Market Roundup
- Tokyo holiday
- USD/JPY -0.32%, EUR/USD +0.06%, GBP/USD +0.33%
- DXY -0.17%, DAX +0.8%, Brent +1.1%, Iron +0.15%
- EZ Jul combined net direct/portfolio inv E72.1 bln vs E6.0 bln in Jun
- Switzerland sight deposits rise in latest week both total and domestic
- China's central bank sees some success in cutting interbank lending risk - Reuters
- Oil jumps 2% in Asia on hopes of an OPEC agreement on limiting supply
- Venezuela says OPEC, non-OPEC oil stabilizing deal close
- Libyan fighting and OPEC/Venezuela comments push oil up over 2% and take the USD lower
- Merkel's party suffers rout in Berlin in migrant policy backlash
- Westpac New Zealand Consumer survey 108 in Q3 up from 106 in Q2
Economic Data Ahead
- (1000 ET/1400 GMT) The National Association of Home Builders is expected to report that U.S. Housing Market Index stood unchanged at 60 for the month of September.
- (1000 ET/1400 GMT) The Conference Board Australia releases its Leading Indicator for the month of July.The index stood at 0.1 percent in the prior month.
Key Events Ahead
No Significant Event Scheduled
FX Beat
DXY: The dollar index against a basket of currencies declined 0.16 percent at 95.89, pulling away from a 2-week high of 96.11 touched on Friday and recording its biggest daily gain since late June.
EUR/USD: The euro consolidated between a narrow range as investors remained cautious ahead of Federal Reserve policy meeting outcome. Data released earlier in the session showed Eurozone's current account s.a for the month of July coming in at 21.0 billion euros, against projections of 27.02 billion euros and previous 29.5 billion euros. The major trades 0.1 percent up at 1.1163, recovering some ground from higher-than-expected U.S. inflation led-slump. In the daily chart the pair is trading well below Tenkan-Sen and Kijun-Sen. So a slight bullishness can be seen only above 1.1245 (daily Kijun-Sen). On the lower side, any break below 1.1144 will drag the pair till 1.1100/1.1045. The resistance is around 1.1203 (200-day MA) and any break above targets 1.1250/1.12840 (Sep 15 High). The short term trend reversal is only above 1.1366.
USD/JPY: The dollar declined, reversing previous session gains as investors nervously await central bank policy meetings in Japan and the United States. The Bank of Japan is due to conduct a comprehensive review of its current policy framework, with markets anticipating the central bank to ease further. The Federal Reserve is expected to hold its monetary policy unchanged, but investors will eye Fed statement that could give clear clues on an interest rate hike this year. The major trades 0.4 percent down at 101.85, pulling closer to a near 1-week low of 101.42 touched last week. The short term trend is slightly bearish as long as resistance 103.40 holds. The major resistance is around 103.40 and break above targets 103.80/104.60. On the lower side, major support is around 101.80 and any break below 101.80 will drag the pair till 101.20/100.55/100.
GBP/USD: Sterling rose, rebounding from a 1-month low as the dollar weakened across the broad, however, gains were capped on growing expectations of more interest rate cuts in coming months. Sterling trades 0.5 percent up at 1.3055, having hit a low of 1.2994, its lowest since August 17. On Friday, it lost 1.8 percent and ended 2 percent down for the week, its worst weekly performance since early July. The pair upside is capped by 23.6% retracement of 1.34450 and 1.299401 and it should break above 1.3092 for further bullishness. Any break above 1.3095 will take the pair to next level till 1.3155 (daily Kijun-Sen)/1.32011(21- day MA). On the lower side, any break below 1.29940 will drag it down till 1.2900/1.28650. Against the euro, the pound trades 0.2 percent up at 85.53 pence, pulling away from a 3-week low of 85.81 pence touched in the previous session.
USDCHF: The Swiss franc edged down, extending previous session losses, ahead of the Federal Reserve monetary policy outcome on Wednesday. The major trades 0.1 percent up at 0.9809, having touched an intra-day low of 0.9784. On Friday, the dollar rose above the 0.9800 handle from a low of 0.9711 largely on the back of upbeat US August CPI print. On the higher side, any break above 0.9806 will take it till 0.9845/0.9880. The short-term weakness can be seen only below 0.9735. Any break below targets 0.9680/0.9635.
AUD/USD: The Australian dollar gained, benefitting from a broadly weaker greenback amid higher crude oil price. The Aussie trades 0.8 percent higher at 0.7543, hovering towards an intra-day high of 0.7552. Investors now await minutes from the RBA’s latest monetary policy meeting ahead of Federal Reserve policy meeting on Wednesday for immediate impetus on the pair's near-term trajectory. On the higher side, any break above 0.7569 (21- day MA) will take the pair till 0.7620/0.7700. The major support is around 0.7440 and break below will drag it till 0.7390 (200- day MA).
