Market Roundup
- USD/JPY -0.17%, EUR/USD +0.3%, GBP/USD +0.1%
- DXY -0.27%, DAX -0.2%, Brent +1.54%, Iron -1.7%
- Le Monde-Greek PM Tsipras says Europe threatened by break-up
- Not only is the euro doomed, but demise a messy affair, Nobel laureate Joseph Stiglitz
- BoJ DepGov Nakaso – Nothing new, sticks to script, will act as necessary
- More talk from BoJ, and maybe fewer surprises – Nikkei
- BOJ's Nakaso dismisses idea of buying foreign bonds to affect FX
- Japan Q2 GDP revised up, +0.2% q/q, +0.7% AR, prelim unch, +0.2%, unch eyed
- RBA Gov-to-be Lowe – Cap flow could cause discomfort but key for prosperity – MNI
- Australia July trade deficit A$2.41 bln, A$2.75 bln eyed
- SA Finmin Gordhan convinced economy doing enough to grow above zero in 2016
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 265,000 for the week ending Sept 2 while continuing claims for the week ending Aug 26 is expected to decline to 2.153 m from previous 2.159 m.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that building permits have increased by 3.0 percent in July after posting a 5.5 percent decline in June.
- (0830 ET/1230 GMT) The Statistics Canada is expected to report that new home price index gained 0.2 percent in July, adding to the 0.1 percent gain in June.
- (0830 ET/1330 GMT) Canada's releases industrial capacity utilization data for the second quarter. The indicator stood at 81.4 in the previous quarter.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending Sept 2.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending Sept 2.
- (1500 ET/1900 GMT) The U.S. Federal Reserve is likely to report that consumer credit rose to $16 billion in August from $12.32 billion in July.
- (1845 ET/2245 GMT) The Statistics New Zealand will release its Electronic Card Retail Sales figures for the month of August. The index was at 0.3 percent in the previous month.
Key Events Ahead
- (0830 ET/1230 GMT) European Central Bank President Draghi releases the monetary policy statement and gives a press conference.
- (1145 ET/1545 GMT) FedTrade ops 30-year Ginnie Mae max $1.275 bln.
- (1220 ET/1620 GMT) Bank of Canada Deputy Governor Timothy Lane will give a presentation in Thunder Bay.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.3 percent lower at 94.64, having touched fresh 2-week low of 94.58 earlier in the session.
EUR/USD: The euro rose above the 1.1300 handle after the European Central Bank left interest rates unchanged and stated that monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if required, and in any case until it sees a sustained adjustment in the path of inflation. The euro trades 0.6 percent higher at 1.1304, having touched a 2-week high of 1.1315 following ECB's announcement. Investors now await ECB President Mario Draghi’s presser for further insights on monetary stimulus. Any break above 1.1330 will take the pair to next level till 1.1380. On the lower side, any violation below 1.1200 will drag the pair till 1.11400/1.1120. The short-term weakness is only below 1.1045.
USD/JPY: The Japanese yen edged up after a Bank of Japan deputy governor provided few fresh clues on whether the central bank will expand its monetary stimulus in its upcoming meeting. The dollar trades 0.1 percent lower at 101.63 yen, hovering within the sight of near 2-week low of 101.20 touched in the previous session. The short term trend is slightly bearish as long as resistance 102.35 (9- day EMA) holds. The major resistance is around 102.35 and break above targets 103/103.80. On the lower side, major support is around 101.20 and any break below 101.20 will drag the pair till 100.55/100.
GBP/USD: Sterling edged up, hovering below a 7-week high against the dollar, after Bank of England Governor Mark Carney kept the option of further monetary easing open in order to help the economy. The major was also supported by broad-based weaker greenback which strengthened the bid tone around the British currency. Sterling rose 0.2 percent to 1.3362 after declining for the first time in six days and retreating from a 7-week high of 1.3444 hit on Tuesday. Against the euro, the pound was 0.3 percent lower at 84.53 pence. Any break above 1.3480 confirms major trend reversal, a jump till 1.3770 is possible. On the lower side, major support is around 1.32680 (9- day MA) and break below targets 1.3220 (10- day MA).
USD/CHF: The Swiss franc edged up as the greenback weakened across the broad. The dollar trades 0.2 percent lower at 0.9674, having touched an early low of 0.9668, a level last seen on August 26. On the higher side, any break above 0.9710 will take the pair till 0.9745/0.9770. The short-term weakness can be seen only below 0.9630.
