Market Roundup
- EUR/USD 0.13%, USD/JPY -0.05%, GBP/USD -0.08%, EUR/GBP 0.23%
- DXY -0.2%, DAX -0.24%, FTSE 0.07%, Brent 0.65%, Gold 0.2%
- N. Korea threatens to "sink" Japan, reduce U.S. to "ashes and darkness"
- Bank of England to balance Brexit and inflation as it seeks right note on rates
- Euro zone inflation seems to have bottomed out: ECB's Smets
- ECB needs more evidence before deciding on cutting stimulus - Jazbec
- SNB lowered its 2017 growth forecast just under 1% from 1.5%
- OECD raises France's economic growth outlook
- Great Britain Aug RICS Housing Survey 6 vs 1
- China’s economy losing some steam as investment growth hits 18-year low
- Japanese buy net Y306.1 bln for-bonds, Y198.7 bln bonds, Y40.6 bln bills
- Foreign investors buy net Y555.8 bln JGBs, Y1.9092 trln bills latest week
- Foreign investors also sell net Y644.6 bln Japanese stocks Sept 9 week
- Oil holds gains, buoyed by stronger demand
- Gold slips to lowest in nearly 2 weeks, U.S. inflation data in focus
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 300,000 for the week ended Sept. 8, while continuing claims for the week ended Sept. 1 is expected to rise to 1.985 million from previous 1.940 million.
- (0830 ET/1230 GMT) The U.S. consumer price index likely increased 0.3 percent in August after rising 0.1 percent in July, while in the 12 months through August, the CPI is expected to have risen 1.8 percent. Excluding food and energy, the core CPI probably rose 0.2 percent, after gaining 0.1 percent in the previous month.
- (0830 ET/1230 GMT) The Statistics Canada releases its New Housing Price Index (NHPI) for the month of July. The index rose 0.2 percent in June.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending September 4.
- (1830 ET/2230 GMT) New Zealand will release its Business PMI index for the month of August. The index stood at 55.4 in the previous month.
Key Events Ahead
- N/A The Bank of Canada will hold a by-invitation workshop examining monetary policy with an aim toward the next renewal of its inflation target in 2021.
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.15 bn)
FX Beat
DXY: The dollar eased across the board as the U.S. Treasury yields declined, while investors awaited the U.S. consumer inflation data later in the session for clues on the possible timing of the Federal Reserve's next rate hike. The greenback against a basket of currencies traded 0.1 percent down at 92.34, having touched a low of 91.01 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at 112.02 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro rebounded after falling to a 2-week low as the greenback gave away early session gains ahead of the U.S. consumer inflation data later in the day. The European currency traded 0.1 percent up at 1.1896, having touched a low of 1.1865 earlier, its lowest since Sept. 1. FxWirePro's Hourly Euro Strength Index stood at -73.68 (Bearish) 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 1.1900/1.18230 (Aug 31st, 2017 low). The near term resistance is at 1.2100 and any break above will take it till 1.2200.
USD/JPY: The dollar retreated after rising to a near 1-month high earlier in the day as investors turned cautious ahead of U.S. consumer inflation data later in the day, that could provide clues on the timing of further interest rate hikes. The major was trading 0.1 percent down at 110.40, having hit a high of 110.73 earlier, its highest since Aug. 16. FxWirePro's Hourly Yen Strength Index stood at -89.09 (Highly Bearish) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. The pair is facing minor resistance at 111.15 (100 day MA) and any convincing break above will take the pair till 112.
GBP/USD: Sterling rallied towards yearly highs after Bank of England kept interest rates on hold at 0.25 percent with a 7-2 split in the vote and hinted at rate hike in coming months to combat inflation. Policymakers stated that a rate rise was likely to be needed in the coming months if the economy kept growing and inflationary pressures continued to rise. Sterling traded 0.7 percent up at 1.3301, having hit a high of 1.3328 the day before, its highest since September 2016. FxWirePro's Hourly Sterling Strength Index stood at 82.83 (Slight Bullish) by 1100 GMT. On the higher side, near term resistance is around 1.3325 and any break above will take the pair till 1.3365 (trend line joining 1.30476 and 1.32449)/1.3400. The near term support is around 1.3250 and any break below will drag it down till 1.3150/1.3095/1.3075. Against the euro, the pound was trading 0.7 percent up at 89.37 pence, having hit a high of 89.24 pence earlier, its highest since Aug. 3.
