Market Roundup
- EUR/USD -0.1%, USD/JPY -0.16%, GBP/USD -0.12%, EUR/GBP 0.02%
- DXY 0.01%, DAX -1.02%, FTSE -0.49%, Brent -0.93%, Gold 0.5%
- Emerging markets wilt in August on peso, lira sell-off
- Indonesia rupiah nears 1998 crisis levels, c.bank intervenes in FX, bonds markets
- Trump ready to ratchet up China trade war with more tariffs -report
- Great Britain Aug Gfk Consumer Confidence, -7, -10 forecast, -10 previous
- Great Britain Aug Nationwide House Prices m/m, -0.5%, 0.1% forecast, 0.6% previous 0.75 revised
- Great Britain Aug Nationwide House Prices y/y, 2.0%, 2.7% forecast, 2.5% previous
- EU Aug HICP Flash y/y, 2.0%, 2.1% forecast, 2.1% previous
- EU Aug HICP-X F&E Flash y/y, 1.2%, 1.3% forecast, 1.3% previous
- EU Jul Unemployment Rate, 8.2%, 8.2% forecast, 8.3% previous 8.2% revised
- Germany Jul Retail Sales m/m Real, -0.4%, 0.0% forecast, 1.2% previous 0.9% revised
- Germany Jul Retail Sales y/y Real, 0.8%, 3.0% previous 2.7% revised
Economic Data Ahead
- (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of July. The index posted a rise of 0.5 percent in June.
- (0830 ET/1230 GMT) The Statistics Canada will report its industrial producer prices for the month of July. The indicator gained 0.5 percent in the prior month.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions eased to 63.0 in August from 65.5 previous months reading.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 95.5 in August, after posting a final reading of 95.3 in July.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1300 ET/1700 GMT) Remarks by ECB Vice President Luis de Guindos at the closing event of Cursos de La Granda organised by University of Oviedo in La Granda, Spain
N/A The deadline set by U.S. President Donald Trump looms over Canada to seal a deal on a revamped North American Free Trade Agreement.
FX Beat
DXY: The dollar index gained on hopes that the North American Free Trade Agreement (NAFTA) will conclude with a trilateral deal after top NAFTA negotiators from Canada and the United States agreed to meet to resolve final differences before a deadline, with Mexican counterparts on standby to rejoin negotiations. The greenback against a basket of currencies trades 0.1 percent up at 94.79, having touched a low of 94.43 on Tuesday, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at 22.46 (Neural) by 1000 GMT.
EUR/USD: The euro declined, extending previous session losses, after data showed Eurozone inflation slowed this month, supporting the European Central Bank's assessment that a recent upward momentum could be temporary. Additionally, another survey showing German retail sales fell unexpectedly in July, weighed down by concerns that trade friction will hurt German manufacturers’ sentiment. The European currency traded 0.1 percent down at 1.1660, having touched a high of 1.1733 on Tuesday, its highest since July 31. FxWirePro's Hourly Euro Strength Index stood at -44.43 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1747 (July 31 High), a break above targets 1.1790 (July 9 High). On the downside, support is seen at 1.1599 (10-DMA), a break below could drag it till 1.1539 (21-DMA).
USD/JPY: The dollar slumped to a 1-week low as a report that President Trump plans to impose new tariffs on China next month and an ongoing rout in emerging market currencies broadly dented investor risk appetite. The major was trading 0.2 percent down at 110.78, having hit a low of 110.68 earlier, its lowest since August 23. FxWirePro's Hourly Yen Strength Index stood at 32.30 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Chicago purchasing managers index and the Michigan consumer sentiment index. Immediate resistance is located at 111.95 (July 31 High), a break above targets 112.17 (July 11 High). On the downside, support is seen at 110.70 (August 9 Low), a break below could take it lower 110.43 (August 15 Low).
GBP/USD: Sterling eased, retreating further from a 4-week peak touched in the previous session as investors remain wary over the possibility of a no-deal Brexit. On Thursday, the major rose to a 1-month peak after the European Union negotiator, Michel Barnier, stated that EU was ready to offer Britain an unprecedentedly close relationship after it leaves. The pair traded 0.1 percent down at 1.2999, having hit a high of 1.3042 the day before; it’s highest since August 3. FxWirePro's Hourly Sterling Strength Index stood at 17.36 (Neutral) 1000 GMT. Immediate resistance is located at 1.3083 (July 19 High), a break above could take it near 1.3159 (July 24 High). On the downside, support is seen at 1.2927 (5-DMA), a break below targets 1.2859 (21-DMA). Against the euro, the pound was trading 0.05 percent down at 89.72 pence, having hit a high of 89.53 on Thursday, it’s highest since August 21.
