Market Roundup
- EUR/USD -0.34%, USD/JPY 0.57%, GBP/USD -0.26%, EUR/GBP -0.07%
- DXY 0.41%, DAX 0.49%, FTSE 0.15%, Brent -0.68%, Gold -0.28%
- China says military means not an option to resolve Korea situation
- German FDP demands policy change as price for coalition with Merkel
- Two worlds of Labour, Britain's opposition party struggles to unite
- German exporters unfazed by stronger euro, car sector less upbeat - Ifo
- Oversized European banking sector likely to shrink: ECB's Nouy
- UK retail sales growth spikes higher in September - CBI
- EZ Aug Money-M3 Annual Growth 5.0% vs 4.5%, forecast 4.6%
- Brent oil eases but remains in sight of 2015 highs
- Gold edges down as dollar gains on Fed rate hike view
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have increased 1.0 percent in August after declining 6.8 percent in July.
- (1000 ET/1400 GMT) The National Association of Realtors is likely to report that U.S. pending home sales decreased 0.5 percent in August after declining 0.8 percent in July.
- (1100 ET/1500 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending September 18.
- (1600 ET/2000 GMT) The Reserve Bank of New Zealand will announce its interest rate decision and release monetary policy statement.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending September 18.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending September 18.
Key Events Ahead
- (0915 ET /1315 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari makes welcoming remarks at Tribal Community Perspectives on Higher Education in Minneapolis.
- (0945 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.625 bn)
- (1145 ET/1545 GMT) Bank of Canada Governor Stephen Poloz will deliver a report on economic progress.
- (1330 ET/1730 GMT) St. Louis Fed President James Bullard gives a presentation on the U.S. economy and monetary policy before an event hosted by Truman State University, in Kirksville.
- (1400 ET/1800 GMT) Fed Board Governor Lael Brainard speaks on "Labor Market Disparities" before conference, "Banking and the Eco nomy: A Forum for Minority Bankers" hosted by the Kansas City Fed.
- (1600 ET/2100 GMT) The Reserve Bank of New Zealand Governor gives a press conference.
- (1900 ET/2300 GMT) Boston Fed President Eric Rosengren speaks before the Money Marketeers of New York University.
FX Beat
DXY: The dollar rallied versus its major peers as President Donald Trump's administration prepared to outline a new tax plan and on growing expectations that the U.S. Federal Reserve will raise interest rates for the third time this year. The greenback against a basket of currencies traded 0.4 percent up at 93.41, having touched a high of 93.50, its highest since Aug. 23. FxWirePro's Hourly Dollar Strength Index stood at 67.23 (Bullish) by 1100 GMT.
EUR/USD: The euro slumped to a 1-month low as German election setback and persistent greenback buying weighed heavily on the major. However, the pair is seen making minor-recovery attempts, in the wake of renewed buying seen around the EUR/JPY cross. The European currency traded 0.4 percent down at 1.1745, having touched a low of 1.1731 earlier, its lowest since Aug. 18. FxWirePro's Hourly Euro Strength Index stood at -131.84 (Highly Bearish) by 1100 GMT. Technically pair is trading well below 100-4 HMA and 200- 4H MA has closed below 1.1870 (233- 4H MA) and this confirms major weakness, a decline till 1.17600 (55- day EMA)/1.1700 likely. On the higher side, near term resistance around 1.1825 and any break above will take it to next level till 1.1870/ 1.1923 (20- day MA)/1.1965/1.2000.
USD/JPY: The dollar rallied to multi-week highs as hawkish comments by the Fed Chair Janet Yellen, reinforced market expectations for additional rate hike move in 2017. Moreover, optimism over the US President Donald Trump's tax reform plan provided additional boost to the major. The major was trading 0.6 percent up at 112.92, having hit a high of 112.96 earlier, its highest since Jul. 14. FxWirePro's Hourly Yen Strength Index stood at -71.73 (Bearish) by 1100 GMT. On the lower side, any close below 111.15 (100- day MA) confirms minor weakness, a decline till 110/108.50 likely. Any break above 113 confirms minor bullishness, a jump till 114/114.50.
GBP/USD: Sterling trimmed losses after falling to a 2-week low earlier in the session, after data showed British retail sales growth unexpectedly surged to a two-year high during the first part of this month, giving the Bank of England confidence to raise interest rates as soon as November. The major traded 0.3 percent down at 1.3417, having hit a low of 1.3363 earlier, its lowest since Sept. 14. FxWirePro's Hourly Sterling Strength Index stood at 75.07 (Slightly Bullish) by 1100 GMT. The near term psychological support is around 1.3313 (21- day EMA) and any break below will drag the pair down till 1.3260/1.3200. The pair on the higher side is facing major resistance around 1.3450 (55- 4H EMA) and any break above will take it to next level to 1.3500/1.3545 (61.8% fibo). Against the euro, the pound was trading 0.1 percent down at 87.55 pence, having hit a high of 87.46 pence earlier, its highest since July.
