Market Roundup
- GBP/USD -0.07%, USD/JPY -0.05%, EUR/USD +0.26%
- DXY -0.2%, DAX -0.75%, Brent+0.5%,. Iron -3.0%
- Germany Aug IFO Bus Climate 106.2 vs 108.3 previous, 108.5 expected
- Germany Aug IFO Curr/Cond 112.8 vs revised 114.8, 114.9 expected
- Germany Aug IFO Expectations 100.1 vs revised 102.1 previous, 102.5 expected
- Switzerland Q2 Ind. Orders -5.6% y/y vs revised -2.3% previous
- UK Aug CBI Dist Trades +9 vs -14 previous
- France Aug business Climate101 vs 103.00 previous,103.00 expected
- Fonterra ups 2016/17 f/c farmgate milk px 50c to NZD4.75 per kgMS
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 3,000 to a seasonally adjusted 265,000 for the week ending Aug 20, while continuing claims for the week ending Aug 12 is expected to have declined to 2.153 m from 2.175 m.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that durable goods orders increased 3.3 percent in July after declining 3.9 percent in June, while non-defense capital goods orders excluding aircraft are likely to have risen 0.3 percent after declining 0.5 percent the prior month.
- (0945 ET/1345 GMT) Markit Economics releases preliminary U.S. service PMI for August, which is expected to have increased to 52.0 from a final reading of 51.4 in July.
- (0945 ET/1345 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of August. The index posted a final reading of 51.8 in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 19.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of August.
- (1930 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of August. The index posted a decline of 0.4 percent in the previous month.
Key Events Ahead
- (2000 ET/2400 GMT) KC Fed program for 2016 Econc Policy Symposium.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.1 percent lower at 94.69, hovering towards a low of 94.59 touched earlier in the session.
EUR/USD: The euro retreated from a 1-week low touched in the previous session, as investors stayed on the sidelines before the annual global central bankers' gathering in Jackson Hole, Wyoming. However, the gains were capped as soft German Ifo data weakened the bid tone around the major. The European currency trades 0.2 percent higher at 1.1290, attempting to extend gains above the 1.1300 handle. Markets now await speech from Federal Reserve Chair Janet Yellen which could provide fresh pointers on U.S. monetary policy due tomorrow. On the lower side, 100 –day MA will be acting as major support and any break below targets 1.1175 (55 day EMA)/1.1150. Technically EUR/USD has formed temporary top around 1.1370 and any bullishness can be seen only above that level. Any violation above 1.1370 will take the pair till 1.1435/1.1450.
USD/JPY: The major trades between a narrow range as markets remain cautious ahead of a speech by Federal Reserve Chair Janet Yellen at the Jackson Hole Symposium. Recent hawkish statements by Fed officials have increased expectations of U.S. interest rates hike this year, with investors anticipating the same from Yellen's speech due on Friday. The greenback trades flat at 100.41, attempting to break above 100.61 resistance level. The short term trend is slightly bearish as long as resistance100.95 (Aug 22nd high) holds. The major resistance is around 100.95 and any break above confirms minor trend reversal, a jump till 102/102.65/103.80 is possible. On the lower side, major support is around 99.50 and any break below 99.50 will drag the pair till 98.
GBP/USD: Sterling hovered near 3-week high touched in the previous session and was on track for its best week in six, on easing worries over the economic impact of Brexit fallout after recent better-than-expected data. Data released by the Confederation of British Industry showed that Distributive Trades Survey rose to 9, surpassing consensus of -5 and previous -14. Sterling trades flat at 1.3224, but within the sight of 3-wwek high of 1.3272 hit on Wednesday. Any break above 1.3270 will take the pair till 1.3310. A minor weakness can be seen only below 1.3180 and any break below targets 1.3115 (61.8% retracement of 1.30228 and 1.32729). Overall weakness is only below 1.3000 level. Against the euro, the pound trades 0.4 percent lower at 85.43 pence, having struck a 2-week high in the previous session.
USD/CHF: The Swiss franc recovered some ground, as the greenback weakened against most of its major peers. The dollar trades 0.2 percent lower at 0.9645, pulling away from 1-week high of 0.9683 hit in the previous session. Data released earlier in the day showed that Switzerland’s industrial production for the second quarter declined 1.2 percent after posting a gain of 1.2 percent in the previous quarter. On an annualized basis it stood at -5.6 percent. On the lower side, major support is around 0.9630 and any violation below 0.9630 will drag the pair down till 0.9575/0.9520. The minor resistance is around 0.9735 and any break above targets 0.9770/0.9845. The major should close above 0.9845 (200 day MA) for further bullishness.