NZD/USD: The New Zealand dollar climbed above the 0.7300 handle, reversing most of its previous session losses, boosted by broad-based greenback weakness. The Kiwi trades 0.6 percent higher at 0.7306, hovering towards a high of 0.7330 hit in the previous session. The recovery in the major was also supported by rising equity stocks and higher oil prices amid improving risk sentiment. Market will closely watch this week's major central bank monetary policy decision which would help investors to determine the pair's direction in the short term. Immediate resistance is located at 0.7335 (10-DMA), break above targets 0.7380/ 0.7400. On the downside, support is seen at 0.7234 (Sept 13 Low), break below could drag it till 0.7200.
Equities Recap
European shares advanced after two straight weeks of losses, as oil prices retreated from multi-week lows on clues that producers were close to reaching an output deal, bolstering energy company shares.
The pan-European STOXX 600 index increased 0.98 percent at 341.14 points, while the FTSEurofirst 300 index added 0.95 percent at 1,341.14 points.
Britain's FTSE 100 trades 1.34 percent up at 6,800.00 points, while mid-cap FTSE 250 gained 0.09 percent at 17,868.19 points.
Germany's DAX rose 0.80 percent at 10,359.58 points; France's CAC 40 trades 1.4 percent higher at 4,395.72 points.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.2 percent.
Australia's S&P/ASX 200 index fell 0.04 percent at 5,294.80 points and South Korea's KOSPI added 0.8 percent at 2,015.78 points.
Shanghai composite index climbed 0.77 percent at 3,026.05 points, while CSI300 index gained 0.8 percent at 3,263.12 points. Hong Kong's Hang Seng index rose 0.9 percent at 23,550.45 points.
Commodities Recap
Crude oil prices rose almost 1 percent, as OPEC and non-OPEC producers were finalizing an output deal and as conflicts in Libya raised concerns that efforts to restart crude exports could be interrupted . Global benchmark Brent crude oil was trading 0.80 percent higher at $46.35 per barrel at 1012 GMT, having touched a 2-week low of $46.38 touched on Friday. U.S. West Texas Intermediate crude rose 1.20 percent at $43.69 a barrel, pulling away from a low of $42.72 hit in the previous session, its lowest since August 11.
Gold edged up after declining to a 2-week low in the previous session, strengthened by a weaker dollar ahead of the U.S. Federal Reserve policy meeting. Spot gold was up 0.3 percent at $1,313.68 an ounce by 1016 GMT, having touched a low of $1,306.21 on Friday, it’s weakest since Sept. 2. U.S. gold rose 0.8 percent to $1,320.90 an ounce.
Treasuries Recap
The US Treasuries little changed during a relatively light session as investors await the FOMC monetary policy meeting, followed by a news conference by Fed Chair, Janet Yellen, where she will talk about the state of the economy. The yield on the benchmark 10-year Treasury note hovered around 1.69 percent mark, the yield on 5-year bond remained steady at 1.20 percent and the yield on short-term 2-year note slid 1/2 basis point to 0.770 percent.
The Eurozone periphery bonds traded narrowly mixed as debt market remained volatile ahead of the United States Federal Reserve and Bank of Japan’s monetary policy meeting scheduled to be held this week. The French 10-year bond yields rose 1-1/2 basis points to 0.250 percent, Irish 10-year bonds yield fell 1 basis point to 0.480 percent, Italian equivalent also dipped 1 basis point to 1.324 percent, Netherlands 10-year bonds yield climbed 2 basis points to 0.130 percent, Portuguese equivalents tumbled 5 basis points to 3.424 percent and the Spanish 10-year bonds yield slid 2-1/2 basis points to 1.054 percent.
The UK gilts traded nearly flat as investors await the Federal Reserve monetary policy decision and Fed Chair Yellen’s post-statement press conference, in an attempt to estimate the Fed's most likely step. The yield on the benchmark 10-year gilts hovered around 0.877 percent mark, the super-long 40-year bond yield climbed 1-1/2 basis points to 1.473 percent and the yield on short-term 2-year bond remained steady at 0.147 percent.
The German bunds traded range bound during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year bond fell 1/2 basis point to -0.004 percent, the yield on long-term 30-year note climbed 1 basis point to 0.643 percent and the yield on short-term 2-year bond remained steady at -0.654 percent.
The New Zealand government bonds traded nearly flat as investors await the Reserve Bank of New Zealand’s monetary policy decision, which is scheduled to be held on September 21. The yield on the benchmark 10-year bond hovered around 2.59 percent mark, the yield on 7-year note remained steady at 2.255 percent and the yield on short-term 2-year note stood flat at 1.975 percent.
The Australian government bonds trade modestly lower during a relatively quiet session that witnessed data of little significance as investors remained focused on the Federal Reserve and Bank of Japan’s monetary policy decision scheduled to be held this week. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.178 percent, the yield on long-term 15-year note climbed more than 1 basis point to 2.559 percent and the yield on short-term 2-year jumped 4 basis points to 1.623 percent.