USD/CHF: The Swiss franc slumped to a 1-month low as the greenback rallied across the board on hawkish comments by Federal Reserve Chair Janet Yellen. The major trades 0.6 percent up at 0.9746, having touched a high of 0.9763 earlier, it’s highest since Aug. FxWirePro's Hourly Swiss Franc Strength Index stood at 17.32 (neutral) by 1100 GMT. The short term trend is still bullish as long as support 0.9630 (233-4H MA) holds and any break below will drag the pair down till 0.9580/0.9565/0.9525. The near term resistance is around 0.9750 (trend-line resistance) and any convincing break above will take it to next level till 0.97730/0.9808/0.9845.
AUD/USD: The Australian dollar tumbled near six-week lows in response to increased demand for the greenback across the board after the Fed Chair Yellen’s hawkish remarks. The Aussie trades 0.3 percent down 0.7858, having hit a low of 0.7836 earlier, it’s lowest since Aug. 16. FxWirePro's Hourly Aussie Strength Index stood at -33.41 (Neutral) by 1100 GMT. On the lower side, near term support is around 0.7800 and any close below will drag the pair till 0.77186/0.7685. The near term resistance is around 0.8000 and any break above targets 0.8065/0.8125.
Equities Recap
European shares rallied to a 10-week high, underpinned by banking stocks, while the dollar against a basket of currencies rallied as investors awaited U.S. President Donald Trump's tax plan.
The pan-European STOXX 600 index climbed 0.3 percent to 385.03 points, while the FTSEurofirst 300 index rallied 0.4 percent to 1,515.14 points.
Britain's FTSE 100 trades 0.3 percent up at 7,304.62 points, while mid-cap FTSE 250 gained 0.2 percent to 19,535.92 points.
Germany's DAX rose 0.5 percent at 12,613.73 points; France's CAC 40 trades 0.2 percent higher at 5,276.87 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, following a report of a possible increase in Nigerian exports, however, an unexpected drop in U.S. crude inventories capped the downside. International benchmark Brent crude was trading 0.9 percent down at $58.02 per barrel by 1044 GMT, having hit a high of $59.48 on Tuesday, its strongest since Jul. 2015. U.S. West Texas Intermediate was trading 0.6 percent up at $51.77 a barrel, after rising as high as $52.41 the day before, its highest since April.
Gold prices declined to a 5-week low, weighed down by a stronger dollar amid prospects for a December interest rate hike in the United States and ahead of the unveiling of a tax plan by Donald Trump's administration. Spot gold eased 0.3 percent to $1,289.57 per ounce by 1047 GMT, having declined to a low of $1286.14 earlier, its lowest since Aug. 25. U.S. gold futures for December delivery fell 0.5 percent to $1,294.90.
Treasuries Recap
The U.S. Treasuries plummeted, following a speech from Federal Reserve Chair Janet Yellen yesterday, where she kept hopes alive for a further rate cut this year in December. The yield on the benchmark 10-year Treasury climbed nearly 6 basis points to 2.29 percent, the super-long 30-year bond yields 5-1/2 basis points up at 2.82 percent and the yield on short-term 2-year note traded 1-1/2 basis points higher at 1.47 percent.
The UK gilts sunk following the overnight speech from Fed Chair Janet Yellen, where she mentioned the possibility of a third rate hike this year. The yield on the benchmark 10-year gilts, jumped 4 basis points to 1.37 percent, the super-long 30-year bond yields also surged nearly 4 basis points to 1.94 percent and the yield on the short-term 2-year traded nearly 2 basis points lower at 0.46 percent.
The German government bunds plunged as investors wait to watch the release of the country’s employment report for the month of September, scheduled to be released on September 29. The German 10-year bond yields, which moves inversely to its price, jumped over 6-1/2 basis points to 0.48 percent, the yield on 30-year note hovered surged nearly 7 basis points to 1.27 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at -0.68 percent.
The New Zealand bonds firmed at the time of closing as investors are closely eyeing the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, scheduled to be unveiled later today for detailed direction into the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.98 percent, the yield on 7-year note also slipped 1 basis point to 2.84 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.12 percent.
The Japanese government bonds weakened, as investors expected to witness a rise in the country’s consumer price-led inflation index (CPI) for the month of August, scheduled to be released on September 28 by 23:30GMT. Also, the retail sales for August, due on the same day by 23:50GMT, will add detailed direction in the bonds market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.04 percent, the yield on long-term 30-year also climbed 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.13 percent.
The Australian bonds traded lower, tracking weakness in the U.S. counterpart, but moved little after investors heard from the U.S. Fed Chair Janet Yellen. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.79 percent, the yield on the 15-year note climbed nearly 1 basis point to 3.06 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.96 percent.
