Market Roundup
- EUR/USD 0.07%, USD/JPY 0.14%, GBP/USD 0.07%, EUR/GBP 0.02%
- DXY -0.09%, DAX flat, FTSE 0.19%, Brent 0.08%, Gold 0.1%
- Italy's bond yields tumble on reports of lower deficits in 2020-2021
- Fed's Evans says comfortable with a December rate hike
- EZ Markit Comp Final PMI, 54.1, 54.2 forecast, 54.2 previous
- EZ Retail Sales (y/y), 1.8%, 1.7% forecast, 1.1% previous
- Germany Markit Comp Final PMI, 55.0, 55.3 forecast, 55.3 previous
- France Markit Comp PMI, 54.0, 53.6 forecast, 53.6 previous
- Italy Markit/ADACI Svcs PMI, 53.3, 52.8 forecast, 52.6 previous
- Great Britain Markit/CIPS Serv PMI, 53.9, 54.0 forecast, 54.3 previous
- Euro lifted off six-week low by Italian budget speculation
- Sterling steadies near 3-week low before May's speech, PMI
- Trade pact clause seen deterring China trade deal with Canada, Mexico
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of September. The report is expected to show that 185,000 jobs were added as compared with 163,000 jobs in August.
- (0945 ET/1345 GMT) Financial firm Markit releases final U.S. composite PMI for the month of September. The index posted a final reading of 53.4 in the previous month.
- (0945 ET/1345 GMT) Markit Economics reports final U.S. services PMI for the month of September. The index posted a final reading of 52.6 in August.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index eased to a final reading of 58.0 in September from 58.5 in August.
- (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending September 28.
Key Events Ahead
- (0805 ET/1205 GMT) Federal Reserve Bank of Richmond President Thomas Barkin speaks on "The Outlook for Tomorrow: Five Numbers to Watch" before the West Virginia Economic Outlook Conference, in Charleston.
- (1030 ET/1430 GMT) ECB Policymaker Francois Villeroy de Galhau to speak at a conference in Paris about "Ten years after: Is financial stability today better assured?" – Paris
- (1315 ET/1715 GMT) Federal Reserve Bank of Philadelphia President Patrick Harker speaks on "Rethinking the Labor Market and Approaches to Employment" before the "Reinventing Our Communities: Investing in Opportunity" conference co-sponsored by the Federal Reserve Banks of Richmond and Philadelphia, in Baltimore.
- (1400 ET/1800 GMT) Federal Reserve Board Governor Lael Brainard speaks on "Payment System" before the FedPayments Improvement Community Forum, in Chicago.
- (1400 ET/1800 GMT) Federal Reserve Bank of St. Louis President James Bullard gives welcome remarks before the 2018 Community Banking in the 21st Century Research and Policy Conference hosted by the Federal Reserve Bank of St. Louis, in St. Louis.
- (1415 ET/1815 GMT) Federal Reserve Bank of Cleveland President Loretta Mester speaks on "Community Banking" before the 2018 Community Banking in the 21st Century Research and Policy Conference hosted by the Federal Reserve Bank of St. Louis, in St. Louis.
- (1600 ET/2000 GMT) Federal Reserve Chairman Jerome Powell participates in discussion before The Atlantic Festival in Partnership with The Aspen Institute, in Washington.
- (2000 ET/0000 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated question-and-answer session before the Anderson Chandler Lecture Series event hosted by the Kansas University School of Business.
FX Beat
DXY: The dollar index rose, extending gains for the sixth straight session, as investors’ awaited U.S. ADP report for further clues on the strength of the labour market. The greenback against a basket of currencies trades 0.05 percent up at 95.50, having touched a high of 95.74 on Tuesday, its highest since September 4. FxWirePro's Hourly Dollar Strength Index stood at 106.70 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro bounced back from a 6-week low on a report stating that Italy's government targets for the budget deficit to decline to 2.2 percent of gross domestic product in 2020 and to 2 percent in 2021 from an expected 2.4 percent next year. However, uncertainty surrounding Italy's debt, fiscal plans and future ties with Europe limited the upside. The European currency traded 0.1 percent up at 1.1559, having touched a low of 1.1505 on Tuesday, its lowest since August 21. FxWirePro's Hourly Euro Strength Index stood at -42.47 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1616 (September 10 High), a break above targets 1.1659 (September 6 High). On the downside, support is seen at 1.1525 (September 10 Low), a break below could drag it till 1.1500.
