Market Roundup
- EUR/USD 0.14%, USD/JPY 0.06%, GBP/USD 0.36%, EUR/GBP -0.14%
- DXY -0.13%, DAX -0.26%, FTSE -0.12%, Brent 2.18%, Gold 0.01%
- China says U.S. trying to force it to submit on trade as new tariffs kick in
- UK's Raab says confident of Brexit deal, needs two to tango
- Oil at 4-year high after OPEC rebuffs Trump, fails to raise output
- Oil could rise to $100 by 2019 as global markets tighten, merchants warn
- Germany Sep Ifo Business Climate New, 103.7, 103.2 forecast, 103.8 previous, 103.9 revised
- Germany Sep Ifo Current Conditions New, 106.4, 106.1 forecast, 106.4 previous, 106.5 revised
- Germany Sep Ifo Expectations New, 101.0, 100.2 forecast, 101.2 previous, 101.3 revised
- Markets should brace for a lengthy convalescence, BIS warns
- France's 2019 budget to ease tax burden on households, firms
- Morgan Stanley raises emerging markets stance to Neutral from Negative
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of August. The index stood at 0.13 in the prior month.
- (0830 ET/1230 GMT) Statistics Canada will release its wholesale trade figures for the month of July. The indicator is likely to have increased by 0.2 percent, after unexpectedly declining 0.8 percent in June.
- (0930 ET/1330 GMT) Brazil's current account deficit is expected to have narrowed to $1.2 billion in August from $4.4 billion in July.
- (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of September. The index posted a rise of 30.9 percent in the previous month.
Key Events Ahead
- (0900 ET/1300 GMT) ECB’s Draghi speaks to the European Parliament's ECON committee in a regular hearing in Brussels
- (1145 ET/1545 GMT) FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $585 mn)
- (1950 ET/2350 GMT) The Bank of Japan will release the minutes of its policy meeting in July.
FX Beat
DXY: The dollar index eased after China cancelled mid-level trade talks with the United States as well as a proposed visit to Washington by vice premier Liu He. The greenback against a basket of currencies trades 0.1 percent down at 94.10, having touched a low of 93.81 on Friday, its lowest since July 9. FxWirePro's Hourly Dollar Strength Index stood at -22.05 (Neutral) by 1000 GMT.
EUR/USD: The euro rose, reversing most of its previous session losses, on news that German Chancellor Angela Merkel's ruling coalition resolved a dispute over the country's scandal-tainted spymaster on Sunday, ending a threat to the 6-month-old government. The European currency traded 0.2 percent up at 1.1765 having touched a high of 1.1802 on Friday, its highest since June 14. FxWirePro's Hourly Euro Strength Index stood at 111.58 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.1820 (June 11 High), a break above targets 1.1852 (June 14 High). On the downside, support is seen at 1.1708 (5-DMA), a break below could drag it till 1.1662 (August 28 Low).
USD/JPY: The dollar surged, extending gains for the third straight session, as the U.S. Federal Reserve appears set to increase interest rates by a quarter point for the eighth time since late 2015. The major was trading 0.1 percent up at 112.62, having hit a high of 112.87 on Friday, its highest since July 19. FxWirePro's Hourly Yen Strength Index stood at -49.60 (Neutral) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index. Immediate resistance is located at 113.00, a break above targets 113.30 (Jan 5 High). On the downside, support is seen at 112.16 (September 19 Low), a break below could take it lower 111.91 (June 12 Low).
GBP/USD: Sterling rallied above the 1.3100 handle, drifting away from a 1-week low touched in the previous session after British Brexit Secretary Dominic Raab stated that he was confident that the United Kingdom will make progress and eventually seal a Brexit deal with the European Union. On Friday, the major slumped to a 1-week low after Prime Minister Theresa May said Brexit talks with the EU had reached an impasse and called for new proposals. The pair traded 0.4 percent up at 1.3136, having hit a low of 1.3055 on Friday; it’s lowest since September 13. FxWirePro's Hourly Sterling Strength Index stood at -88.10 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.3158 (5-DMA), a break above could take it near 1.3215 (September 19 High). On the downside, support is seen at 1.3000, a break below targets 1.2896 (September 10 Low). Against the euro, the pound was trading 0.3 percent up at 89.55 pence, having hit a low of 89.95 on Friday, it’s lowest since September 7.
