Market Roundup
- U.S. Ambassador Haley: U.N. has exhausted options on North Korea
- Japan's PM Abe considers snap election as early as October -sources
- China Aug House prices y/y, 8.3% vs previous 9.7%
- Australia Aug New motor vehicle sales, 0.0% vs July -2%
- Tillerson says U.S. could stay in Paris climate accord
- UK households squeezed again, BoE might make it worse - survey
- German liberals would expect finance ministry in Merkel coalition
- Britain's Boris Johnson accused of Brexit "backseat driving"
- Global debt may be understated by $13 trillion - BIS
- New Zealand service activity rises to 57.3 in August - BNZ survey
- Speculators raise short dollar bets to new 4-1/2-year high -CFTC, Reuters
Economic Data Ahead
- (0500 ET/0900 GMT) EU Aug Inflation final, 0.3% m/m, 1.5 y/y eyed; last -0.5%, 1.5%
- (0500 ET/0900 GMT) EU Aug Inflation ex food and energy, 0.3% m/m, 1.2% y/y eyed; last -0.5%, 1.3%
Key Events Ahead
- (0445 ET/0845 GMT) ECB's Angeloni speaks in Rome, Italy
- (0540 ET/0940 GMT) Netherlands E1.0-2.0/E1.0-2.0 bln for 3/6 month auction
- (0600 ET/1000 GMT) Belgium E3.0-3.5/E3.0-3.5/E3.0-3.5 for 7/10/17 year auction
- (0855 ET/1255 GMT) France E2.4-2.8/E1.0-1.4/E0.6-1.0 bln for 3/6/12 month auction
- (1030 ET/1430 GMT) ECB's Lautenschlager speaks in Basel, Switzerland
- (1000 ET/1500 GMT) BOE's Carney speaks in Washington
FX Beat
DXY: The dollar steadied against most of its major peers as last week’s upbeat economic data rekindled expectations that the Federal Reserve could raise interest rates again in December. The greenback against a basket of currencies traded up at 91.88, having touched a high of 92.66 last week, its highest since Sept. 5. FxWirePro's Hourly Dollar Strength Index stood at -17.38 (Neutral) by 0500 GMT.
EUR/USD: The euro consolidated within narrow ranges as investors remained on the sidelines ahead of the Federal Reserve's two-day meeting starting on Tuesday. The Fed is likely to announce a plan to start reducing its balance sheet at the meeting, but is widely expected to keep interest rates unchanged. The European currency traded 0.2 percent up at 1.1945, having touched a low of 1.1838 on Thursday, its lowest since Aug. 31. FxWirePro's Hourly Euro Strength Index stood at 27.77 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone inflation figures, ahead of U.S. NAHB housing market index. Immediate resistance is located at 1.1978, a break above targets 1.12000. On the downside, support is seen at 1.1873 (Sept. 13 Low), a break below could drag it near 1.1823 (August 31 Low).
USD/JPY: The dollar extended gains above the 111.0 handle, boosted by a rise in U.S. Treasury yields and data showing a pick-up in U.S. consumer prices. At this week's Federal Reserve policy meeting, investors will closely watch the central bank’s views on the outlook for the economy and inflation as well as possible assessments of the impact from Hurricanes Harvey and Irma. The major was trading 0.3 percent up at 111.15, having hit a high of 111.33 the prior session, its highest since Jul. 28. FxWirePro's Hourly Yen Strength Index stood at -58.25 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. NAHB housing market index for further momentum. Immediate resistance is located at 111.60, a break above targets 111.71. On the downside, support is seen at 110.21 (5- DMA), a break below could take it near 109.79 (61.8% retracement of 107.31 and 111.33).
GBP/USD: Sterling steadied after rising to its highest level since the result of the Brexit vote in the previous session on growing speculations that the Bank of England would raise interest rates soon. The major traded up at 1.3585, having hit a high of 1.3616 on Friday, its highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 117.61 (Highly Bullish) by 0500 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3650, a break above could take it near 1.3600. On the downside, support is seen at 1.3453 (78.6% retracement of 1.2852 and 1.3616), a break below targets 1.3325 (61.8% retracement). Against the euro, the pound was trading flat at 87.91 pence, having hit a high of 87.74 pence last week, its highest since Jul. 17.
