Market Roundup
- British PM may says there will be no retreat towards protectionism
- British PM may says we can be confident about the strengths of the UK economy
- G20 - Obama says G20 summit committed to using all policy tools to spur growth
- G20 - Obama says benefits of globalization need to be shared broadly by more workers in global economy
- Norway's Aug s/a housing-prices rose 1.1 pct vs July
- UK Aug all-sector PMI 53.2 vs July 47.4, highest since March - Markit/CIPS
- UK Aug services PMI 'prices charged' component rises to 52.3 from 51.0, highest since Jan 2014
- Swiss total sight deposits at 515.771 bln sfr in week ending September 2 versus 515.599 bln sfr a week earlier
- Markit eurozone July-Aug services business expectations PMI 60.7 (flash 60.2; July final 60.9); lowest since Dec 2014
- Markit eurozone Aug final composite output prices PMI 49.3 (49.5 flash, July final 49.8)
- Swedish service sector production +5.3 pct yr/yr in July - stats office
- Swedish industrial production +1.1 pct mo/mo in July
Economic Data Ahead
- (1901 ET/2301 GMT) The British Retail Consortium publishes Retail Sales Monitor for the month of August. The indicator rose at an annualized rate of 1.1 percent in the previous month.
Key Events Ahead
No Significant Events Scheduled
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.2 percent lower at 95.68, attempting to stay above a 1-week low of 95.19 touched on Friday following downbeat U.S. non-farm payroll data.
EUR/USD: The euro edged up, after data released earlier showed Eurozone's Sentix investor confidence and retails sales rising higher than estimates. Eurozone's Sentix investor confidence for the month of September came in at 5.6 against consensus of 5.0, while retail sales rebounded to 1.1 percent in July, down from 0.1 percent. However, the upside was capped as downbeat Markit services PMI stood at 52.8 versus projection of 53.1, weakening the bid tone in the major. The European currency trades 0.1 percent up at 1.1161, attempting to recover from previous session losses. In the daily chart the pair is facing strong resistance at 1.1260 and further bullishness can be seen only above that level. Any break above 1.1260 will take the pair till 1.1300/1.1370. On the lower side, minor support is around 1.11500 and any break below targets 1.112 (200- day MA)/1.1045.
USD/JPY: The Japanese yen rallied against the dollar, after comments from Bank of Japan Governor Haruhiko Kuroda indicated that the central bank was unlikely to ease further this month. Kuroda acknowledged that negative rates could hurt public sentiment and the rate of returns on pension investments. However, BoJ's comprehensive assessment of its policies later this month won't lead to a withdrawal of easing, he added. The major trades 0.6 percent lower at 103.21, hovering away from a 1-month high of 104.31 hit on Friday. The short term trend is slightly bearish as long as resistance 104.89 (90- day EMA) holds. The major resistance is around 104.90 and break above targets 105.80/107. On the lower side, major support is around 102.45 (9- day EMA) and any break below 101.80 will drag the pair till 100.55/100.
GBP/USD: Sterling advanced to a 7-week high against dollar after survey showed Britain's services industry rebounded in August following a decline triggered by Brexit shock vote. The Markit/CIPS Purchasing Managers' Index for the services sector in August rose to 52.9 from a 7-year low of 47.4 hit in July. Sterling trades 0.3 percent up at 1.3324, having touched a high of 1.3375, its highest since July 15, following the data release. Any further bullishness can be seen only above 1.3345 (55-day EMA) level. Any break above 1.3350 will take the pair till 1.3480. On the lower side, major support stands at 1.3250 and any break below targets 1.3170 (9- day EMA)/1.3120/1.3050. Against the euro, the pound trades 0.1 percent up at 83.77 pence, having hit a high of 83.52 pence, its highest since early August.
USD/CHF: The Swiss franc edged up, as the dollar weakened across the broad. The greenback trades 0.1 percent lower at 0.9790, hovering towards a low of 0.9739 hit in the previous session following weaker-than-expected U.S jobs report. Any break below 55- day EMA will take the pair to next level till 0.9710(daily Kijun-Sen)/0.9635. On the higher side, any break above 0.9835 will drag the pair till 0.9880/0.9960. The short-term weakness can be seen only below 0.9630.
AUD/USD: The Australian dollar rose, supported by better-than-expected Chinese services PMI and robust domestic data, however, it trimmed gains after rising above the 0.7600 handle. The Aussie trades 0.2 percent up at 0.7585, having touched an early high of 0.7606. Investors now await Reserve Bank of Australia policy meeting due tomorrow, which is expected to hold its cash rate steady at a record low of 1.5 percent. On the higher side, any break above 0.7620 (daily Kijun-Sen) will take the pair till 0.7650/0.7700. The major support is around 0.7500 and break below will drag it till 0.7480/0.7420.