USD/JPY: The dollar rose against the safe-haven Japanese yen as risk-sentiment improved after an Italian newspaper reported that Italy plans to reduce its budget deficit at a faster pace than expected over the next three years. The major was trading 0.2 percent up at 113.83, having hit a high of 114.06 on Monday, its highest since Nov. 8. FxWirePro's Hourly Yen Strength Index stood at 42.71 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment change, Service PMI from both Markit and ISM, and speeches from several Fed officials. Immediate resistance is located at 114.28 (Nov 1 High), a break above targets 114.73 (Nov 6 High). On the downside, support is seen at 113.45 (5-DMA), a break below could take it lower 112.63 (September 26 Low).
GBP/USD: Sterling nudged up after falling to an over 3-week low in the previous session, as Britain's services sector kept up its steady growth in September despite increasing uncertainty about the economy ahead of Brexit. The major traded 0.1 percent up at 1.2991, having hit a low of 1.2941 on Tuesday; it’s lowest since September 10. FxWirePro's Hourly Sterling Strength Index stood at -32.12 (Neutral) 1000 GMT. Immediate resistance is located at 1.3107 (10-DMA), a break above could take it near 1.3193 (September 25 High). On the downside, support is seen at 1.2944 (August 31 Low), a break below targets 1.2896 (September 10 Low). Against the euro, the pound was trading 0.05 percent down at 88.99 pence, having hit a high of 88.59 on Monday, it’s highest since September 20.
USD/CHF: The Swiss franc fell to a 6-week low, as worries that rippled across markets this week eased on signs Italy was ready to cut budget deficits and debt in coming years. The major trades 0.3 percent up at 0.9870, having touched a high of 0.972 earlier, it’s highest since August 21. FxWirePro's Hourly Swiss Franc Strength Index stood at -95.90 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9890 (June 25 High) and any break above will take the pair to next level till 0.9925 (June 22 High). The near-term support is around 0.9787 (August 27 Low) and any close below that level will drag it till 0.9745 (August 28 Low).
Equities Recap
European shares surged on signs the Italian government would target a lower budget deficit, while greenback steadied near a 1-month peak ahead of U.S. ADP employment report.
The pan-European STOXX 600 index rose 0.3 percent at 383.18 points, while the FTSEurofirst 300 index gained 0.4 percent to 1,504.45 points.
Britain's FTSE 100 trades 0.3 percent higher at 7,499.93 points, while mid-cap FTSE 250 surged 0.2 percent to 20,311.17 points.
Germany's DAX fell 0.4 percent at 12,287.58 points; France's CAC 40 trades 0.3 percent higher at 5,483.20 points.
Commodities Recap
Crude oil price rallied, hovering near a 4-year high, supported by expectations that U.S. sanctions on Iran will tighten supply. International benchmark Brent crude was trading 0.2 percent up at $84.83 per barrel by 1022 GMT, having hit a high of $85.43 on Monday, its highest since November 2014. U.S. West Texas Intermediate was trading 0.3 percent up at $75.24 a barrel, after rising as high as $75.88 on Tuesday, its highest since Nov 2014.
Gold prices surged to hit its highest in more than a week as concerns surrounding Italy's plans to tackle budgetary deficit boosted safe-haven demand. Spot gold was up 0.1 percent at $1,203.58 by 1025 GMT, having hit a high of $1208.17 earlier, its highest since September 21. U.S. gold futures were up 0.1 percent to $1,207.06 an ounce.
Treasuries Recap
The U.S. Treasuries lost ground ahead of the country’s ADP non-farm employment data for the month of September and ISM non-manufacturing PMI for the same period, scheduled to be released today by 12:15GMT and 14:00GMT respectively. The yield on the benchmark 10-year Treasuries rose 1-1/2 basis points to 3.071 percent, the super-long 30-year bond yields surged nearly 2 basis points to 3.224 percent and the yield on the short-term 2-year traded tad higher at 2.819 percent.
The United Kingdom’s gilts slumped during European session after the investors have largely shrugged-off the country’s services PMI for the month of September that missed market expectations, also falling from the previous reading in August. The yield on the benchmark 10-year gilts, climbed nearly 1-1/2 basis points to 1.541 percent, the super-long 30-year bond yields rose 1 basis point to 1.903 percent and the yield on the short-term 2-year also traded 1 basis point higher at 0.804 percent.
The Japanese government bond prices traded tad higher during late Asian session, following a dip in investors’ sentiments after the Nikkei 225 retreated, owing to budget worries and political disturbances in Italy. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.140 percent, the yield on the long-term 30-year note hovered around 0.916 percent and the yield on short-term 2-year too traded tad lower at -0.113 percent.
The Australian 10-year government bond yield slumped to a 2-week low during Asian session, struck by woes over the Italian budget deficit. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 5-1/2 basis points to 2.641 percent, the yield on the long-term 30-year bond slumped nearly 6 basis points to 3.127 percent and the yield on short-term 2-year suffered 4 basis points to 1.987 percent.
