Market Roundup
- USD/JPY -0.04%, EUR/USD -0.08%, GBP/USD -0.0109%
- DXY -0.04%, Brent +1.12%, Gold +0.14%, FTSE +1.12%
- Switzerland Sep Retail Sales -3.0% vs -2.2% previous
- Switzerland Sept Mfg PMI 53.2 vs 51.0 previous, 51.5 expected
- Germany Sept Markit/BME Mfg PMI 54.3 vs 54.3 previous, 54.3 expected
- EZ Sept Markit/BME Mfg PMI 52.6 vs 52.6 previous, 52.6 expected
- UK Sept Markit/BME Mfg PMI 55.4 vs 53.3 previous, 52.1 expected
- Britain’s May says to trigger EU divorce by end of March
- May on collision course with Tory backbenchers over hard Brexit – Guardian
- UK Finmin Hammond- in favour if getting Brexit done ASAP
- BoJ Gov Kuroda – Lot of room left to ease policy
- BoJ Tankan – Big manufacturing DI +6, non-manufacturing +18, +7/+18 eyed
- Japan Sept manufacturing PMI 50.4, flash 50.3, Aug 49.5, first expansion in 7-mths
- Moody’s – Japan policy stimulus to support growth, challenges remain
- Deutsche Bank, US DOJ continue to discuss mortgage-securities settlement
- China Sept official manufacturing PMI 50.4, as eyed, Aug 50.4; services 53.7, Aug 53.5
- Clinton leads Trump by five points in US presidential race
- Hungarian PM Orban loses his migrant quota referendum
Economic Data Ahead
- (0900 ET/1300 GMT) Brazil releases Purchasing Managers' Index for the month of September. The indicator declined to a seasonally adjusted 45.7 in August from a four-month high of 46.0 in July.
- (0930 ET/1330 GMT) The RBC will release Canada's Manufacturing PMI for the Month of September. The indicator stood at 51.1 in the prior month.
- (0945 ET/1345 GMT) The Markit Economics releases its final U.S. Manufacturing Purchasing Managers Index (PMI) for the month of September. The index stood at 51.4 in August.
- (1000 ET/1400 GMT) The Institute for Supply Management is likely to report that U.S. manufacturing PMI rose to 50.3 in September from a reading of 49.4 last month.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that construction spending for August rose 0.2 percent after staying unchanged in the previous month.
- (1030 ET/1430 GMT) The Bank of Canada releases Business Outlook Survey.
- (1330 ET/1730 GMT) Autodata Corp releases U.S. auto sales figures for September. Vehicles sales are likely to have risen 17.30 million, compared to a slight increase from Augusts’ 16.98 million.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade ops 30-yr Ginnie Mae max $1.725 bln.
- (1430 ET/1830 GMT) FedTrade ops 15-yr Fannie Mae/Freddie Mac max $675 mln
FX Beat
DXY: The dollar edged up versus yen amid risk-on market profile. The dollar index against a basket of currencies trades 0.1 percent up at 95.53, hovering towards a peak of 95.96 hit on Friday.
EUR/USD: The euro consolidated between a narrow range following Friday’s rally back by renewed optimism surrounding Deutsche Bank. The major failed to benefit from upbeat Eurozone's September Markit manufacturing PMI, which came in at 52.6 in line with consensus and previous. The European currency has closed out the bearish gap and trades flat at 1.1234, and attempts to break above 1.1250 level. The pair is facing resistance at 1.12680 and any violation above targets 1.1300/1.13660 level. On the lower side, support is around 1.1200 (psychological support) and any break below will drag it down till 1.1158 (200- day MA)/1.1120. It should break below 1.1120 for further weakness.
USD/JPY: The dollar gained, extending gains for the fifth consecutive session amid risk-on environment. The major rose to an intra-day high of 101.67 following the release of Tankan Manufacturing Index from Japan. However, the upside was capped as investors wary over renewed Brexit developments, which supported the safe-haven appeal of the Japanese yen. The pair trades 0.1 percent up at 101.35, attempting to sustain gains above the 101.00 handle. The pair is facing major resistance at 21- day MA and any further bullishness can be seen only above that level. The pair’s major resistance is around 101.75 (21- day MA) and break above targets 102.80/103.40. On the lower side, major support is around 100 and any break below 100 will drag the pair till 98.80.
GBP/USD: Sterling tumbled to a 3-year low against the euro and 3-month low against the dollar after British Prime Minister Theresa May stated that she would formally trigger the procedure to leave the EU by the end of March 2017, at which point Britain will enter into an initial two-year negotiating period. The major attempted a minor recovery following better-than-expected UK manufacturing PMI report, which came in at 55.4, surpassing estimates of 52.1 and previous 53.3. Sterling trades 0.7 percent lower at 1.2876, within the sigh of 1.2789, its lowest since July 6. The pair is struggling to close above 14-day MA and any break above 14- day MA (1.3075) confirms minor bullishness, a jump till 1.3120/1.3150 (21- day MA) is possible. On the lower side, support is around 1.2780 and any break below targets 1.2700. Against the euro, the pound trades 0.8 percent at 87.27 pence, having touched an early low of 87.46 pence, its lowest since August 2013.