AUD/USD: The Australian dollar rose as investors attention remained on speeches by top central bank officials on Wednesday and Thursday for any guidance on the policy outlook. The Aussie trades 0.3 percent up 0.8026, having hit a low of 0.7956 on Thursday, it’s lowest since Sept. 5. FxWirePro's Hourly Aussie Strength Index stood at 37.07 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7968 (38.2% retracement of 0.7871 and 0.8124), a break below targets 0.7931 (23.6% retracement of 0.7871 and 0.8124). On the upside, resistance is located at 0.8044, a break above could take it near 0.8080.
NZD/USD: The New Zealand dollar rallied to a 1-month high ahead of New Zealand general election to be held on Saturday 23 September. The Kiwi trades 1.04 percent up at 0.7315, having touched a high of 0.7343 earlier, its highest level since Aug. 10. FxWirePro's Hourly Kiwi Strength Index was at 28.63 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7343 (Session High), a break above could take it near 0.7400. On the downside, support is seen at 0.7258 (5-DMA), a break below could drag it till 0.7238 (21-DMA).
Equities Recap
Asian shares rose to a decade high, while the dollar held gains as investors awaited the Federal Reserve policy meeting for clues on the next U.S. interest rate hike.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 percent to hit its highest level since late 2007.
Australia's S&P/ASX 200 index rallied 0.5 percent to 5,720.60 points and South Korea's KOSPI climbed 0.2 percent to 2,413.97 points.
Shanghai composite index rose 0.2 percent to 3,360.75 points, while CSI300 index was trading 0.4 percent up at 3,845.81 points.
Hong Kong’s Hang Seng was trading 1.1 percent higher at 28,108.19 points. Taiwan shares added 0.5 percent to 10,631.57 points.
Commodities Recap
Crude oil prices rose, extending gains for the sixth straight session, as the number of U.S. rigs drilling for new production declined and refineries continued to start up after getting hit by Hurricane Harvey. International benchmark Brent crude was trading 0.3 percent up at $55.67 per barrel by 0448 GMT, having hit a high of $55.96 on Thursday, its strongest since Apr. 13. U.S. West Texas Intermediate was trading 0.2 percent up at $49.89 a barrel, after rising as high as $50.47 last week, its highest since May. 25.
Gold prices declined to its lowest level in over two weeks amid a firmer dollar, while the prospects of monetary policy tightened in the United States ahead of the Federal Reserve's two-day meeting starting on Tuesday. Spot gold was down 0.7 percent at $1,317.60 an ounce by 0512 GMT, after falling to a low of $1,314.35 earlier, its lowest level since Aug 31. U.S. gold futures for December delivery fell 0.4 percent to $1,320.60 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.211 percent higher by 0.009 bps, while 5-year yield was 0.008 bps up at 1.812 percent.
The Australian bonds staged a sharp rally at the open of the trading week as investors moved away from safe-haven instruments on easing geopolitical tensions and as markets seem to have digested the last ballistic missile attack by North Korea. The yield on the benchmark 10-year Treasury note jumped 5-1/2 basis points to 2.80 percent, the yield on the 15-year note climbed nearly 6 basis points to 3.10 percent and the yield on short-term 2-year traded 4-1/2 basis points higher at 1.99 percent.
The New Zealand bonds remained mixed at the time of closing as investors wait to watch the country’s second-quarter gross domestic product (GDP), scheduled to be released on September 20 by 22:45GMT, besides, the GlobalDairyTrade price auction, due on September 19 for further direction in the bond market. At the time of closing, the yield on the benchmark 10-year Treasury note slipped 1 basis point to 3.01 percent, the yield on 7-year note also fell 1 basis point to 2.86 percent while the yield on short-term 2-year ended 1/2 basis point higher at 2.12 percent.
