Market Roundup
- Germany is not facing an economic crisis: minister
- German institutes slash GDP growth forecasts
- Oil declines ahead of U.S. crude stocks data
- PM Johnson to unveil 'final Brexit offer' to EU
- Gold gains on U.S. slowdown fears
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of September. The report is expected to show that 140,000 jobs were added as compared with 195,000 jobs in August.
- (0945 ET/1345 GMT) The NAPM-New York releases ISM-New York Index for the month of September. The index stood at 50.3 in the previous month.
Key Events Ahead
- (1915 ET/0015 GMT) Federal Reserve Bank of New York President John C. Williams' speech
FX Beat
DXY: The dollar index steadied after tumbling from an over 2-year peak in the previous session on disappointing U.S. manufacturing data that fanned fears of a sharp global economic slowdown and stoked bets of further interest rate cuts. The greenback against a basket of currencies traded 0.1 percent up at 99.30, having touched a high of 99.67 on Tuesday, its highest since May 2017.
EUR/USD: The euro declined following another speech from outgoing European Central Bank Chief Mario Draghi calling for fiscal stimulus to boost the region’s sluggish economy. The European currency traded 0.1 percent down at 1.0918, having touched a low of 1.0879 the day before, its lowest since May 2017. Immediate resistance is located at 1.0966 (38.2% retracement of 1.1109 and 1.0879), a break above targets 1.0994 (50% retracement). On the downside, support is seen at 1.0865, a break below could drag it below 1.0830.
USDJPY: The dollar plunged to a 1-week low after U.S. manufacturing activity tumbled to more than a decade low, sparking worries that the fallout from the U.S.-China trade war is spreading to the U.S. economy. The major was trading 0.1 percent down at 107.60, having hit a high of 108.46 on Tuesday, its highest since September 19. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change and Fed Williams' speech. Immediate resistance is located at 108.25 (September 13 High), a break above targets 108.47 (September 19 Low). On the downside, support is seen at 107.42 (September 26 Low), a break below could take it near at 107.18 (September 10 Low).
GBP/USD: Sterling tumbled as investors turned cautious amid concerns that British Prime Minister Boris Johnson’s proposal to replace the Irish border backstop will not seal an EU separation agreement. Johnson is expected to unveil his final Brexit offer to the European Union later and make clear that if Brussels does not engage with the proposal, Britain will not negotiate further and will leave on Oct. 31. The major traded 0.4 percent down at 1.2254, having hit a low of 1.2204 on Tuesday, it’s lowest since September 4. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2362 (21-DMA), a break above could take it near 1.2400. On the downside, support is seen at 1.2233 (September 9 Low), a break below targets 1.2210 (September 5 Low). Against the euro, the pound was trading 0.4 percent down at 89.13 pence, having hit a low of 89.36 the day before, it’s lowest since Sept. 13.
USD/CHF: The Swiss franc plunged, hovering towards a 4-month trough, as the greenback rallied against a basket of currencies. The major trades 0.6 percent up at 0.9992, having touched a high of 1.0016 on Tuesday, it’s highest since June 3. On the higher side, near-term resistance is around 1.0042 and any break above will take the pair to next level till 1.0084. The near-term support is around 0.9915, and any close below that level will drag it till0.9890 (September 23 Low).
Equities Recap
European shares hit a 1 month-low on fresh worries over Brexit, while dismal factory reports from across the eurozone and the United States intensified global growth fears.
The pan-European STOXX 600 index slumped 1.5 percent at 382.35 points, while the FTSEurofirst 300 eased 1.5 percent to 1,503.30 points.
Britain's FTSE 100 trades 1.9 percent down at 7,215.35 points, while mid-cap FTSE 250 rose 1.2 to 19,635.17 points.
Germany's DAX fell 1.3 percent at 12,103.07 points; France's CAC 40 trades 1.6 percent lower at 5,506.76 points.
Commodities Recap
Crude oil prices declined amid fears of a sharp global economic slowdown. International benchmark Brent crude was trading 0.8 percent down at $58.74 per barrel by 1033 GMT, having hit a low of $58.37 the day before, its lowest since September 12. U.S. West Texas Intermediate was trading 0.3 percent lower at $53.76 a barrel, after falling as low as $53.02 on Tuesday, its lowest since September 3.
Gold prices rose, extending previous session gains as disappointing U.S. manufacturing data fanned fears of a sharp global economic slowdown and stoked bets of further interest rate cuts. Spot gold was trading 0.3 percent to $1,482.76 per ounce by 1035 GMT, having touched a low of $1,458.97 on Tuesday, its lowest since August 6. U.S. gold futures were little changed at $1,488.20 per ounce.
Treasuries Recap
The U.S. Treasuries jumped the afternoon session ahead of the country’s ADP non-farm employment data for the month of September, scheduled to be released today by 12:15GMT and the Federal Open Market Committee (FOMC) members Harker and Williams’ speech, also due today by 13:00GMT and 14:50GMT respectively. The yield on the benchmark 10-year Treasury yield suffered 1-1/2 basis points to 1.628 percent, the super-long 30-year bond yield slipped 1 basis point to 2.095 percent and the yield on the short-term 2-year plunged 3-1/2 basis points to 1.520 percent.
The United Kingdom’s gilts slumped during European trading hours even after the country’s manufacturing PMI for the month of September, inched lower, worse than investors’ expectations, as markets still eye Britain’s services PMI for the similar period, due on October 3 for further direction in the debt market, besides, the 10-year auction, also scheduled for release tomorrow. The yield on the benchmark 10-year gilts, jumped nearly 4 basis points to 0.508 percent, the 30-year yield surged 3 basis points to 0.983 percent and the yield on the short-term 2-year gained 4 basis points to 0.386 percent.
The German bunds inched tad lower during European trading session amid a muted day that witnessed data of little economic significance ahead of the country’s Unification Day tomorrow. However, slight attention shall be diverted towards the eurozone’s retail sales for the month of August, scheduled to be released on October 3 by 09:00GMT for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, edged 1 basis point up to -0.547 percent, the yield on 30-year note climbed a little over 1 basis point to -0.070 percent while the yield on short-term 2-year traded flat at -0.757 percent.
