Market Roundup
- GBP/USD +0.05%, EUR/USD +0.03%, USD/JPY -0.09%
- DXY -0.06%, DAX -0.2%, Brent -0.7%, Iron -2.5%,
- Germany Sept GfK Cons/Sent 10.2 vs 10.0 previous, 9.9 expected
- Frnace Aug Cons/Sent 97 vs 96 previous
- EZ Jul M3 4.8% y/y vs 5.0% previous, 4.9% expected
- UK Q2 GDP 2nd read +0.6% q/q vs 0.6% previous, 0.6% expected
- UK Q2 GDP 2nd read +2.2% y/y vs 2.2% prev, 2.2% expected
- UK Q2 Bus. Inv. -0.8% y/y vs -0.8% previous, -1.4% expected
- Allianz El-Erian – No major policy statement at Jackson Hole
- El-Erian - Fed only game in town for far too long-CNBC
- Fed officials stress risk of recession if it acts too slowly – MNI
- Japanese regulators consider allowing off-hours margin trading – Nikkei
- Lipper – Investors pull $6.4 bln from US-based stock funds latest week
- The great unravelling: Yrs of Fed missteps fuelled disillusion – Hilsenrath
- Japan housing market rare bright spot amid stalling growth
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that gross domestic product growth grew at a 1.1 percent annual rate in the second quarter, slower than first estimate of 1.2 percent.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of July. The economy's trade deficit is expected to contract to $62.3 billion after posting a deficit of $63.3 billion in the previous month.
- (0830 ET/1230 GMT) The U.S. Department of Commerce is likely to show that preliminary Personal Consumption Expenditures remained unchanged at 1.9 percent in the second quarter.
- (1000 ET/1400 GMT) The University of Michigan is expected to report that the final consumer sentiment index stood at 90.6 in August compared with a preliminary reading of 90.4 earlier this month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1000 ET/1400 GMT) Federal Reserve Chair Janet Yellen speaks on "The Federal Reserve's Monetary Policy Toolkit" before the Federal Reserve Bank of Kansas City Economic Symposium.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.1 percent lower at 94.65, ahead of Federal Reserve Chair Janet Yellen's Jackson Hole press conference.
EUR/USD: The euro rose above the 1.1300 handle, however, failed to sustain gains as investors remained on the sidelines ahead of the Federal Reserve Chair Janet Yellen's keynote address at a global gathering of central bankers. Data released earlier showed that Eurozone's money supply in July expanded 4.9 percent in line with projections and previous, while private loans grew at an annualized 1.8 percent in the same period, strengthening the bid tone around the euro. The European currency trades 0.1 percent up at 1.1290, attempting to regain the 1.1300 level. On the lower side, 100 –D 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 traded between a narrow range around 100.50 region as investors await Fed Chair Janet Yellen speech at Jackson Hole symposium, which might provide clues on U.S. rate hike and also would be key determinant for the greenback's near-term direction. Data released earlier showed that Japan's National CPI for July came-in at -0.4 percent y-o-y, in-line with expectations and June reading. Meanwhile, core CPI (excluding food and energy) rose 0.3 percent in July as compared to previous 0.4%. Apart from Yellen's speech focus would also be on first revision of US GDP growth for the second quarter of 2016. The short term trend is slightly bearish as long as resistance100.50 (10-day MA) holds. The major resistance is around 100.50 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 a 3-week high against the dollar, largely boosted by strong growth and business investment figures that helped offset worries over the impact Brexit vote. Britain’s gross domestic product in the second quarter grew by 0.6 percent and on annualized basis was up by 2.2 percent, in line with preliminary readings and forecasts. Moreover, business investment rose surprisingly to 0.5 percent from April to June as compared with the previous three months. Sterling was trading 0.1 percent up at 1.3210, within the sight of 3-week high of 1.3263 hit on Thursday, and on course for 1.1 percent weekly gain. Against the euro, the pound was 0.1 percent down at 85.59 pence, but was on track for its best weekly performance in 6- weeks, having hit a 2-week high on Wednesday. The pair has taken support near 5 –D MA (1.31650) and slightly jumped from that level. Further decline the cable can be seen only below 1.3085 (10-D MA). On the higher side, major resistance is at 1.3275 the temporary top formed on Aug 24th 2016 high and any break above targets 1.3310/1.3387 (55- day EMA). The short term weakness is only below 1.3000.
USD/CHF: The Swiss franc edged up, as the greenback weakened ahead of Fed Yellen's speech at the Economic Symposium. The dollar trades lower at 0.9670, having touched an early low of 0.9648, but was within the range of 1-week high struck on Thursday. 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 pair should close above 0.9845 (200 DMA) for further bullishness.
