Market Roundup
- USD/JPY +0.02%, EUR/USD -0.4%, GBP/USD -0.1%
- EUR/CHF rebounds from 1.0812 to 1.0907: SNB speculation
- Deutsche Bk shares down over 12% on the week before bounce
- Deutsche Bk 5-yr CDS jumps 21-bp to 255 from 234 Thurs cls
- DAX -1.23%, DXY +0.21%, Brent -1.75%, Iron -3.23%
- EUR/NOK drops under 9.00: 8.9830 13-mth low
- Germany Aug Retail Sales 3.7% y/y vs -1.5% previous, 1.3% expected
- UK N/Wide Sept Hse Px 5.3% y/y vs 5.6% previous, 5.3% expected
- Switzerland Sept KoF ind. 101.3 vs revised 99.7 previous, 100.8 expected
- UK Q2 GDP 2.1% y/y vs revised 1.9% previous, 2.2% expected
- UK Q2 C/A –GBP28.68 bln vs revised -26.99 bln, -30.50 bln expected
- EZ Sept Infl. 0.4% yh/y vs 0.2% previous, 0.4% expected
- EZ Aug Jobless Rate 10.1% vs 10.1% previous, 10.0% expected
- ECB Lautenschlaeger – No reason for more stimulus, must craft exit – BZ
- Japan Aug core CPI -0.5% y/y, Tokyo Sept core -0.5% y/y, -0.4% eyed for both
- BoJ Sept 21 minutes some board members had doubts on policy overhaul
- Reuters poll – Japan fund managers up stock holdings in September to 37.4%
- UK Sept GfK consumer confidence index up to -1, Aug -7, -5 eyed.
- China’s property bubble and rising risks of more curbs
- China Sept Caixin mfg PMI 50.1, as eyed, Aug 50.0, orders edge up
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for August, which is expected to rise 0.2 percent, having gained 0.4 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of August. The index stood unchanged in the prior month while core PCE is likely to have increased 0.2 percent in August after edging up 0.1 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.2 percent in the month of August, after surging 0.3 percent in July.
- (0830 ET/1230 GMT) The Statistics Canada releases its Raw Material Price Index for the month of August. The index posted a decline of 2.7 percent in July.
- (0830 ET/1230 GMT) Canadian producer prices are expected to have edged up 0.1 percent in July after rising 0.2 percent in the prior month.
- (0830 ET/1230 GMT) Canada's gross domestic product is likely to rise 0.3 percent in July, after posting a growth of 0.6 percent in June.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions rose to 52.0 in September from 51.5 last month.
- (1000 ET/1400 GMT) The University of Michigan is expected to report that the consumer sentiment index stood at 90.0 in September from a final reading of 89.8 in August.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.775 bln
- (1300 ET/1700 GMT) Dallas Fed President Robert Kaplan participates in a moderated Q&A session before the Stemmons Corridor Business Association 35th Annual Meeting in Dallas, Texas.
FX Beat
DXY: The dollar gained across the broad as Deutsche Bank worries weigh on market sentiment. The dollar index against a basket of currencies traded 0.3 percent higher at 95.83, having touched a fresh 1-week high of 95.88 earlier in the session.
EUR/USD: The euro declined to a 1-week low against the dollar and 2-month low versus the Swiss franc as worries around the Deutsche Bank continue to weigh on investors’ sentiment. The major came under intense selling pressure after data showed Eurozone's unemployment edging up to 10.1 percent against consensus of 10.0 percent, while preliminary core- consumer price index came in at 0.8 percent, missing projection of 0.9 percent. The pair trades 0.4 percent down at 1.1172, hovering towards a low of 1.1163, its lowest since Sept. 21. But it recovered against the Swiss franc to trade 0.4 percent up at 1.0879. The major is facing strong resistance around 1.1280 (trend line joining 1.16163 and 1.13660) and any slight bullishness can be seen only above that level. The minor resistance is around 1.1210 (21- day MA)/1.1250 and short-term weakness is below 1.1120 level. On the lower side, major support is around 1.1150 (200- day MA) and any break below targets 1.1120/1.1045.
USD/JPY: The Japanese yen declined against the dollar, extending losses for the fourth consecutive session. However, the yen has gained about 2 percent so far this quarter and is set for its third straight quarter of gains, as investors suspect the Bank of Japan has reached a limit in stimulus and unlikely to weaken the yen further. The dollar trades 0.2 percent up at 101.24 yen, having touched a high of 101.77 earlier in the session. The major resistance is around 101.80 (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 it till 98.80.
GBP/USD: Sterling edged up, but continued to trade below the 1.3000 handle and was on course for a fifth straight quarter of losses, recording its worst performance since 1984. Data released earlier showed Britain's services sector grew much stronger than anticipated in July, while the economy grew faster than previously in the second quarter. The economy's gross domestic product grew by 0.7 percent in the second quarter, up from an estimate of 0.6 percent growth, while the current account deficit widened to 28.7 billion pounds in the second quarter but was less than 30.5 billion pounds expected. The figures will give the BoE an overview how Britain's economy responded to the referendum, and whether it needs to ease in its upcoming meeting. Sterling trades 0.1 percent up at 1.2975, attempting to regain the 1.3000 level. On the higher side, major resistance is around 1.3005 (10- day MA) and any break above will take it to next level till 1.3060/1.3100/1.31208 (Sep 22nd 2016 high). The support stands at 1.2900 and any violation below will drag the pair down till 1.2865/1.2820. Against the euro, the pound trades 0.4 percent up at 86.15 pence, hovering towards a high of 85.89 hit on Sept 28.
