Market Roundup
- Japan's Abe to push pacifist constitution reform after strong election win
- USD/JPY, JPY crosses up in Asia following Japan PM LDP-led coalition win.
- US yields higher too from Friday on fast-track US budget passage.
- Spain urges Catalonia secessionists to obey Madrid
- China House Prices YY Sept 6.3%, 8.3% prev
- Fed's Yellen defends past policies as Trump mulls top Fed pick
- Top U.S. Senate Republican, White House, aim for tax bill by year-end
- Speculators pare bearish bets on dollar –CFTC
- UK households' morale and rate hike expectations rise - IHS Markit
- New Zealand's incoming leader flags TPP problems
Economic Data Ahead
- (1000 ET/1400 GMT) EZ Consumer Confid. Flash, -1.10 eyed, last -1.20
Key Events Ahead
- (0300 ET/0700 GMT) ECB Peter Praet speaks at Frankfurt, Germany
- (0700 ET/1100 GMT) Belgium E1.000/E1.000/E1.000 bln for 6/9/30 year auctions
- (1330 ET/1730 GMT) ECB's Daniele Nouy speaks at London, UK
FX Beat
DXY: The dollar index rose to an over 2-week high, after the U.S. Senate approved a budget blueprint for the 2018 fiscal year, clearing a critical hurdle for Republicans to pursue a tax-cut package without Democratic support. The greenback against a basket of currencies traded 0.1 percent up at 93.78, having touched a high of 93.90 earlier, its highest since Oct. 6. FxWirePro's Hourly Dollar Strength Index stood at 51.34 (Bearish) by 0500 GMT.
EUR/USD: The euro fell to a 5-day low as the greenback rallied as the progress in tax reforms boosted expectations of increased U.S. Government borrowing and a possible pickup in inflation. The European currency traded 0.1 percent down at 1.1766, having touched a low of 1.1751 earlier, its lowest since Oct. 6. FxWirePro's Hourly Euro Strength Index stood at 3.04 (Neutral) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of U.S. National Activity Index. Immediate resistance is located at 1.1792 (21-DMA), a break above targets 1.1880. On the downside, support is seen at 1.1736, a break below could drag it near 1.1700.
USD/JPY: The dollar advanced to a three-month high above the 114.00 handle, as a huge election victory for Japan's ruling party left the door open to ultra-loose monetary policy for longer. The major was trading 0.3 percent up at 113.70, having hit a high of 114.10 earlier, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at 19.22 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. National Activity Index for further momentum. Immediate resistance is located at 114.20, a break above targets 114.50. On the downside, support is seen at 113.50, a break below could take it near 113.10.
GBP/USD: Sterling rose, extending previous session gains, as investors expected a breakthrough in Brexit negotiations after British Prime Minister Theresa May won a modest reprieve in stalled talks with the European Union. The major traded 0.2 percent up at 1.3216, having hit a low of 1.3087 the day before, its lowest since Oct. 09. FxWirePro's Hourly Sterling Strength Index stood at 83.89 (Slightly Bullish) by 0500 GMT. Investors’ focus will remain on UK CBI Trends - Orders, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3250, a break above could take it near 1.3269 (21-DMA). On the downside, support is seen at 1.3140, a break below targets 1.3100. Against the euro, the pound was trading 0.9 percent up at 89.08 pence, having hit a low of 90.19 pence the prior day, its lowest since Oct. 12.
AUD/USD: The Australian dollar gained, after falling to 1-1/2 week lows earlier in the session on a resurgent greenback as the progress in U.S. tax reforms boosted expectations of a possible pickup in inflation. The Aussie trades 0.2 percent rose at 0.7830, having hit a low of 0.7802 earlier, it’s lowest since Oct. 12. FxWirePro's Hourly Aussie Strength Index stood at -19.22 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7802 (Session Low), a break below targets 0.7780. On the upside, resistance is located at 0.7846 (5-DMA), a break above could take it near 0.7880.
NZD/USD: The New Zealand rebounded after falling to a five-month trough on concerns the incoming Labour coalition would introduce curbs on immigration and foreign investment. The Kiwi trades 0.1 percent down at 0.6987, having touched a low of 0.6931 earlier, its lowest level since May 22. FxWirePro's Hourly Kiwi Strength Index was at -95.52 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7000, a break above could take it near 0.7050. On the downside, support is seen at 0.6931 (Session Low), a break below could drag it till 0.6900.
Equities Recap
Asian shares steadied following a rise in Japanese stocks, while the dollar rallied to a fresh 3- high against the yen as an election win for Shinzo Abe's ruling party paved way for more policy stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan steadied.
Tokyo's Nikkei rallied 1.1 percent to 21,696.65 points, Australia's S&P/ASX 200 index fell 0.2 percent to 5,894.00 points and South Korea's KOSPI advanced 0.1 percent to 2,491.54 points.
Shanghai composite index rose 0.1 percent to 3,382.56 points, while CSI300 index was trading 0.2 percent up at 3,933.48 points.
Hong Kong’s Hang Seng was trading 0.5 percent lower at 28,336.91 points. Taiwan shares added 0.1 percent to 10,735.21 points.
Commodities Recap
Crude oil prices steadied as supply concerns in the Middle East and the U.S. market showed further signs of tightening. International benchmark Brent crude was trading flat at $57.85 per barrel by 0529 GMT, having hit a high of $58.51 on Wednesday, its highest since Sept. 28. U.S. West Texas Intermediate was trading 0.1 percent higher at $52.05 a barrel, after rising as high as $52.31 on Wednesday, its highest since Sept. 28.
Gold prices touched it’s lowest in over two weeks, as the dollar rallied to a more than three-month high versus the yen after Japan's ruling party won Sunday's election by a huge margin. Spot gold was down 0.3 percent at $1,276.35 an ounce by 0534 GMT, after hitting its lowest since Oct. 6 at $1,274.18 earlier in the session. U.S. gold futures for December delivery fell 0.3 percent to $1,277.20 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.380 percent lower by 0.001 bps, while 5-year yield was 0.001 bps down at 2.018 percent.
The Japanese government bonds remained little changed at the start of the trading week even as the country’s snap elections held over the weekend yielded results as per market expectations, with Prime Minister Shinzo Abe retaining his outright majority to form a government in the Lower House. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.07 percent, the yield on long-term 30-year hovered around 0.89 percent and the yield on short-term 2-year too remained steady at -0.13 percent.
The Australian government bonds plunged following weakness in the U.S. Treasuries as investors reduced bond holdings on worries about more inflation and federal borrowing after the U.S. Senate passed a budget blueprint. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose more than 2 basis points to 2.809 percent, the yield on the long-term 30-year note also climbed 2-1/2 basis points to 3.573 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.950 percent.