AUD/USD: The Australian dollar rose as stability in commodity prices and broad based greenback weakness, provided an additional boost to the major. The Aussie trades 0.2 percent higher at 0.7632, hovering towards a 3-day high of 0.7655. However, further upside seems capped amid prevalent cautious sentiment ahead of the Fed Chair Janet Yellen's speech at Jackson Hole Symposium. On the higher side, any break above 0.7645 (9-DMA) 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 inched higher, reversing all of its previous session losses and was poised to end the week 0.5 percent higher. Investors remain cautious ahead of Federal Reserve Chair Janet Yellen's speech at a gathering of global central bankers, which could provide further insights on U.S. interest rate hike cycle. The Kiwi trades 0.3 percent higher at 0.7316, hovering near to its 2016 highs. Immediate resistance is located at 0.7340, break above targets 0.7400. On the lower side, support is seen at 0.7276 (10-DMA), break below could drag it near 0.7250.
Equities Recap
World shares slipped to a 2-week low and European shares edged down as investors remained cautious ahead of keynote speech by Federal Reserve Chair Janet Yellen that could provide insight on U.S. interest rates hike path.
The MSCI All-Country World index was down 0.1 percent, after declining to its lowest level since Aug. 9.
The pan-European STOXX 600 index slumped 0.13 percent at 341.58 points, while the FTSEurofirst 300 index fell 0.1 percent at 1,344.12 points.
Britain's FTSE 100 trades flat at 6,814.42 points, while mid-cap FTSE 250 index dropped 0.1 pct at 17,870.36 points.
Germany's DAX lost 0.1 percent at 10,509.37 points; France's CAC 40 trades 0.14 percent lower at 4,400.25 points.
Tokyo's Nikkei slumped 1.18 pct at 16,360.71, Australia's S&P/ASX 200 index declined 0.40 pct at 5,519.60 points and South Korea's KOSPI shed 0.2 percent at 2,037.50 points.
Shanghai composite index edged up 0.1 pct at 3,070.31 points, but was down 1.2 pct for the week. CSI300 index ended down 0.1 pct at 3,307.09 points and was down 1.7 pct for the week.
Hong Kong's Hang Seng index rose 0.4 pct at 22,909.54 points and ended flat for the week.
Commodities Recap
Crude oil prices declined after the Saudi energy minister dampened expectations of strong market intervention by producers at next month’s meeting. International benchmark Brent crude oil prices were trading 0.8 percent lower at $49.23 per barrel at 0937 GMT. U.S. West Texas Intermediate crude was at $47.11 a barrel, down by 0.6 percent.
Gold gained, pulling away from a 4-week low hit in the previous session, as the dollar weakened ahead of a speech by Federal Reserve Chair Janet Yellen that could provide clues on U.S. interest rates hikes. Spot gold was up 0.3 percent at $1,325.16 an ounce at 0942 GMT, having touched a 4-week low of $1,317.97 in the previous session and was down over 1 percent for the week. U.S. gold was up 0.2 percent at $1,327.20 an ounce.
Treasuries Recap
The US Treasuries held relatively unchanged on Friday despite stronger than expected durable goods orders data for July as markets sit in anticipation of Fed Chair Yellen’s Jackson Hole speech on Friday. The yield on the benchmark 10-year Treasury note fell ½ basis point to 1.570 percent, the yield on 5-year note remained steady at 1.159 percent and the yield on short-term 2-year note slid 1/2 basis point to 0.785 percent.
The UK gilts little changed after the data showed that the country’s second quarter gross domestic product (GDP) remained steady from its preliminary estimate. The yield on the benchmark 10-year gilts hovered around 0.570 percent mark, the super-long 40-year bond yield remained steady at 1.133 percent and the yield on short-long 2-year bond stood flat at 0.156 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. The yield on the benchmark 10-year bond hovered around -0.077 percent mark, the yield on long-term 30-year note remained steady at 0.444 percent and the yield on short-term 2-year bond stood unchanged at -0.612 percent.
The Japanese government bonds traded marginally lower despite recent consumer inflation that fell for the fifth straight month in a row, heightening monetary pressure on the Bank of Japan to ease interest rate in September’s monetary policy meeting. . The benchmark 10-year bond yield rose 1 basis point to -0.073 percent, the super-long 30-year JGB yield also jumped 1 basis point to 0.348 percent and the short-term 2-year JGB yield climbed ½ basis point to -0.179 percent.
The New Zealand government bonds closed higher as investors remained cautious ahead of the Federal Reserve Chair Janet Yellen’s Jackson Hole press conference, in an attempt to estimate the Fed's most likely step. The yield on the benchmark 10-year bond fell 2 basis points to 2.290 percent and the yield on 7-year note also ended 2-1/2 basis points lower at 1.975 percent and the yield on short-term 2-year note slid 1 basis point to 1.820 percent.
The Australian government bonds traded modestly lower Friday as investors await the Federal Reserve Chair Janet Yellen’s Jackson Hole speech. The yield on the benchmark 10-year Treasury note rose more than ½ basis point to 1.929 percent and the yield on short-term 2-year climbed 1-1/2 basis points to 1.471 percent.