USD/CHF: The Swiss franc slumped to more than 1-week low as the dollar strengthened across the broad. The greenback rose 0.8 percent to 0.9737, having touched a high of 0.9753, it’s strongest since Sept. 21. Data released earlier showed Switzerland’s KoF leading indicator for the month of September rising to 101.3, surpassing expectations of 100.8 and previous revised 99.7. On the higher side, any break above 0.9735 will take it till 0.9790/0.9820. The short-term weakness can be seen only below 0.9630 and any break below targets 0.9580/0.9530.
AUD/USD: The Australia dollar tumbled, extending losses for the second consecutive session, but it trimmed losses to trade above the 0.7600 handle. The major declined to an early low of 0.7589, its lowest since Sept 21, as the U.S. dollar recovered against its major peers. The Aussie trades 0.3 percent lower at 0.7610, putting further distance between a 3-week high of 0.7710 hit in the previous session. The Reserve Bank of Australia meets on Tuesday for its monthly policy meeting and is expected to keep rates unchanged at an all-time low of 1.5 percent. On the higher side, major resistance is around 0.7650, any break above will take it till 0.7680/0.7730. 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 retreated after declining to an early 4-day low, however, the upward momentum ran out of steam as concerns about the health of Deutsche Bank undermined risk appetite. The Kiwi trades 0.1 percent up at 0.7262, having touched a high of 0.7279 earlier in the session. Immediate resistance is located at 0.7311 (20-DMA), break above targets 0.7330/ 0.7350. On the downside, support is seen at 0.7220 (Sept 26 Low), break below could drag it till 0.7200.
Equities Recap
European shares tumbled to 8-week lows as renewed concerns over the stability of Deutsche Bank weighed down markets sentiment.
The pan-European STOXX 600 index decreased 0.84 percent at 339.83 points, while the FTSEurofirst 300 index shed 0.83 percent at 1,338.83 points.
Britain's FTSE 100 trades 0.93 percent down at 6,854.98 points, while mid-cap FTSE 250 lost 0.83 percent at 17,716.26 points.
Germany's DAX slumped 0.95 percent at 10,305.95 points; France's CAC 40 trades 1.18 percent lower at 4,391.24 points.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 1 percent, however, it is set for a 1.7 percent gain in this month.
Tokyo's Nikkei fell 1.46 percent at 16,449.84 points, Australia's S&P/ASX 200 index lost 0.54 percent at 5,441.80 points and South Korea's KOSPI added 0.76 percent at 2,068.72 points.
Shanghai composite index rose 0.2 percent at 3,004.70 points, while CSI300 index gained 0.3 percent at 3,253.28 points. Hong Kong's Hang Seng index dropped 1.9 percent at 23,297.15 points.
Commodities Recap
Crude oil prices tumbled after rising 6-percent in the previous session on OPEC members agreement to reduce output for the first time in eight years. Global benchmark Brent crude was trading 1.07 percent lower at $49.07 per barrel at 0949 GMT, having touched a fresh 3-week high of $49.80 earlier in the session,. U.S. West Texas Intermediate crude declined 1.05 percent at $47.20 a barrel, after rising as high as $48.29 in the previous session, its highest since Aug. 26.
Gold gained as global equity markets slumped on worries over the stability of Deutsche Bank, however, a firmer dollar limited the upside in the safe-haven. Spot gold rose 0.5 percent to $1,326.50 an ounce by 0954 GMT, but was on track to end the week down nearly one percent. U.S. gold futures were mostly flat at $1,326.70 an ounce.
Treasuries Recap
The U.S. Treasuries were pushed modestly higher as markets largely shrugged off better than expected jobless claims and final 2Q16 GDP revisions (+1.4%, up from +1.1% seen in the preliminary release). The yield on the benchmark 10-year Treasury note fell 1 basis point to 1.544 percent, the yield on 5-year bond also dipped 1 basis point to 1.104 percent and the yield on short-term 2-year note slid 2 basis points to 0.726 percent.
The UK gilts strengthened as investors poured into safe-haven instruments amid losses in riskier assets including equities and crude oil. Also, ongoing banking crises in Europe encouraged traders for safe-haven buying. The yield on the benchmark 10-year gilts fell more than 2 basis points to 0.699 percent, the super-long 40-year bond yield dipped more than 1 basis point to 1.317 percent and the yield on short-term 3-year bond slid 1/2 basis point to 0.085 percent.
The German bunds gained following concern about the financial health of country’s biggest lender after insolvency fears plaguing Deutsche bank heated up, triggering market-wide risk aversion. The yield on the benchmark 10-year bond fell 3-1/2 basis points to -0.152 percent, the yield on long-term 30-year note dipped 5 basis points to 0.397 percent and the yield on short-term 2-year bond slid 1-1/2 basis points to -0.700 percent.
The Japanese government bonds traded mixed as investors were digesting a disparate bag of economic data. The benchmark 10-year bond yield rose 1/2 basis point to -0.078 percent, the yield on long-term 30-year note climbed 2 basis points to 0.468 percent and the yield on short-term 2-year note slid 1-1/2 basis points to -0.277 percent.
The New Zealand government bonds closed higher as investors speculated that the Reserve Bank of New Zealand (RBNZ) will lower its key interest rate in its November monetary policy decision. The yield on the benchmark 10-year bond fell 7 basis points to 2.295 percent, the yield on 7-year note ended 6 basis points lower at 2.060 percent and the yield on short-term 2-year note slid 4-1/2 basis points to 1.910 percent.
The Australian government bonds gained as investors remained cautious ahead of the Reserve Bank of Australia’s monetary policy meeting, which is scheduled to take place on October 4. The yield on the benchmark 10-year Treasury note fell 5 basis points to 1.972 percent, the yield on 15-year note dipped 5-1/2 basis points to 2.314 percent and the yield on short-term 2-year slid nearly 4 basis points to 1.563 percent.
