Menu

Search

  |   Market Roundups

Menu

  |   Market Roundups

Search

Europe Roundup: Dollar touches 3-week high against yen, while gold hits 1-month low on U.S. rate hike expectations, European shares trade in red - Monday, August 29th, 2016

Market Roundup

  • U.K markets closed for August Bank Holiday
     
  • USD/JPY +0.31%, EUR/USD -0.16%, GBP/USD -0.22%
     
  • DXY +0.11%, DAX -0.7%, Brent -1.6%, Iron -3.45%
     
  • Italy Aug Bus. Conf. 101.1 vs revised 102.9 previous, 102.5 expected
     
  • Italy Aug Cons. Conf. 109.2 vs revised 111.2 previous, 110.5 expected
     
  • Sweden Jul R.Sales 1.9% y/y vs 3.2% previous, -0.9% m/m vs -0.6%
     
  • Central bankers, stuck at zero, unite in plea for help from govts
     
  • Harvard paper- Fed should keep trillions in bonds to provide stability
     
  • Ricardo Reis - Fed could use reserves payments to stimulate US economy
     
  • BoJ Gov Kuroda – Data suggests inflation expectations not yet anchored
     
  • ECB Coeure – Rates to stay low unless other policy areas contribute
     
  • German FinMin Schaeuble – ECB’s low interest rates harmful – FAZ
     
  • BoJ, GPIF biggest stakeholders in quarter of Japan’s listed firms - Nikkei
     
  • Orders recovering for Japanese chip-making gear – Nikkei

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for July, which is expected to rise 0.4 percent from 0.2 percent in June.
     
  • (0830 ET/1230 GMT) The U.S. consumer spending likely increased 0.3 percent in July after surging 0.4 percent in June
     
  • (0830 ET/1230 GMT)  The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of July The index stood at 0.1 percent in the prior month, while the core PCE is likely to remain unchanged at 0.1 percent in July.
     
  • (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of August. The index posted a decline of -1.3 percent in the previous month.
     
  • (1845 ET/2245 GMT) The Statistics New Zealand releases building permits s.a data for the month of July. The index stood at 16.3 percent in June.
     
  • (1930 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 3.1 percent for the month of July.
     
  • (1950 ET/2350 GMT) Japan's Ministry of Economy, Trade and Industry will release retail trade data for the month of July. The indicator is expected to drop 0.9 percent after posting a decline of 1.2 percent in the prior month.
     

Key Events Ahead

  • N/A  Atlanta Fed Q3 GDPNow update previous +3.4% q/q

FX Beat

DXY: The dollar index, against a basket of currencies trades 0.2 percent higher at 95.71, having touched a high of 95.75, its strongest level since Aug. 15.

EUR/USD: The euro attempted a minor recovery to re-gain the 1.1200 handle, however, the ongoing rally in the U.S dollar weakened the bid tone around the major, dragging it lower. The major trades 0.2 percent lower at 1.1177, having touched a 2-week low of 1.1170 earlier in the session. The pair moved between a narrow range as volumes in Europe were thin with London shut for a public holiday. Any break below 1.1180 confirms minor weakness, a decline till 1.1108 (200- day MA)/1.100. On the higher side, any break above 1.1220 will take the pair till 1.130/1.1365.

USD/JPY: The greenback rose to a 3-week high after Federal Reserve Chair Janet Yellen’s speech at Jackson Hole last Friday, bolstered expectations that U.S. interest rates will hike in near term. While on the Japanese side, investors doubt the prospects of extra easing by the BoJ at the September meeting, keeping the bid tone around the dollar strong. The major trades 0.5 percent higher at 102.22, hovering towards a high of 102.50, last seen since Aug 9. The short term trend is slightly bullish as long as support 100 holds. The major resistance is around 103.30 and any break above confirms minor trend reversal, a jump till 103.80104.55 is possible. On the lower side, major support is around 100.50 (10- day MA) and any break below 100.50 will drag the pair till 99.50.   

GBP/USD: Sterling slumped below the 1.3100 handle, as the dollar strengthened across the broad after Fed Yellens's comments renewed expectations of U.S interest rate hike in near term. Trading in the major was in marginal levels and volatility almost absent as UK markets were closed due to the bank holiday. Sterling trades 0.3 percent lower at 1.3087 having touched 1-week low of 1.3081 earlier in the session. Any break below 10-day MA confirms minor weakness, a decline till 1.3000 is possible. On the higher side, minor  resistance is at 1.3176 (5- day MA) and any break above targets 1.3270/1.3310. Against the euro, the pound trades 0.3 percent lower at 85.41 pence.

USD/CHF: The Swiss franc edged down against the dollar, extending losses around the 0.9800 handle. The greenback trades higher at 0.9780, having touched an early high of 0.9793, it’s highest since Aug. 10. On the lower side, major support is around 0.9730 and any violation below 0.9630 will drag the pair down till 0.9680/0.9630. The major resistance is around 0.9830 (200- day MA) and any break above targets 0.9900/0.9960.

