Market Roundup
- EUR/USD -0.28%, USD/JPY -0.02%, GBP/USD 0.03%, EUR/GBP -0.31%
- DXY 0.2%, DAX 0.24%, FTSE -0.05%, Brent -0.73%, Gold -0.36%
- North Korea appears to bolster defences after flight by U.S. bombers as rhetoric escalates
- Republican tax plan expected to include new 'pass-through' business rate
- UK consumer lending growth slows in August, industry data shows
- Germany Import Prices YY 2.1% vs 1.9%, forecast 2.1%
- Japan FinMin Aso: Need more time to hit budget-balancing goal
- BoJ July Policy Board minutes – To stick to QQE, YCC program
- Japan Aug corporate service price index -0.2% m/m, +0.8% y/y
- Oil near 26-month high as Turkey threatens to choke Kurdish exports
- Gold steady near 1-week high on North Korea worries
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 5.8 percent in July, after posting a 5.7 percent gain in the previous month.
- (0900 ET/1300 GMT) Mexico is expected to report that unemployment rate gained 3.28 percent in August from a 3.20 percent rise in the previous month.
- (1000 ET/1400 GMT) The U.S. Conference Board is likely to show a decline in its consumer confidence index for the month of September to 120.0 from a final reading of 122.9 in August.
- (1000 ET/1400 GMT) The U.S. new home sales are expected to have increased 3.3 percent to a seasonally adjusted annual rate of 588,000 units in August, after declining 9.4 percent in July.
- (1830 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0930 ET/1330 GMT) Cleveland Fed President Loretta Mester moderates a "global outlook" panel at an event.
- (0930 ET/1330 GMT) Chicago Fed President Charles Evans gives welcome remarks before the 17th annual Chicago Payments Symposium in Chicago.
- (1030 ET/1430 GMT) Federal Reserve Board Governor Lael Brainard speaks on "labor market disparities" before the Federal Reserve Board Conference, "Disparities in the Labor Market: What are we Missing?" in Washington.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $675 mn)
- (1230 ET/1630 GMT) Atlanta Fed President Raphael Bostic speaks on the economic outlook and monetary policy at the Atlanta Press Club.
- (1245 ET/1645 GMT) Federal Reserve Chair Janet Yellen speaks on "inflation, uncertainty, and monetary policy" at the 59th National Association for Business Economics Annual Meeting, which will debate challenges under the theme "Prospects for Growth: Reassessing the Fundamentals" in Cleveland.
FX Beat
DXY: The dollar gained versus some of its peer as investors keenly awaited the Federal Reserve Chair Janet Yellen's speech in Cleveland on inflation, uncertainty, and monetary policy. The greenback against a basket of currencies traded 0.2 percent up at 92.87, having touched a high of 92.88 earlier, its highest since Sept. 1. FxWirePro's Hourly Dollar Strength Index stood at 55.37 (Bullish) by 0900 GMT.
EUR/USD: The euro slumped to a fresh 5-week low as investors worried that months of coalition talks in Germany could weigh on the economy. The European currency traded 0.4 percent down at 1.1797, having touched a low of 1.1790 earlier, its lowest since Aug. 25. FxWirePro's Hourly Euro Strength Index stood at -74.06 (Bearish) by 0900 GMT. Technically pair has closed below 1.1870 (233- 4H MA) and this confirms major weakness, a decline till 1.17600 (55- day EMA)/1.1700 likely. On the higher side, near term resistance around 1.18700 and any break above will take the pair to next level till 1.19250 (20- day MA)/1.1965/1.2000.
USD/JPY: The dollar declined versus the Japanese yen as investors remained cautious amid escalating tensions between North Korea and the United States. The major was trading flat at 111.69, having hit a high of 112.71 last week, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at 100.24 (Highly Bullish) by 0900 GMT. On the lower side, any close below 111.15 (100- day MA) confirms minor weakness, a decline till 110/108.50 likely. Any break above 113 confirms minor bullishness, a jump till 114/114.50.
GBP/USD: Sterling steadied after declining to a 10-day low against the dollar in the previous session, following the release of better-than expected UK BBA August mortgage approvals data. The major traded 0.1 percent up at 1.3477, having hit a low of 1.3431 on Monday, its lowest since Sept. 15. FxWirePro's Hourly Sterling Strength Index stood at 20.61 (Neutral) by 0900 GMT. The pair on the higher side is facing major resistance around 1.35000 and any break above will take the pair to next level to 1.35435/1.3595. The near term psychological support is around 1.3450 and any break below will drag it down till 1.3400. Against the euro, the pound was trading 0.3 percent up at 87.69 pence, having hit a high of 87.74 pence earlier in the month, its highest since Jul. 17.
