Market Roundup
- EUR/USD 0.03%, USD/JPY 0.34%, GBP/USD -0.43%, EUR/GBP 0.47%
- DXY 0.03%, DAX 0.31%, FTSE 0.34%, Brent -0.22%, Gold -0.34%
- Korean peninsula draws range of military drills in show of force against N. Korea
- ECB's Hansson calls for broad discussion beyond "inordinate focus" on asset buys
- German inflation likely to slow in autumn: Bundesbank
- Britain proposes new security treaty with EU after Brexit
- EZ Aug Inflation Final YY 1.5% vs 1.5%, forecast 1.5%
- EZ Aug Inflation Ex Food & Energy YY 1.3% vs 1.3%, forecast 1.2%
- EZ Aug Inflation, Ex-Tobacco YY 1.50% vs 1.30%
- EZ Aug Inflation Exenerfoodalctob YY 1.2% vs 1.2%
- U.S. oil prices hit $50 on rising refinery demand, falling rig count
- Gold slips as equities, dollar surge ahead of Fed meet
Economic Data Ahead
- (0830 ET/1330 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of December.
- (0830 ET/1330 GMT) The Statistics Canada will release investment in foreign securities figures for the month of December
- (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index rose to 67 in February, after posting a similar increase in January.
Key Events Ahead
- (1430 ET/1830 GMT) Bank of Canada Deputy Governor Tim Lane will give a speech.
- (1030 ET/1430 GMT) European Central Bank's Executive Board Sabine Lautenschlager speaks in Basel, Switzerland
- (1000 ET/1500 GMT) Bank of England Governor Mark Carney gives a lecture at the International Monetary Fund in Washington
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.15 bn)
FX Beat
DXY: The dollar hit an 8-week peak against the Japanese yen following a rise in U.S. yields, while last week's upbeat U.S. economic data rekindled expectations that the Fed could hike rates again in December. The greenback against a basket of currencies traded up at 91.85, having touched a high of 92.66 last week, its highest since Sept. 5. FxWirePro's Hourly Dollar Strength Index stood at -66.26 (Bearish) by 1000 GMT.
EUR/USD: The euro extended gains for the third consecutive session after data showed Eurozone headline inflation hit its highest level in four months in August. The euro bloc's consumer prices rose by 0.3 percent in August and by 1.5 percent on yearly basis, both in line with the forecast. The European currency traded 0.2 percent up at 1.1944, having touched a low of 1.1838 on Thursday, its lowest since Aug. 31. FxWirePro's Hourly Euro Strength Index stood at 81.50 (Slightly Bullish) by 1000 GMT. On the lower side, near-term intraday support is around 1.1850 (trend line joining 1.13400 and 1.13705) and any break below will drag the pair down till 1.18230 (Aug 31st, 2017 low)/1.1800. The major resistance is around 1.2100 and any break above confirms bullish continuation, a jump till 1.2200.
USD/JPY: The dollar rallied to a fresh 8-week high against the yen, supported by a rise in U.S. Treasury yields, as markets awaited the Federal Reserve meeting commencing on Tuesday for clues on next U.S. interest rate hike. The major was trading 0.4 percent up at 111.25, having hit a high of 111.42 earlier in the session, its highest since Jul. 28. FxWirePro's Hourly Yen Strength Index stood at -95.44 (Slightly Bearish) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. Bullish continuation can be seen above 112 level and any break above targets 112.98/114.
GBP/USD: Sterling eased after rising to a 15-month high earlier in the day ahead of a speech by the Bank of England Governor Mark Carney. The weakness in the major came in as investors wound back some of last week's bets on a Bank of England rate hike. Sterling traded 0.3 percent down at 1.3545, having hit a high of 1.3618 earlier, its highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 57.85 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 1.36320 and any break above will take the pair till 1.3700/1.3750. The near-term support is around 1.3500 and any break below will drag the pair down till 1.3450/1.3400. Against the euro, the pound was trading 0.4 percent down at 88.18 pence, having hit a high of 87.74 pence last week, its highest since Jul. 17.
USD/CHF: The Swiss franc eased, reversing some of its previous session gains as the greenback steadied across the board. The major trades 0.05 percent up at 0.9594, having touched a high of 0.9705 last week, it’s highest since Aug. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at 25.78 (Neutral) by 1000 GMT. The short-term trend is still bullish as long as resistance 0.97730 holds and any break above will take the pair to next level till 0.9808/0.9845. Overall bearish continuation can be seen only below 0.9420.