AUD/USD: The Australian dollar declined to its lowest level in nearly a month as investors increased their bets on a U.S. interest rate hike after Federal Reserve Chair Janet Yellen's upbeat assessment of the economy. The major declined to an early low of 0.7525, its lowest level since Aug. 2, however, it regained some ground to trade flat at 0.7554. On the higher side, any break above 0.7620 (9-day MA) will take the pair till 0.7700/0.7760 is possible. The major support is around 0.7550 (55- day EMA) and break below will drag it till 0.7520/0.7490.

NZD/USD: The New Zealand dollar recovered after hitting a 1-week low, to trade 0.1 percent higher at 0.7231. On Friday, the major rose to fresh 15-month high level of 0.7380, however, reversed sharply after comments from Fed's Janet Yellen indicated a strong case for raising interest rates in near-future. Immediate resistance is located at 0.7270 (10-DMA), break above targets 0.7300. On the lower side, support is seen at 0.7200, break below could drag it near 0.7164.

Equities Recap

European shares declined, while the dollar strengthened after Federal Reserve Chair Janet Yellen's speech bolstered expectations for a U.S. rate hike this year.

The pan-European STOXX 600 index slumped 0.5 percent at 341.96 points, while the FTSEurofirst 300 index fell 0.54 percent at 1,345.36 points.

Britain's FTSE 100 trades 0.3 percent up at 6,838.05 points, while mid-cap FTSE 250 rose 0.2 pct at 17,930.79 points.

Germany's DAX decreased 0.8 percent at 10,500.95 points; France's CAC 40 trades 1.06 percent lower at 4,394.63 points.

Tokyo's Nikkei advanced 2.30 pct at 16,737.49, Australia's S&P/ASX 200 index declined 0.94 pct at 5,463.40 points and South Korea's KOSPI shed 0.2 percent at 2,032.35 points.

Shanghai composite index and CSI300 index both ended flat at 3,070.03 points and 3,307.78 points, respectively. Hong Kong's Hang Seng index slumped 0.4 pct at 22,821.34 points

Commodities Recap

Crude oil prices declined by more than 1 percent, falling towards $49 a barrel as increasing output from Middle East OPEC and as a stronger U.S. dollar weighed on commodities. Brent crude oil was 1.01 percent lower at $49.14 a barrel at 1030 GMT, pulling further away from its 2016 peak of 52.83 reached on June 9. U.S. crude was down 60 cents at $47.04.

Gold edged lower, hitting fresh 1-month low as the dollar strengthened after hawkish comments from Federal Reserve Chair Janet Yellen increased expectations of U.S. interest rate hike as early as next month. Spot gold trades lower at $1,319.50 per ounce at 1036 GMT, touching a low of  $1,314.99, its lowest since July 27. U.S. gold futures fell 0.35 percent to $1,321.20.

Treasuries Recap

The US 10-year Treasury yields jumped above 1.61 percent mark after Fed Chair Janet Yellen indicated an interest rate hike for this year. The yield on the benchmark 10-year Treasury note bounced 8 basis points to 1.661 percent, the yield on 5-year note climbed 9 basis points to 0 1.225 percent and the yield on short-term 2-year note also increased 9 basis points to 0.837 percent.

The Eurozone periphery bonds slumped after hawkish comments from Federal Reserve Chair Janet Yellen that kept the door open for the US interest hike in 2016. The French 10-year bonds yield jumped nearly 6 basis points to 0.204 percent, Irish 10-year bonds yield rose 1-1/2 basis points to 0.451 percent, Italian sovereign bond inched 3-1/2 basis points higher to 1.155 percent, Portuguese equivalents ticked 5 basis points higher to 3.064 percent, Netherlands 10-year bonds yield bounced 4-1/2 basis points to 0.056 percent, Spanish 10-year bonds yield climbed 3 basis points to 0.954 percent.

The German bunds plunged after the US Federal Reserve Chair Janet Yellen commented that the case for interest rate increase has strengthened in the coming months. The yield on the benchmark 10-year bond rose 3-1/2 basis points to -0.055 percent, the yield on long-term 30-year note jumped more than 4 basis points to 0.474 percent and the yield on short-term 2-year bond stood bounced ½ basis point to -0.616 percent.

The long-term Japanese government bonds traded lower after Federal Reserve Chair Janet Yellen signalled that the possibilities of increasing policy rates have strengthened in recent months. The benchmark 10-year bond yield rose 1 basis point to -0.061 percent, the super-long 30-year JGB yield also jumped 3 basis points to 0.381 percent and the short-term 2-year JGB yield remained steady at -0.177 percent.

The New Zealand government bonds closed modestly higher as investors poured into safe-haven instruments amid losses in riskier assets including equities and crude oil.  The yield on the benchmark 10-year bond fell 1/2 basis point to 2.300 percent and the yield on 7-year note ended 1 basis point lower at 1.985 percent and the yield on short-term 2-year note also slid 1 basis point to 1.825 percent.

The Australian government bonds slumped as investors drove out of safe-haven buying after the Federal Reserve Chair Janet Yellen spoke at the annual Jackson Hole Symposium on Friday, hinting that the possibilities of increasing policy rates have strengthened in recent months. The yield on the benchmark 10-year Treasury note rose nearly 2 basis points to 1.942 percent and the yield on short-term 3-year climbed 2 basis points to 1.472 percent.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.