USD/CHF: The Swiss franc eased, reversing most of its previous session gains, as investors awaited the Federal Reserve Chair Yellen's and other Fed officials' speeches later in the day. The major trades 0.5 percent up at 0.9707, having touched a high of 0.9747 last week, it’s highest since Aug. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at 87.26 (Slightly Bullish) by 0900 GMT. The short term trend is still bullish as long as support 0.9630 (55- day EMA) holds and any break below will drag the pair down till 0.9580/0.9525/0.9500. The near term resistance is around 0.97730 and any convincing break above will take it to next level till 0.9808/0.9866.
AUD/USD: The Australian dollar slumped, extending previous session losses as weakness in the crude oil prices undermined the bid tone around the major. The Aussie trades 0.3 percent down 0.7913, having hit a low of 0.7908 on Friday, it’s lowest since Aug. 31. FxWirePro's Hourly Aussie Strength Index stood at -107.24 (Highly Bearish) by 0900 GMT. On the lower side, near term support is around 0.7898 (55- day EMA) and any close below will drag the pair till 0.7850/0.7800. The near term resistance is around 0.8000 and any break above targets 0.8065/0.8125.
Equities Recap
European shares gained, while the dollar against a basket of currencies rose to a 4-week high ahead of Federal Reserve Chair Janet Yellen's speech in Cleveland.
The pan-European STOXX 600 index climbed 0.1 percent to 384.26 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,510.31 points.
Britain's FTSE 100 trades 0.1 percent down at 7,291.58 points, while mid-cap FTSE 250 fell 0.3 percent to 19,510.00 points.
Germany's DAX rose 0.1 percent at 12,613.73 points; France's CAC 40 trades 0.06 percent higher at 5,271.01 points.
Commodities Recap
Crude oil prices declined, despite Turkey's threat to cut crude exports from Iraq's Kurdistan region as well as signs that market rebalancing is accelerating. International benchmark Brent crude was trading 0.6 percent down at $58.76 per barrel by 0922 GMT, having hit a high of $59.47 earlier, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.1 percent down at $52.03 a barrel, after rising as high as $52.41, its highest since April.
Gold prices eased after hitting its highest in about a week, underpinned by demand for safe-haven investments amid persisting tensions over the Korean peninsula. Spot gold was trading 0.3 percent down at $1,305.87 per ounce at 0928 GMT, after recording its highest since Sept. 20 at $1,313.52 earlier. U.S. gold futures for December delivery rose 0.2 percent to $1,313.70 per ounce.
Treasuries Recap
The U.S. Treasuries flat as investors await the Federal Open Market Committee (FOMC) Chair Janet Yellen’s speech, scheduled to be held today by 16:45GMT, besides, the 5-year auction, due on September 27 by 17:00GMT. The yield on the benchmark 10-year Treasury hovered around 2.22 percent, the super-long 30-year bond yields flat at 2.75 percent and the yield on short-term 2-year note traded tad higher at 1.43 percent.
The UK gilts traded tad higher as investors wait to watch the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be held on September 28, besides, the Q2 GDP, due on September 29 for further direction in the debt market. The yield on the benchmark 10-year gilts, slid nearly 1 basis point to 1.37 percent, the super-long 30-year bond yields also fell 1 basis point to 1.89 percent and the yield on the short-term 2-year traded steady at 0.44 percent.
The German government bunds traded range-bound Tuesday amid lack of any significant data through the day. However, markets are eyeing the release of the country’s employment report for the month of September, scheduled to be released on September 29. The German 10-year bond yields, which moves inversely to its price, traded flat at 0.40 percent, the yield on 30-year note hovered around 1.20 percent and the yield on short-term 2-year also traded steady at -0.70 percent.
The New Zealand bonds jumped at the time of closing Tuesday after the country posted a bigger-than-expected goods trade deficit in August as exports of milk powder, butter and cheese declined and imports of crude oil and petroleum products jumped higher. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 5 basis points to 3.07 percent, the yield on 7-year note plunged 4-1/2 basis points to 2.83 percent and the yield on short-term 2-year ended 3-1/2 basis points lower at 2.12 percent.
The Japanese government bonds traded flat Tuesday as investors remained sidelined in any major trading activity amid lack of significant economic data through the day. Japan’s Prime Minister Shinzo Abe said he’ll dissolve the lower house of parliament on September 28 for a general election as he announced an USD18 billion economic package. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.02 percent, the yield on long-term 30-year rose nearly 1 basis point to 0.83 percent and the yield on short-term 2-year hovered around -0.13 percent.
