Market Roundup
- Italy's 5-Star, opposition, clash over potential cabinet roles
- Corbyn 'will do everything necessary' to stop no-deal Brexit
- Steady French economic confidence defies euro-gloom in August: surveys
- UK mortgage approvals hit nearly 2-1/2-year high in July: UK Finance
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 2.4 percent in June, after posting similar gains in the previous month.
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of June. The index gained 0.3 percent in May.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish its Manufacturing Index for August. The index declined 4 in the prior month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index edged down as the 10-year U.S. Treasury yields fell to 1.5097 percent, keeping the yield curve inverted as two-year yields traded at 1.5264 percent, a sign of an impending recession. The greenback against a basket of currencies traded 0.1 percent down at 97.91, having touched a low of 97.17 on Friday, its lowest since August 9.
EUR/USD: The euro steadied after data showed French consumers and businesses in August shrugged off the gloom settling in across much of the eurozone. However, the recovery in the major appears fragile as talks between Italy’s ruling 5-Star Movement and the opposition Democratic Party to form a new coalition government were at risk of failure over who should become the next interior minister. The European currency traded flat at 1.1107, having touched a high of 1.1163 on Monday, its highest since August 14. Immediate resistance is located at 1.1119 (38.2% retracement of 1.1230 and 1.1051), a break above targets 1.1162 (61.8% retracement). On the downside, support is seen at 1.1079 (August 21 Low), a break below could drag it below 1.1051 (August 23 Low).
USD/JPY: The dollar plunged against the Japanese yen amid worries the U.S.-China trade conflict would get worse. On Monday, U.S. President Donald Trump said China had contacted Washington overnight to say it wanted to return to the negotiating table, however, Chinese Foreign Ministry spokesman stated that he was unaware that a phone call had taken place. The major was trading 0.3 percent down at 105.79, having hit a low of 104.44 on Monday, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing price index and consumer confidence. Immediate resistance is located at 106.58 (21-DMA), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.26 (August 9 Low), a break below could take it lower at 105.05 (August 12 Low).
GBP/USD: Sterling rose, reversing most of its previous session losses, after opposition Labour Party leader Jeremy Corbyn said he would do everything necessary to prevent Britain leaving the European Union without a transition deal. The major traded 0.3 percent up at 1.2258, having hit a high of 1.2293 on Friday, it’s highest since July 29. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2331 (61.8% retracement of 1.2522 and 1.2079), a break above could take it near 1.2417 (78.6% retracement). On the downside, support is seen at 1.2149 (10-DMA), a break below targets 1.2108 (August 22 Low). Against the euro, the pound was trading 0.3 percent up at 90.60 pence, having hit a high of 90.28 on Thursday, it’s highest since July 29.
USD/CHF: The Swiss franc eases, extending previous session losses, as investor risk appetite improved after U.S. President Donald Trump signalled a possible reconciliation with China. The major trades 0.2 percent up at 0.9801, having touched a low of 0.9713 on Monday, it’s lowest since August 14. On the higher side, near-term resistance is around 0.9831 (August 21 High)) and any break above will take the pair to next level till 0.9877 (August 23 High). The near-term support is around 0.9703 (August 6 Low), and any close below that level will drag it till 0.9659 (August 13 Low).
Equities Recap
European shares rose after U.S. President Donald Trump predicted a trade deal with China.
The pan-European STOXX 600 index gained 0.2 percent at 371.49 points, while the FTSEurofirst 300 rallied 0.2 percent to 1,463.24 points.
Britain's FTSE 100 trades 0.2 percent down at 7,079.12 points, while mid-cap FTSE 250 surged 0.2 to 19,276.04 points.
Germany's DAX rose 0.3 percent at 11,689.97 points; France's CAC 40 trades 0.1 percent higher at 5,357.49 points.
Commodities Recap
Crude oil prices surged after U.S. President Donald Trump predicted a trade deal with China after positive comments by Beijing. International benchmark Brent crude was trading 0.9 percent higher at $59.35 per barrel by 1042 GMT, having hit a low of $58.29 on Friday, its lowest since August 16. U.S. West Texas Intermediate was trading 0.9 percent up at $54.29 a barrel, after falling as low as $52.95 on Monday, its lowest since August 9.
Gold prices steadied after retreating from an over 6-year peak hit in the previous session, as U.S. President Donald Trump signalled a possible reconciliation with China, calming worries about an escalation in their trade war. Spot gold was trading 0.2 percent up at $1,530.67 per ounce by 1044 GMT, having touched a high of $1,555.10 on Monday, its highest since August 2013. U.S. gold futures were flat at $1,537.80 an ounce.
Treasuries Recap
The U.S. Treasuries surged during the afternoon session ahead of the country’s consumer confidence data for the month of August, scheduled to be released today by 14:00GMT and the short-term 2-year auction, also due today by 17:00GMT. However, this the gross domestic product (GDP) for the second quarter of this year, due on August 29 will snatch the key limelight from investors, for further direction in the debt market. The yield on the benchmark 10-year Treasury yield slumped 3 basis points to 1.513 percent, the super-long 30-year bond yield plunged nearly 4-1/2 basis points to 1.998 percent and the yield on the short-term 2-year suffered 2 basis points to 1.530 percent.
The United Kingdom’s gilts remained flat during European trading hours, amid a muted session that barely witnessed any data of major economic significance, after returning from a long weekend. The yield on the benchmark 10-year gilts, hovered around 0.555 percent, the 30-year yield edged tad higher to 1.088 percent and the yield on the short-term 2-year too traded steady at 0.396 percent.
The German bunds gained slightly during European trading session after the country’s gross domestic product (GDP) for the second quarter of this year, shrunk, disappointing market investors while eyes still remain on the employment report for the month of August, scheduled to be held on August 29 by 09:40GMT for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, hovered around -0.672 percent, the yield on 30-year note slipped 1 basis point to -0.179 percent and the yield on short-term 2-year traded 1 basis point higher at -0.884 percent.
The Australian government bonds suffered during Asian session of the second trading day of the week as risk sentiments improved overnight on hopes of developments in the Sino-American trade war. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 3 basis points to 0.920 percent, the yield on the long-term 30-year bond surged 3-1/2 basis points to 1.556 percent and the yield on short-term 2-year also gained nearly 3-1/2 basis points to 0.740 percent.
