Market Roundup
- GBP/USD -0.05%, USD/JPY 0.33%, EUR/USD -0.15%
- Dollar, shares rise on expectations for a U.S. rate increase
- Sterling slips back towards $1.30 as Transatlantic rate paths diverge
- Fed’s Fischer: Central banks can’t say “one and done” on rate hikes
- Fed’s Fischer: Employment close to full employment
- Japan Chief Cab Sec Suga defends BoJ’s NIRP, watching market including FX closely
- Japan PM Advisor Hamada: MoF hesitant to back tough talk with action – Project Syndicate
- Hamada: Fed hike would be “blessing” by weakening yen, removing need for intervention
- BOJ needs massive move to shock & awe, $2 trillion investor says
- EU demands Apple pay Ireland up to 13 bln euros in tax
- Apple says will appeal against EU tax decision
- Euro zone Aug Business Climate 0.02 vs 0.39 previous, 0.36 expected
- Euro zone Aug Economic Sentiment 103.5 vs 104.6 previous, 104.1 expected
- Euro zone Aug Industrial Sentiment -4.4 vs -2.4 previous, -2.7 expected
- Euro zone Aug Services Sentiment 10 vs 11.1 previous, 11.2 expected
- Euro zone Aug Consumer Confid. Final -8.5 vs -7.9 previous, -8.5 expected
- Euro zone Aug Cons Infl Expec 3.3 vs 3.7 previous
- Euro zone Aug Selling Price Expec -0.8 vs 0.2 previous
- French economy minister to resign - French media reports
- Switzerland Aug KOF Indicator 99.8 vs 102.7 previous, 102 expected
- Switzerland Q2 Non-Farm Payrolls 4.903mln vs 4.878 previous
- Brexit angst prompts UK services firms to cut expansion plans-CBI
- UK Jul BOE Consumer Credit 1.181bln UK vs 1.837 previous, 1.7 expected
- UK Jul Mortgage Lending 2.665bln UK vs 3.348 previous, 3.2 expected
- UK Jul Mortgage Approvals 60.912k vs 64.766 previous, 61.9 expected
- UK Jul M4 Money Supply 1.2% vs 1.1 previous
Economic Data Ahead
- (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of July. The index stood at 1.8 percent for June.
- (0830 ET/1230 GMT) Canadian producer prices are expected to have edged down 0.1 percent in July after rising 0.6 percent in the prior month.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that current account deficit widened to C$20.5 billion in the second quarter after posting a deficit of C$16.8 billion in the previous quarter.
- (0900 ET/1300 GMT) The S&P Case Shiller house price index probably edged down 5.1 percent in June from 5.2 percent a year ago.
- (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. consumer confidence index declined to 97.0 in August from a reading of 97.3 recorded in July.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
- (1905 ET/2305 GMT) The GfK Group will release Britain's consumer confidence index for the month of August. The index is expected to decline 8 after slumping 12 in July.
- (1950 ET/2350 GMT) Japan's preliminary Industrial Production is expected to have edged up 0.7 percent in July, after increasing 2.3 percent in June.
Key Events Ahead
- (0945 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac max $2.050 bln.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.2 percent higher at 95.75, having touched an early high of 95.85, it’s highest since Aug. 12.
EUR/USD: The euro hit fresh 2-week low on the back of worse-than-expected Eurozone sentiment indices. Eurozone's service sentiment index for the month of August declined to 10.0 against forecast of 11.2, while industrial confidence slumped 4.4, versus projection of 2.7 drop. Moreover, Eurozone's economic sentiment indicator fell to 103.5 in August from 104.5 in July, its lowest level since March. The European currency trades 0.2 percent lower at 1.1164, having touched a low of 1.1155, its lowest since August 15. Any break below 1.1158 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 touched 3-week high as investors focused on US consumer confidence data to see whether it supports expectations of Federal Reserve interest rates hike this year. The major continues to rise across the board after hawkish comment from Vice Chairman Stanley Fischer triggered speculations of Fed rate-hike as early as September. The pair trades 0.4 percent higher at 102.30, having touched a high of 102.44, its highest since August 9. The short term trend is slightly bullish as long as support 100 holds. The major resistance is around 103.25 (55- day EMA) and any break above confirms minor trend reversal, a jump till 103.80/104.55 is possible. On the lower side, major support is around 100.57 (10- day MA) and any break below 100.57 will drag the pair till 99.50.
GBP/USD: Sterling declined back towards 1.3000 handle, on divergent monetary policy expectations, with investors anticipating BoE to cut rates at its next meeting, while U.S. Fed could raise interest rates by year-end. According to CME FedWatch, markets price in a 55 percent chance of a rate hike by the end of the year. In contrast, the Bank of England may ease policy further after cutting rates to a record low of 0.25 percent earlier this month. Sterling trades flat at 1.3099, having touched a low of 1.3059 earlier in the session. Any break above 10-DMA will take the pair to next level till 1.3175/1.3200/1.3270. On the lower side, support stands at 1.3050, break below targets 1.3000/1.2950. Against the euro, the pound trades flat at 85.30 pence.
USD/CHF: The Swiss franc declined largely on the back of worse-than-expected Switzerland's KOF leading indicator reading, amid risk-on market profile. The greenback trades 0.2 percent higher at 0.9795, after having gone as high as 0.9812, its highest since August 10. The Swiss KOF Leading Indicator slumped to 99.8 for the month of August, missing forecast of 102.3 and previous 103.5. 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- DMA) and any break above targets 0.9900/0.9960.