AUD/USD: The Australian dollar gained, boosted by prevalent positive trading sentiment around commodity bloc and a subdued action around the U.S. Dollar. The Aussie trades 0.1 percent up 0.8005, having hit a low of 0.7956 on Thursday, it’s lowest since Sept. 5. FxWirePro's Hourly Aussie Strength Index stood at 38.09 (Neutral) by 1000 GMT. On the lower side, near-term support is around 0.7965 (50% retracement of 0.7811 and 0.81245) and any close below will drag the pair till 0.7940 (233 4H MA). The near-term resistance is around 0.8125 and any break above targets 0.8200/0.8235.
Equities Recap
European shares touched 6-week highs, strengthened by stronger financials stocks, while the dollar reached an 8-week peak against the yen on expectations that the U.S. Federal Reserve will this week announce the trimming of its balance sheet.
The pan-European STOXX 600 index rallied 0.5 percent to 382.44 points, while the FTSEurofirst 300 index advanced 0.5 percent to 1,502.60 points.
Britain's FTSE 100 trades 0.3 percent up at 7,236.98 points, while mid-cap FTSE 250 gained 0.3 percent to 19,426.18 points.
Germany's DAX rose 0.6 percent at 12,588.307 points; France's CAC 40 trades 0.5 percent lower at 5,238.00 points.
Commodities Recap
Crude oil prices gained and were near last week's multi-month highs as the number of U.S. rigs drilling for new production declined and refineries continued to restart after getting hit by Hurricane Harvey. International benchmark Brent crude was trading 0.3 percent up at $55.65 per barrel by 0949 GMT, having hit a high of $55.96 on Thursday, its strongest since Apr. 13. U.S. West Texas Intermediate was trading 0.2 percent up at $49.88 a barrel, after rising as high as $50.47 last week, its highest since May. 25.
Gold prices declined to its lowest level in over two weeks as the dollar gained on growing prospects of monetary policy tightening in the U.S. ahead of a Federal Reserve meeting this week. Spot gold was trading 0.9 percent down at $1,314.53 an ounce by 0956 GMT, after falling to a low of $1,311.92 earlier in the session, its lowest level since Aug 31. U.S. gold futures for December delivery fell 0.5 percent to $1,319 an ounce.
Treasuries Recap
The U.S. Treasuries remained flat Monday as investors wait to watch the Federal Open Market Committee (FOMC) policy decision, scheduled to be unveiled on September 20 by 18:00GMT. The yield on the benchmark 10-year Treasury rose 1 basis point to 2.21 percent, the super-long 30-year bond yields flat at 2.77 percent and the yield on short-term 2-year note also traded rangebound at 1.39 percent.
The UK gilts slipped Monday as investors wait to watch the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be held today by 15:00GMT, besides, the 30-year auction, due on September 19, which will add direction to the country’s debt market. The yield on the benchmark 10-year gilts rose nearly 1 basis point to 1.31 percent, the super-long 30-year bond yields also climbed near to 1 basis point to 1.90 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.44 percent.
The German government bunds traded sideways Monday, after reading the unchanged consumer price inflation index of Eurozone for the month of August, which matched market estimates as well. The German 10-year bond yields hovered around 0.43 percent, the yield on 30-year note flat at 1.23 percent and the yield on short-term 2-year traded 1 basis point lower at -0.70 percent.
The New Zealand bonds remained mixed at the time of closing Monday as investors wait to watch the country’s second-quarter gross domestic product (GDP), scheduled to be released on September 20 by 22:45GMT. At the time of closing, the yield on the benchmark 10-year Treasury note slipped 1 basis point to 3.01 percent, the yield on 7-year note also fell 1 basis point to 2.86 percent while the yield on short-term 2-year ended 1/2 basis point higher at 2.12 percent.
The Australian bonds staged a sharp rally at the open of the trading week Monday as investors moved away from safe-haven instruments on easing geopolitical tensions and as markets seem to have digested the last ballistic missile attack by North Korea. The yield on the benchmark 10-year Treasury note jumped 5-1/2 basis points to 2.80 percent, the yield on the 15-year note climbed nearly 6 basis points to 3.10 percent and the yield on short-term 2-year traded 4-1/2 basis points higher at 1.99 percent.