NZD/USD: The New Zealand dollar advanced as broad-based weakness in the greenback helped the major to maintain its bid tone and headed towards it Friday's high touched following downbeat U.S. nonfarm payroll data release. The Kiwi trades 0.4 percent higher at 0.7314, extending gains above the 0.7300 handle. In absence of significant macro updates today, markets attention will remain on Tuesday’s NZ GDT auction results for further momentum on the major. Immediate resistance is located at 0.7360 (Previous Session High), break above could take it near 0.7380 (2016 High)/ 0.7400. On the downside, support is seen at 0.7251 (20-DMA), break below target 0.7227/0.7200.
Equities Recap
World shares rose to their highest in over a month, while European shares hit a 4-month high on the back of mining and oil stocks as crude prices rose more than 3 percent for the second consecutive session in the commodity markets.
MSCI world stocks index witnessed biggest gain in a month, while MSCI's broadest index of Asia-Pacific shares outside Japan ended up 1.6 percent.
The pan-European STOXX 600 index added 0.21 percent at 351.22 points, while the FTSEurofirst 300 index edged up 0.22 percent at 1,381.95 points.
Britain's FTSE 100 trades 0.3 percent down at 6,872.23 points, while mid-cap FTSE 250 was flat at 18,009.40 points.
Germany's DAX rose 0.25 percent at 10,710.17 points; France's CAC 40 trades 0.38 percent higher at 4,560.78 points.
Tokyo's Nikkei rose 0.66 pct at 17,037.63, Australia's S&P/ASX 200 index gained 0.95 pct at 5,423.90 points and South Korea's KOSPI advanced 1.07 percent at 2,060.08 points.
Shanghai composite index and CSI300 index both added 0.2 pct at 3,072.10 points and 3,319.68 points, respectively. Hong Kong's Hang Seng index climbed 1.7 pct at 23,649.55 points.
Commodities Recap
Crude oil rose, extending gains above the $49.00 a barrel mark as renewed expectations that major producers including Saudi Arabia and Russia could cooperate to support oil markets, strengthened investor sentiments. Global benchmark Brent crude oil gained 5.4 percent at $49.10 a barrel at 0939 GMT, while U.S. West Texas Intermediate crude oil was also 5.1 percent up at $46.41 a barrel.
Gold prices rose as the dollar weakened after downbeat U.S. jobs data reduced the likelihood of a Federal Reserve rate hike in September. Spot gold gained 0.3 percent at $1,327.72 per ounce by 0952 GMT, after rising as much as over 1 percent on Friday. U.S. gold futures were up 0.3 percent at $1,330.50.
Treasuries Recap
(Friday closing) The US Treasuries managed to finish off the week with mild selling across the curve, taking only some cues from the weaker than expected August employment report. The yield on the benchmark 10-year Treasury note rose 1 basis point to 1.608 percent, the yield on 5-year note also climbed nearly 1 basis point to 1.198 percent and the yield on short-term 2-year note remained steady at 0.794 percent.
The UK gilts traded nearly flat Monday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year gilts hovered around 0.72 percent mark, the super-long 40-year bond yield remained steady 1.20 percent and the yield on short-term 2-year bond rose 1/2 basis point to 0.140 percent.
The German bunds traded modestly firmer after data showed that the country’s PMI came weaker than expected in August. The yield on the benchmark 10-year bond fell 1 basis point to -0.049 percent, the yield on long-term 30-year note also tumbled 1 basis point to 0.525 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.638 percent.
The Japanese government bonds plunged as investors moved away from safe-haven buying after the Bank of Japan governor Kuroda said that they were limited on what the central bank can do on two-day monetary policy meeting scheduled on September 21. The benchmark 10-year bond yield rose nearly 5 basis points to -0.009 percent, the super-long 30-year JGB yield climbed 3 basis points to 0.537 percent and the short-term 2-year JGB yield increased 1/2 basis point to -0.180 percent.
The New Zealand government bonds closed modestly higher as investors covered previous short positions. The yield on the benchmark 10-year bond fell 1 basis point to 2.305 percent, the yield on 7-year note also ended 1/2 basis point lower at 2.010 percent and the yield on short-term 2-year note also dipped 1 basis point to 1.865 percent.
The Australian government bonds slumped ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision. The yield on the benchmark 10-year Treasury note rose 5 basis points to 1.958 percent and the yield on short-term 2-year bounced 1-1/2 basis points to 1.505 percent.