AUD/USD: The Australian dollar reversed early session gains as a fresh bout of US dollar buying interest weighed on the Aussie. The major hit a low of 0.7543, shrugging-off better-than-expected Australian building approvals data, which rose by 11.3 percent recording the largest percentage increase since September 2013. The pair trades 0.2 percent lower at 0.7550, hovering towards a near 4-week low of 0.7525 struck in the previous session. On the higher side any break above 0.7605 (9-DMA) will take the pair till 0.7650/0.7700/0.7760. The major support is around 0.7525 (cloud top) and break below will drag it till 0.7520/0.7490.
NZD/USD: The New Zealand dollar edged down, as the U.S dollar continued to strengthen across the broad. The major rose to an early high of 0.7264, despite New-Zealand posting weaker housing market data, which showed a decline in the number of new building permits issued in the month of July. The Kiwi trades 0.1 percent lower at 0.7240, hovering towards a 2-week low touched in the previous session. Immediate resistance is located at 0.7291 (Aug 19- High), break above would take it over 0.7300. On the downside, support is seen at 0.7201, break below targets 0.7180.
Equities Recap
European shares gained as investors reduced their earlier expectations that the Federal Reserve could hike interest rates as early as September, especially with an election in November.
The pan-European STOXX 600 index added 0.5 percent at 345.16 points, while the FTSEurofirst 300 index advanced 0.6 percent at 1,358.05 points as banking and industrial stocks gained.
Britain's FTSE 100 trades 0.1 percent up at 6,846.20 points, while mid-cap FTSE 250 fell 0.15 pct at 17,903.74 points.
Germany's DAX jumped 1.02 percent at 10,652.27 points; France's CAC 40 trades 0.94 percent higher at 4,465.82 points.
Shanghai composite index added 0.2 pct at 3,074.68 points, while CSI300 index nudged up 0.1 pct at 3,311.99 points. Hong Kong's Hang Seng index advanced 0.9 pct at 23,016.11 points.
Tokyo's Nikkei edged down 0.07 pct at 16,725.36, Australia's S&P/ASX 200 index gained 0.31 pct at 5,485.90 points and South Korea's KOSPI rose 0.4 percent at 2,040.90 points.
Commodities Recap
Crude oil rose, hovering towards the $50 a barrel level, however, markets doubts that crude producers would agree on output freeze at an upcoming meeting continue to weigh on prices. International Brent crude oil was trading 0.7 percent higher at $49.60 per barrel at 0958 GMT, while U.S. West Texas Intermediate at $47.36 a barrel, up by 0.9 percent.
Gold declined, hovering back towards near 5-week low, as investors await nonfarm payroll data due later this week for fresh cues on the timing of U.S. interest rate hike. Spot gold fell 0.2 percent at $1,319.54 per ounce at 1002 GMT, hovering towards a low of $1,314.70, its lowest since July 27. U.S. gold futures was down 0.2 percent to $1,324.80.
Treasuries Recap
The US Treasuries saw range bound activity during a relatively quiet Tuesday session light on significant economic data. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 1.571 percent, the yield on 5-year note jumped 1 basis point to 1.186 percent and the yield on short-term 2-year note also climbed 1 basis point to 0.813 percent.
The UK gilts gained after data showed that the country’s mortgage approvals fell to the lowest in 18-months as consumer borrowing lessened following the decision to leave the European Union. The yield on the benchmark 10-year gilt fell 2-1/2 basis points to 0.649 percent, the super-long 40-year bond yield dipped 3 basis points to 1.101 percent and the yield on short-long 2-year bond slid nearly 2 basis points to 0.151 percent.
The German bunds gained as investors remained cautious ahead of August consumer inflation data. The yield on the benchmark 10-year bond fell 2-1/2 basis points to -0.077 percent, the yield on long-term 30-year note dipped 1-1/2 basis points to 0.452 percent and the yield on short-term 2-year bond remained steady at -0.615 percent.
The Japanese government bonds traded narrowly mixed as investors expect that the Bank of Japan will ease interest rate in its two-day September monetary policy meeting, following dovish comments from Governor Haruhiko Kuroda at the annual Jackson Hole Symposium. The benchmark 10-year bond yield fell 1/2 basis point to -0.070 percent, the super-long 30-year JGB yield climbed 1 basis point to 0.400 percent, the 5-year JGB yield dipped 1 basis point to -0.181 percent and the short-term 2-year JGB yield slid nearly 3 basis points to -0.206 percent.
The New Zealand government bonds closed lower as investors moved away from safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond rose 2-1/2 basis points to 2.265 percent and the yield on 7-year note ended 2-1/2 basis points higher at 1.970 percent and the yield on short-term 2-year note also bounced 3 basis points to 1.840 percent.
The Australian government bonds gained on upswing in investor demand, following a market selloff on Friday after the Federal Reserve Chair Janet Yellen spoke at the annual Jackson Hole Symposium, hinting at rising possibilities of an interest rate hike. The yield on the benchmark 10-year Treasury note fell nearly 5 basis points to 1.890 percent and the yield on short-term 2-year dipped 2 basis points to 1.451 percent.
