Market Roundup
- Scottish court rules UK PM Johnson's decision to suspend parliament is unlawful
- German institutes see recession, cut growth forecasts for 2019, 2020
- UK Labour deputy to demand Brexit referendum before election
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. producer price index is likely to have increased at an annualized rate of 1.7 percent in August, while PPI excluding food and energy probably edged up 0.2 percent after easing 0.1 percent in July.
- (0830 ET/1230 GMT) Canada's releases industrial capacity utilization data for the second quarter. The indicator stood at 80.9 in the previous quarter.
- (1000 ET/1400 GMT) The U.S. Census Bureau is likely to report that wholesale inventories rose 0.2 percent in July after posting a similar gain in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending Sept 6.
FX Beat
DXY: The dollar index rose to a 1-week peak, after falling to a 2-1/2 week low earlier in the session, ahead of monetary policy decisions by the ECB on Thursday and the U.S. Federal Reserve next week, with investors hoping for further easing amid a slowdown in global growth. The greenback against a basket of currencies traded 0.3 percent up at 98.58, having touched a low of 97.86 earlier, its lowest since August 26.
EUR/USD: The euro plunged to a 1-week low amid doubts over whether the European Central Bank will announce a fresh round of asset purchases this week. The ECB is widely expected to push interest rates even further into negative territory at Thursday’s policy meeting to boost growth and inflation. The European currency traded 0.3 percent down at 1.1014, having touched a low of 1.1013 earlier, its lowest since September 4. Immediate resistance is located at 1.1067 (21-DMA), a break above targets 1.1116 (August 27 High). On the downside, support is seen at 1.1000, a break below could drag it below 1.0963 (August 30 High).
USD/JPY: The dollar advanced to a near 6-week peak as trade tensions eased after China's finance ministry announced exemptions for 16 types of U.S. products from additional retaliatory tariffs effective Sept. 17. The major was trading 0.1 percent up at 107.68, having hit a high of 107.84 earlier, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index and wholesale inventories. Immediate resistance is located at 107.97 (July 19 High), a break above targets 108.37 (July 16 High). On the downside, support is seen at 106.99 (5-DMA), a break below could take it lower at 106.59 (10-DMA).
GBP/USD: Sterling steadied near 6-week highs as no-deal Brexit risks receded as investors assessed the chances Prime Minister Boris Johnson can strike a Brexit deal with the European Union. The major traded 0.1 percent up at 1.2352, having hit a high of 1.2384 on Monday, it’s highest since July 26. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2400, a break above could take it near 1.2456 (July 17 High). On the downside, support is seen at 1.2312 (5-DMA), a break below targets 1.2224 (10-DMA). Against the euro, the pound was trading 0.3 percent up at 89.13 pence, having hit a high of 89.04 on Monday, it’s highest since July 25.
USD/CHF: The Swiss franc slumped to a 6-week low, as risk-appetite improved, boosted by optimism that a high-level meeting of U.S. and Chinese negotiators at Washington next month can deliver a breakthrough in the trade war. The major trades 0.2 percent up at 0.9932, having touched a high of 0.9940 earlier, it’s highest since August 1. On the higher side, near-term resistance is around 0.9949 (July 31 High) and any break above will take the pair to next level till 0.9975 (August 1 High). The near-term support is around 0.9875 (5-DMA), and any close below that level will drag it till 0.9813 (August 22 Low).
Equities Recap
European shares rose to 6-week highs as China eased trade worries by saying it would exempt some U.S. goods from additional tariffs, while investors awaited the European Central Bank policy meeting.
The pan-European STOXX 600 index gained 0.7 percent at 389.18 points, while the FTSEurofirst 300 surged 0.6 percent to 1,529.74 points.
Britain's FTSE 100 trades 0.9 percent up at 7,335.30 points, while mid-cap FTSE 250 rallied 1.4 to 20,020.00 points.
Germany's DAX rose 0.8 percent at 12,367.38 points; France's CAC 40 trades 0.5 percent higher at 5,621.20 points.
Commodities Recap
Crude oil prices surged after a reported sharp decline in U.S. crude stocks and as OPEC member Iraq said the producer group will discuss whether to deepen output cuts. International benchmark Brent crude was trading 0.2 percent higher at $62.86 per barrel by 1030 GMT, having hit a high of $63.74 on Tuesday, its highest since August 1. U.S. West Texas Intermediate was trading 0.2 percent up at $57.96 a barrel, after rising as high as $58.74 on Tuesday, its highest since July 31.
Gold prices rebounded, snapping a 4-day losing streak amid expectations that the European Central Bank will roll out stimulus and cut interest rates. Spot gold was trading 0.5 percent up at $1,491.93 per ounce by 1039 GMT, having touched a low of $1,483.22 earlier, its lowest since August 13. U.S. gold futures were up 0.2 percent at $1,502.2 an ounce.
Treasuries Recap
The Euro zone bond yields rose to their highest since early August amid doubts over whether the ECB will announce a fresh round of quantitative easing on Thursday. The German 10-year bond yield rose to -0.535 percent, a 1-month high, while 30-year German bond yields rose to 0.027 percent, holding in positive territory for a second day. German 10-year bond yields are 20 basis points above record lows reached a week ago.
The Japanese government bond prices fell, with Benchmark 10-year JGB futures falling 0.27 point to 154.40. The 10-year JGB yield rose 3 basis points to minus 0.200 percent, the highest since Aug. 9. The 20-year JGB yield rose 1.5 bps to 0.160 percent, while the 30-year JGB yield increased 1.5 bps to 0.290 percent. At the short end of the curve, the two-year JGB yield rose 1.5 bps to minus 0.280 percent.