USD/CHF: The Swiss franc retreated from a 5-month peak touched in the prior session, as the greenback rallied amid receding fears of U.S.-China trade war. The major trades 0.1 percent up at 0.9593, having touched a low of 0.9542 on Friday. it’s lowest since April 10. FxWirePro's Hourly Swiss Franc Strength Index stood at -32.79 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9621 (23.6% retracement of 0.9865 and 0.9542) and any break above will take the pair to next level till 0.9668 (38.2% retracement). The near-term support is around 0.9535 and any close below that level will drag it till 0.9500.
Equities Recap
European shares slumped as tariffs from the U.S. came into effect, while China cancelled planned talks, triggering fears of a protracted trade dispute.
The pan-European STOXX 600 index declined 0.2 percent at 383.43 points, while the FTSEurofirst 300 index slumped 0.2 percent to 1,502.25 points.
Britain's FTSE 100 trades 0.1 percent up at 7,482.31 points, while mid-cap FTSE 250 eased 0.1 percent to 20,573.22 points.
Germany's DAX fell 0.7 percent at 12,403.59 points; France's CAC 40 trades 0.1 percent lower at 5,486.01 points.
Commodities Recap
Crude oil prices rallied by more than 2 percent to a 4-year high after OPEC declined to announce an immediate increase in production despite calls by U.S. President Donald Trump for action to raise global supply. International benchmark Brent crude was trading 2.2 percent up at $80.53 per barrel by 1042 GMT, having hit a high of $80.91 earlier, its highest since November 2014. U.S. West Texas Intermediate was trading 1.5 percent up at $71.91 a barrel, after rising as high as $72.35, its highest since July 11.
Gold prices nudged lower as the dollar held firm on news that China has cancelled trade talks with the United States, while investors awaited this week's U.S. Federal Reserve meeting for guidance on future rate hikes. Spot gold was 0.05 percent down at $1,198.09 by 1046 GMT, having hit a low of $1191.71 on Friday, its lowest since September 11. U.S. gold futures were little changed at $1,201.60 an ounce.
Treasuries Recap
The U.S. Treasuries suffered ahead of this week’s two-day FOMC meeting that concludes on Wednesday. The yield on the benchmark 10-year Treasuries jumped nearly 2 basis points to 3.085 percent, the super-long 30-year bond yields also climbed nearly 2 basis points to 3.222 percent and the yield on the short-term 2-year traded close to 1-1/2 basis points higher at 2.817 percent.
The German bunds slumped during European session after the country’s Ifo business climate index for the month of September beat market estimates, also rising from the previous reading in August. The German 10-year bond yields, which move inversely to its price, rose 1-1/2 basis points to 0.476 percent, the yield on 30-year note also surged 1-1/2 basis points to 1.136 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.543 percent.
The New Zealand bonds closed nearly flat at the start of the trading week amid a muted trading session that witnessed data of little economic significance ahead of the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, scheduled to be concluded on September 26 by 21:00GMT. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, hovered around 2.685 percent, the yield on the long-term 20-year note slipped nearly 1/2 basis point to 3.000 percent and the yield on short-term 2-year closed nearly 1 basis point lower at 1.750 percent.
The Australian government bonds traded a little higher during Asian session after China cancelled trade talks with the U.S. following a recent escalation in trade tensions. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1 basis point to 2.706 percent, the yield on the long-term 30-year bond traded 1-1/2 basis points lower at 3.192 percent and the yield on short-term 2-year dipped 1-1/2 basis points to 2.096 percent.