USD/CHF: The Swiss franc extended losses, as the greenback strengthened as worries over Deutsche Bank eased. However, British PM May's statement to trigger Article 50 by end of March, spurred risk-off sentiment, capping the gains in the major. The dollar trades flat at 0.9709, attempting to sustain gains above the 0.9700 handle. On the higher side, any break above 0.9760 will take the pair till 0.9800/0.9890. The short-term weakness can be seen only below 0.9630 and any break below targets 0.9580/0.9530.
AUD/USD: The Australian dollar rose, extending gains for the second consecutive session as easing Deutsche Bank concerns boosted investor risk-appetite. The trading activity in the major remained subdued as Australian markets were closed for Labor Day. The Aussie trades 0.3 percent up at 0.7676, hovering towards a 3-week peak of 0.7710 hit last week. On the higher side, major resistance is around 0.77225, any break above will take it till 0.7760/0.7800. The major support is around 0.75800 and break below will drag it till 0.7530/0.7470/ 0.7440.
NZD/USD: The New Zealand dollar recovered after declining to an early low of 0.7253. The major strengthened largely on the back of prevalent risk-on environment, supported by rising oil prices. However, the upside remains limited as markets expect the Reserve Bank of New Zealand to ease further at its upcoming monetary policy meeting in November. The Kiwi trades flat at 0.7279, attempting to regain the 0.7300 handle. Immediate resistance is located at 0.7310 (20-DMA), break above targets 0.7330/ 0.7350. On the downside, support is seen at 0.7236 (Sept 29 Low), break below could drag it till 0.7200.
Equities Recap
European shares edged up as Deutsche Bank's health worries eased, supported by risk-on market sentiment triggered by rising oil prices.
The pan-European STOXX 600 index increased 0.2 percent at 343.60 points, while the FTSEurofirst 300 index added 0.15 percent at 1,352.66 points.
Britain's FTSE 100 trades 1.12 percent up at 6,976.91 points, while mid-cap FTSE 250 rose 1.08 percent at 18,064.76 points.
Germany's DAX rallied 1.01 percent at 10,511.02 points; France's CAC 40 trades 0.30 percent higher at 4,461.62 points.
MSCI's broadest index of Asia-Pacific shares outside Japan traded 0.8 percent higher and it advanced 8.8 percent in the third quarter.
Tokyo's Nikkei rose 0.90 percent at 16,598.67 points, Australia's S&P/ASX 200 index gained 0.75 percent at 5,476.80 points and Hong Kong's Hang Seng index rose 1.2 percent at 23,584.43 points.
Commodities Recap
Crude oil rallied, rising to its highest since August above $50 a barrel, strengthened by a planned production cut by OPEC, however, the gains remained capped as investors remained cautious over the existing supply overhang. Global benchmark Brent crude was trading 1.46 percent higher at $50.72 per barrel at 0947 GMT, having touched a fresh 7-week high of $50.87 earlier in the session. U.S. West Texas Intermediate crude gained 1.35 percent at $48.68 a barrel, after rising as high as $48.84, its highest since Aug. 22.
Gold edged up from a near 2-week low, but the recovery was fragile as the dollar stood firm and global equities gained amid easing concerns about Deutsche Bank's health. Spot gold was up 0.1 percent at $1,317.46 an ounce as of 0954 GMT, while U.S. gold futures rose 0.1 percent to $1,318.60.
Treasuries Recap
The U.S. Government bonds were little changed during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note hovered around 1.60 percent mark, the yield on 5-year bond remained steady at 1.16 percent and the yield on short-term 2-year note stood flat at 0.78 percent.
The UK gilts strengthened as Prime Minister Theresa May’ demand for control of immigration and laws represented that the Britain will leave the European Union. The yield on the benchmark 10-year gilts fell more than 2 basis points to 0.728 percent, the super-long 40-year bond yield dipped more than 2-1/2 basis point to 1.364 percent and the yield on short-term 2-year bond slid 2 basis point to 0.089 percent.
The German bunds traded nearly flat Monday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. Also, investors now look forward to September manufacturing PMI data for further direction. The yield on the benchmark 10-year bond hovered around -0.11 percent, the yield on long-term 30-year note remained steady at 0.447 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.689 percent.
The Japanese government bonds traded narrowly mixed as investors await 10-year note auction during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield rose 1 basis point to -0.068 percent, the yield on long-term 40-year note fell 1 basis point to 0.529 percent and the yield on short-term 2-year note climbed 1/2 basis point to -0.272 percent.
The New Zealand government bonds closed lower as investors awaited the Reserve Bank of New Zealand Governor Graeme Wheeler’s speech. The yield on the benchmark 10-year bond rose 3 basis points to 2.325 percent, the yield on 7-year note ended 2 basis points higher at 2.080 percent and the yield on short-term 2-year note climbed 1-1/2 basis points to 1.925 percent.
The Australian government slumped as Melbourne Institute’s Australian consumer inflation index rose for the second successive month in September that released pressure from the Reserve Bank of Australia for further monetary easing. The yield on the benchmark 10-year Treasury note rose 7 basis points to 2.031 percent, the yield on 15-year note jumped nearly 6 basis points to 2.361 percent and the yield on short-term 2-year climbed 3-1/2 basis points to 1.588 percent.