AUD/USD: The Aussie touched a 3-week high above the 0.7700 handle as markets cheered upbeat Australian and Chinese trade balance data amid higher crude oil prices. Extended weakness in the US dollar also benefited the major to build on to its strong gains. The Australian dollar trades 0.6 percent higher at 0.7721, attempting to take out the 0.7750 level. On the higher side, any break above 0.7700 will take the pair till 0.7760. The major support is around 0.7650 and break below will drag it till 0.7580/0.7520.
NZD/USD: The New Zealand dollar hovered near its 16-month highs, supported by broad based US dollar weakness and higher commodities’ prices. Upbeat Chinese trade report helped the major to maintain its upward momentum for the seventh consecutive session. The Kiwi trades 0.2 percent higher at 0.7466, hovering towards a high of 0.7484, hit in the previous session. Immediate resistance is located at 0.7500, break above targets 0.7550. On the downside, support is seen at 0.7397 (Previous Session Low), break below could drag it till 0.7350.
Equities Recap
European shares edged up, led by solid gain in banking and software company stocks, while European Central Bank kept its interest rate unchanged.
The pan-European STOXX 600 index added 0.05 percent at 350.62 points, while the FTSEurofirst 300 index edged up 0.03 percent at 1,379.85 points.
Britain's FTSE 100 trades 0.51 percent up at 6,881.38 points, while mid-cap FTSE 250 gained 0.53 percent at 18,156.13 points.
Germany's DAX dropped 0.20 percent at 10,731.67 points; France's CAC 40 trades 0.08 percent lower at 4,554.22 points.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent on the day, just shy of peaks hit in the previous session.
Tokyo's Nikkei lost 0.32 percent at 16,958.77 points, Australia's S&P/ASX 200 index fell 0.75 percent at 5,383.30 points and South Korea's KOSPI added 0.09 percent at 2,063.73 points.
Shanghai composite index gained 0.1 percent at 3,095.95 points, CSI300 index ended flat at 3,339.56 points and Hong Kong's Hang Seng index rose 0.8 pct at 23,919.34 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, after U.S. industry data showed crude stocks declined 12.1 million barrels last week, its large weekly crude stocks draw in over three decades. Global benchmark Brent crude oil was 0.3 percent up at $48.68 a barrel by 0947 GMT, pulling closer to a high of $49.36 hit on Monday. U.S. West Texas Intermediate crude was at $46.24, higher by 0.2 percent.
Gold edged higher, reversing most of previous session losses as the dollar weakened across the broad, while investors eye European Central Bank President Draghi’s speech for clues on economic stimulus. Spot gold was up 0.2 percent at $1,347.52 an ounce by 0952 GMT, retreating from an early low of $1341.75. U.S. gold futures rose 0.2 percent to $1,351.70.
Treasuries Recap
The US Treasuries little changed during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note remained steady at 1.539 percent, the yield on 5-year bond hovered around 1.12 percent mark and the yield on short-term 2-year note stood flat at 0.742 percent.
The Eurozone periphery bonds traded narrowly mixed as the French 10-year bond yields rose 1 basis point to 0.117 percent, Irish 10-year bonds yield dipped 3 basis points to 0.349 percent, Italian equivalent ticked 1-1/2 basis points lower to 1.062 percent, Netherlands 10-year bonds yield climbed 1 basis point to -0.007 percent, Portuguese equivalents inched 1-1/2 basis points lower to 2.954 percent, Spanish 10-year bonds yield also tumbled 1-1/2 basis points to 0.913 percent.
The UK gilts slumped as investors moved away from the safe-haven instruments amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year gilts rose 2-1/2 basis points to 0.704 percent, the super-long 40-year bond yield climbed 1 basis point to 1.196 percent and the yield on short-term 2-year bond remained steady at 0.100 percent.
The German bunds traded nearly flat as the yield on the benchmark 10-year bond remained steady at -0.111 percent, the yield on long-term 30-year note hovered around 0.430 percent mark and the yield on short-term 2-year bond stood flat at -0.666 percent.
The Japanese government bond erased previous gains following comments from BoJ’s Deputy Governor Hiroshi Nakaso. The benchmark 10-year bond yield rose more than 1/2 basis point to -0.043 percent, the yield on 6-year note jumped 1-1/2 basis points to -0.171 percent, the super-long 30-year JGB yield dipped 1/2 basis point to 0.419 percent and the short-term 2-year JGB yield remained steady at -0.194 percent.
The New Zealand government bonds closed lower as investors cashed in profits relishing previous gains. The yield on the benchmark 10-year bond rose 2 basis points to 2.280 percent, the yield on 7-year note ended 1-1/2 basis points higher at 1.995 percent and the yield on short-term 2-year note climbed 1 basis point to 1.855 percent.
The Australian government bonds traded nearly flat Thursday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note hovered around 1.90 percent mark and the yield on short-term 2-year remained steady at 1.49 percent.