USD/CHF: The Swiss franc surged to a 4-1/2 month peak as investor risk appetite was broadly curbed by a report that President Trump plans to impose new tariffs on China next month. The major trades 0.2 percent down at 0.9673, having touched a low of 0.9652 earlier, it’s lowest since April 18. FxWirePro's Hourly Swiss Franc Strength Index stood at 158.16 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9703 (23.6% retracement of 0.9866 and0.9652) and any break above will take the pair to next level till 0.9735 (38.2% retracement). The near-term support is around 0.9635 and any close below that level will drag it till 0.9600.
Equities Recap
European shares declined for a second consecutive session on reports that U.S. President Donald Trump is planning more tariffs on China, while greenback gained as investors braced for Canada and the United States NAFTA deal talks, with Mexican counterparts on standby to rejoin negotiations.
The pan-European STOXX 600 index slumped 0.7 percent at 382.68 points, while the FTSEurofirst 300 index declined 0.7 percent to 1,506.95 points.
Britain's FTSE 100 trades 0.5 percent down at 7,480.79 points, while mid-cap FTSE 250 rose 0.3 percent to 20,743.37 points.
Germany's DAX fell 0.9 percent at 12,371.21 points; France's CAC 40 trades 1.2 percent lower at 5,411.47 points.
Commodities Recap
Crude oil prices declined amid concerns over the impact of a global trade war, although looming U.S. sanctions on Iran and falling Venezuelan output limited the downside. International benchmark Brent crude was trading 0.1 percent down at $77.44 per barrel by 1030 GMT, having hit a high of $78.05, its highest since July 11. U.S. West Texas Intermediate was trading 0.5 percent lower at $69.69 a barrel, after rising as high as $70.47 the day before, its highest since August 8.
Gold prices surged amid concerns about an escalation in the U.S.-China trade dispute following fresh threats by President Donald Trump. Spot gold was up 0.5 percent at $1,206.15 an ounce at 1033 GMT, having touched a low of $1,196.15 on Thursday, its lowest since August 24 and was heading for its fifth straight monthly decline. U.S. gold futures were up 0.7 percent at $1,212.80 an ounce.
Treasuries Recap
The U.S. Treasuries climbed before ending the trading week with the final University of Michigan consumer confidence survey results for August and Chicago PMI. On the preliminary results, the headline Michigan consumer sentiment index fell a larger-than-expected 2.6pts to an eleven-month low of 95.3. The yield on the benchmark 10-year Treasuries fell 1-1/2 basis point to 2.846 percent, the super-long 30-year bond yields also slipped nearly 1-1/2 basis points to 2.995 percent and the yield on the short-term 2-year traded close to 1 basis point lower at 2.645 percent.
The German bunds lost ground during European session after investors have shrugged-off the fall in Eurozone’s consumer price inflation (CPI) data for the month of August. Further, the eurozone’s unemployment rate for the month of July remained unchanged, meeting market expectations as well. The German 10-year bond yields, which move inversely to its price, rose 1/2 basis point to 0.354 percent, the yield on the 30-year note rose nearly 1 basis point to 1.031 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points to -0.605 percent.
The New Zealand bonds closed higher after the country’s dairy giant Fonterra lowered global milk price forecast for 2018-19, citing increased supply in Europe and the United States ahead of the GlobalDairyTrade (GDT) price auction, scheduled to be held early next week. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1-1/2 basis points to 2.560 percent, the yield on the long-term 20-year note fell 2 basis points to 2.875 percent and the yield on short-term 2-year closed 1 basis point down at 1.655 percent.
The Japanese government bonds slightly gained on the last trading day of the week after the country’s unemployment rate and industrial production for the month of July, both disappointed market sentiments, forcing buyers into safe-haven instruments. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.105 percent, the yield on the long-term 30-year note flat at 0.850 percent and the yield on short-term 2-year remained tad lower at -0.109 percent.
The Australian bond yields slumped during the Asian session, tracking a similar movement in U.S. peer amid ongoing trade negotiations over NAFTA with Canada and Mexico. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 4-1/2 basis points to 2.526 percent, the yield on the long-term 30-year bond plunged 5 basis points to 3.042 percent and the yield on short-term 2-year lost 2 basis points to 1.972 percent.
