackson Hole, Wyoming, for insight on the U.S. monetary policy outlook. Immediate resistance is located at 0.7340, break above targets 0.7400. On the lower side, support is seen at 0.7291 (5-DMA), break below could drag it near 0.7260.
Equities Recap
Asian shares nudged higher, but was struck between recent trading ranges as the greenback stood firm ahead of Federal Reserve Chair Janet Yellen speech at a global central bankers' meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.2 percent higher, however, is down 1.6 percent after hitting a 1-year high last Tuesday.
Tokyo's Nikkei declined 0.25 pct at 16,555.95, Australia's S&P/ASX 200 index dropped 0.36 pct at 5,541.40 points and South Korea's KOSPI was trading flat at 2,042.97 points.
Shanghai composite index shed 1 percent at 3,056.67 points, while CSI300 index was trading 1.03 percent lower at 3,295.19 points.
Hong Kong’s Hang Seng was trading 0.1 percent up at 22,845.49 points. Taiwan shares added 1.1 pct at 9,115.47 points.
Commodities Recap
Crude oil prices edged lower as increasing U.S. and Asian fuel inventories added to a large global supply overhang, dragging Brent crude futures below the $50 a barrel mark after a strong rally earlier in the month. International benchmark Brent crude oil was trading at $49.01 per barrel at 0354 GMT, while U.S. West Texas Intermediate crude was little changed at $46.76 a barrel.
Gold steadied after hitting a 4-week low in the previous session, as the dollar weakened ahead Federal Reserve Chair Janet Yellen speech due tomorrow that will be closely watched for further clues on U.S. interest rate policy. Spot gold was up 0.2 percent at $1,325.69 an ounce at 0358 GMT, after declining to a 4-week low of $1,323.39 on Wednesday. U.S. gold was nearly flat at $1,328.70 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5560 percent down by 0.005 bps, while 5-year was at 1.1331 percent lower by 0.005 bps.
The Australian government bonds traded modestly lower as investors await the Federal Reserve Chair Janet Yellen’s Jackson Hole speech scheduled to be held on Friday. The yield on the benchmark 10-year Treasury note, rose more than 1 basis point to 1.923 percent and the yield on short-term 2-year climbed 1 basis point to 1.448 percent.
The New Zealand government bonds closed lower after the world's biggest dairy exporter increased 2016/2017 milk price forecast by 50 cents to 4.75 NZ dollars. The yield on the benchmark 10-year bond increased 1 basis point to 2.285 percent and the yield on 7-year note also ended 1 basis point higher at 1.970 percent and the yield on short-term 2-year note bounced 2-1/2 basis points to 1.810 percent.
Canadian government bond prices were lower across the maturity curve, with the 2-year bond down 3 Canadian cents to yield 0.573 percent and the benchmark 10-year falling 14 Canadian cents to yield 1.038 percent. The curve flattened very slightly as the spread between the 2-year and 10-year yields narrowed by 0.1 of a basis point to 46.5 basis points. It was the narrowest spread since June 2008 as longer-dated maturities extended recent outperformance.