AUD/USD: The Australian dollar trimmed gains after rising to session's high of 0.7603. The major is seen consolidating the downside so far this week, as investors remain cautious ahead of the Jackson Hole Symposium, amid lower oil prices. The Aussie trades flat at 0.7617, within the range of 2-week low hit on Monday. However, the recovery mode looks fragile as persisting cautious sentiment is expected to extend into Friday. On the higher side, any break above 0.7650 (200 HMA) will take the pair till 0.7700/0.7760. The major support is around 0.7575 and break below will drag it till 0.7535/0.7480.
NZD/USD: The New Zealand dollar held gains above the 0.7300 handle, as uncertainty surrounding Fed rate-hike this year has failed to assist the greenback to register any meaningful recovery. The major has largely strengthened on the back of Tuesday's hawkish comments from RBNZ Governor Wheeler, which supported the bullish momentum in the pair. The Kiwi trades 0.1 percent higher at 0.7313, having touched a high of 0.7336 earlier in the session. Immediate resistance is located at 0.7340, break above targets 0.7400. On the lower side, support is seen at 0.7289 (5-DMA), break below could drag it near 0.7265.
Equities Recap
European shares witnessed their biggest fall in 3-weeks as investors stayed on the sidelines ahead of the annual global central bankers' gathering in Jackson Hole, Wyoming,
The pan-European STOXX 600 index slumped 1.1 percent at 340.89 points, while the FTSEurofirst 300 index fell 1.0 percent at 1,340.91 points.
Britain's FTSE 100 trades 0.5 percent down at 6,795.65 points, while mid-cap FTSE 250 index dropped 0.7 pct at 17,881.83 points.
Germany's DAX decreased 1.3 percent at 10,482.09 points; France's CAC 40 trades 1.2 percent lower at 4,382.30 points.
Tokyo Nikkei lost 0.25 pct at 16,555.95, Australia's S&P/ASX 200 index shed 0.36 pct at 5,541.40 points and South Korea's KOSPI closed flat at 2,042.92 points.
Shanghai composite index and CSI300 index both declined 0.6 pct at 3,068.33 points and 3,308.97 points, respectively. Hong Kong's Hang Seng index ended flat at 22,826.87 points.
Commodities Recap
Crude oil prices steadied near recent lows despite increasing U.S. and Asian fuel inventories added to a large oversupply, fading hopes of a production freeze. Global benchmark Brent crude oil was 0.5 percent up at $49.31 a barrel by 0929 GMT, having closed down by more than 1 percent on Wednesday. U.S. West Texas Intermediate crude oil was also up 0.5 percent at $47.07 a barrel, after dropping 2.8 percent on Wednesday.
Gold on rose, hovering away from a 4-week low touched in the previous session as the dollar weakened across the broad ahead of a speech by Federal Reserve Chair Janet Yellen that may provide clues on U.S. monetary policy. Spot gold edged up 0.1 percent at $1,324.08 an ounce at 0935 GMT, having touched a 4-week low of $1,323.39 on Wednesday. U.S. gold was nearly flat at $1,328.90 an ounce.
Treasuries Recap
The US Treasuries continued to hold relatively steady with markets taking in stride weaker than expected existing home sales data for July (-3.2 percent to 5.39 million). The yield on the benchmark 10-year Treasury note hovered around 1.55 percent mark, the yield on 5-year note remained steady at 1.13 percent and the yield on short-term 2-year note stood flat at 0.76 percent.
The UK gilts traded nearly flat Thursday, 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 0.554 percent, the super-long 40-year bond yield remained steady at 1.115 percent and the yield on short-long 2-year bond climbed 1/2 basis point to 0.149 percent.
The German 10-year bund yields continued to hover between -0.05 percent to -0.10 percent mark as markets look to be holding steady in advance of Federal Reserve Chair Janet Yellen’s Jackson Hole speech on Friday. The yield on the benchmark 10-year bond hovered around -0.084 percent, the yield on long-term 30-year note remained steady at 0.424 percent and the yield on short-term 3-year bond stood unchanged at -0.666 percent.
The Japanese government bonds traded nearly flat as investors await the country’s July national consumer inflation data and the BoJ’s own inflation numbers, which are scheduled to be released on Thursday at 23:30 GMT. The benchmark 10-year bond yield hovered around -0.079 percent mark, the super-long 30-year JGB yield remained steady at 0.332 percent and the short-term 2-year JGB yield stood flat at -0.187 percent.
The New Zealand government bonds closed lower after the world's biggest dairy exporter increased 2016/2017 milk price forecast by 50 cents to 4.75 NZ dollars. The yield on the benchmark 10-year bond increased 1 basis point to 2.285 percent and the yield on 7-year note also ended 1 basis point higher at 1.970 percent and the yield on short-term 2-year note bounced 2-1/2 basis points to 1.810 percent.
The Australian government bonds traded modestly lower as investors await the Federal Reserve Chair Janet Yellen’s Jackson Hole speech scheduled to be held on Friday. The yield on the benchmark 10-year Treasury note rose more than 1 basis point to 1.923 percent and the yield on short-term 2-year climbed 1 basis point to 1.448 percent.