USD/CHF: The Swiss franc slumped to a 3-week low against the dollar and to a 6-week low versus the euro after Swiss National Bank kept its negative interest rates on hold and said it remained ready to intervene in the currency markets whenever necessary. The major trades 0.2 percent up at 0.9660, having touched a high of 0.9688 earlier in the session, it’s highest since Aug. 23. FxWirePro's Hourly Swiss Franc Strength Index stood at -69.38 (Bearish) by 1000 GMT. The short term trend is still bullish as long as support 0.9580 holds and any break below will drag the pair down till 0.9525/0.9480/0.9420. The near term resistance is around 0.9700 and any violation above will take the pair to next level till 0.97730.
AUD/USD: The Australian dollar trimmed gains after rising to an early high of 0.0816 as downbeat Chinese economic data weighed heavily on the major bulls' sentiments. The Aussie trades 0.2 percent up at 0.8001, having hit a high of 0.8124 last week, it’s strongest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at- 13.06 (Bearish) 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 slumped, weighed down by weaker mining stocks, while sterling rallied towards yearly highs after Bank of England hinted at rate hike in coming months to combat inflation.
The pan-European STOXX 600 index dropped 0.05 percent to 381.25 points, while the FTSEurofirst 300 index fell 0.1 percent to 1,498.17 points.
Britain's FTSE 100 trades 0.1 percent up at 7,387.69 points, while mid-cap FTSE 250 rose 0.3 percent to 19,650.01 points.
Germany's DAX eased 0.2 percent at 12,524.84 points; France's CAC 40 trades 0.05 percent lower at 5,215.33 points.
Commodities Recap
Crude oil prices rallied, extending gains for the fourth consecutive session after the International Energy Agency raised its estimate of 2017 world oil demand growth to 1.6 million barrels per day (bpd) from 1.5 million bpd. International benchmark Brent crude was trading 0.6 percent up at $55.37 per barrel by 0958 GMT, having hit a high of $55.38 earlier, its strongest since Apr. 18. U.S. West Texas Intermediate was trading 0.5 percent up at $49.54 a barrel, after rising as high as $49.55 earlier, its highest since Sept. Aug. 10
Gold prices steadied after declining to its lowest in nearly two weeks earlier in the session as the dollar gained ahead of U.S. consumer inflation data that could provide clues on the timing of further interest rate hikes. Spot gold was trading flat at $1,323.17 an ounce by 1003 GMT, after dropping to its lowest since Sept. 1 at $1,319.03. U.S. gold futures for December delivery fell 0.2 percent at $1,325.10 an ounce.
Treasuries Recap
The U.S. Treasuries remained range-bound Thursday as investors wait to watch the country’s consumer price-led inflation index for the month of August, scheduled to be released today by 12:30GMT, besides, the initial jobless claims, also due today, which will provide further direction to the bond market. The yield on the benchmark 10-year Treasury slid 1 basis point to 2.19 percent, the super-long 30-year bond yields flat at 2.79 percent and the yield on short-term 2-year note hovered around 1.35 percent.
The UK gilts traded tad lower Thursday ahead of the Bank of England’s (BoE) monetary policy decision, scheduled to be unveiled today by 11:00GMT, besides, the meeting minutes, which will add direction to the country’s debt market. The yield on the benchmark 10-year gilts slightly rose to 1.15 percent, the super-long 30-year bond yields hovered around 1.79 percent and the yield on the short-term 2-year traded nearly 1 basis point higher at 0.29 percent.
The German government bonds traded flat Thursday as investors wait to watch the Eurogroup meeting, scheduled to be held on September 15, besides, the common currency bloc’s trade balance for the month of July, due on the same day by 09:00GMT. The German 10-year bond yields hovered around 0.40 percent, the yield on 30-year note flat at 1.22 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.71 percent.
The Japanese government bonds traded on the downside after the country’s industrial production declined as initially estimated in July, at the same levels as was witnessed in June. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.02 percent, the yield on long-term 30-year rose 1/2 basis point to 0.83 percent and the yield on short-term 2-year traded flat at -0.14 percent.
The New Zealand bonds slumped at the time of closing after a private survey revealed an upbeat consumer confidence amid a silent trading session that witnessed data of least economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note jumped 7-1/2 basis points to 2.93 percent, the yield on 7-year note surged 6-1/2 basis points to 2.79 percent and the yield on short-term 2-year ended 3-1/2 basis points higher at 2.06 percent.
The Australian 10-year bond yields surged to 7-week high Thursday after investors moved away from safe-haven assets, following higher-than-expected employment report for the month of August that ignited signals of a promising economic performance of the country. The yield on the benchmark 10-year Treasury note jumped 6 basis points to 2.73 percent, the yield on 15-year note also surged 6 basis points to 3.03 percent and the yield on short-term 2-year traded 4 basis points higher at 1.94 percent.
