Market Roundup
- GBP/USD 0.44%, USD/JPY 0.27%, EUR/USD 0.01%
- Fed Rosengren: With Fed nearing goals, rate hikes could shield economy
- BoJ Policy Board Funo sticks to old script, remains optimistic on prices and economy
- Funo notes risks to outlook, strong JPY-higher crude costs affecting CAPEX
- Funo: Will use all policy options available
- ECB’s Nouy: Low rates taking a toll on euro zone banks
- Euro zone Aug Inflation, Flash y/y 0.2% vs 0.2 previous, 0.3 expected
- Euro zone Aug Infl Ex Food & Enr Flash 0.8% vs 0.8 previous, 0.9 expected
- Euro zone Jul Unemployment Rate 10.1% vs 10.1 previous, 10 expected
- German Aug Unemployment Chg SA -7k vs -7 previous, -5 expected
- German Aug Unemployment Total NSA 2.684mln vs 2.661 previous, 2.69 expected
- German Aug Unemployment Rate SA 6.1% vs 6.1 previous, 6.1 expected
- German Aug Unemployment Total SA 2.675mln vs 2.682 previous
- German Jul Retail Sales m/m Real 1.7% vs -0.1 previous, 0.5 expected
- German Jul Retail Sales y/y Real -1.5% vs 2.7 previous, 0.3 expected
- UK PM: No second vote or attempt to stay in EU by "back door"
- UK Aug GfK Consumer Confidence -7 vs -12 previous, -8 expected
- UK Aug Nationwide house price m/m 0.6% vs 0.5 previous, -0.3 expected
- UK Aug Nationwide house price y/y 5.6% vs 5.2 prev, 4.8 expected
- Switzerland Jul UBS consumption indicator 1.32 vs 1.34 previous
Economic Data Ahead
- (0815 ET/1215 GMT) Payrolls processor ADP releases U.S. employment report for the month of July. The report is expected to show that 175,000 jobs were added in August, compared with 179,000 jobs in July.
- (0830 ET/1230 GMT) Canada's gross domestic product for the second quarter is expected to have declined to a 1.5 percent annualized rate, as compared to 2.4 percent growth in the previous quarter.
- (1000 ET/1400 GMT) The National Association of Realtors is expected to report that U.S. pending home sales increased 0.6 percent in July after rising 0.2 percent in June.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions edged down at 54.3 in August after increasing to 55.8 in July.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 26.
- (1930 ET/2330 GMT) Australian Industry Group releases its performance of manufacturing index for the month of August. The index stood at 56.4 in July.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending Aug 26.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending Aug 26.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae, max $1.275bn.
FX Beat
DXY: The dollar index, against a basket of currencies trades higher at 96.11, having touched an early high of 96.18, its highest since Aug. 9.
EUR/USD: The euro slumped to fresh near 3-week lows following downbeat consumer price index and unemployment figures. Eurozone's preliminary consumer price index for the month of August declined to 0.2 percent against consensus of 0.3 percent, while core-consumer price index edged down to 0.8 percent versus forecast and previous reading of 0.9 percent. Meanwhile, unemployment rate for the month of July came in at 10.1 percent, against projection of 10.0 percent. The European currency trades lower at 1.1137, having touched a low of 1.1129, its lowest since August 12. The minor intraday resistance is around 1.1166 and any break above will take the pair till 1.1177 (55- H EMA)/1.1215 (100-day MA). It should close above 100-day MA for further jump. On the lower side, any break below 50- day MA will drag it down till 1.11130 (200- day MA)/1.10450 (May 8th 2016 low).
USD/JPY: The Japanese yen declined to a 1-month low against the dollar, as upbeat U.S. economic data strengthened the case of imminent Fed interest rate hike as early as September. Earlier in the day, Chicago Fed President Charles Evans emphasized on sluggish growth and the case for keeping rates lower for an extended period, while Boston Fed president Eric Rosengren stated that higher rates could safeguard the economy from uncertainties such as a commercial real estate bubble. The major trades 0.3 percent higher at 103.28, having touched a high of 103.33, it’s highest since July 29. The short term trend is slightly bullish as long as support 101.40 holds. The major resistance is around 103.25 (55- day EMA) and any break above confirms minor trend reversal, a jump till 103.80/104.55 is possible. On the lower side, major support is around 101.40 (9- day EMA) and any break below 101.40 will drag it till 100.55/100.
GBP/USD: Sterling regained the 1.3100 handle, strengthened by improved consumer confidence and rising house prices, indicating that the economy was holding up well despite Brexit shock vote. Data released overnight showed that GfK's gauge of consumer confidence rose to -7 in August from -12 in July, while Nationwide's house prices increased 5.6 percent in August compared with 5.2 percent the same month last year. Sterling trades 0.44 percent higher at 1.3137, having touched an early high of 1.3157. Any break above 10-day MA will take the pair to next level till 1.3178/1.3200/1.3270. On the lower side, support stands at 1.3050, break below targets 1.3000/1.2950. Against the euro, the pound trades 0.4 percent up at 84.74 pence.
USD/CHF: The Swiss franc slump for the ninth consecutive session, hitting fresh 1-month low as the greenback strengthened on mounting speculation the Federal Reserve could raise interest rates sooner rather than later. The major trades 0.14 percent higher at 0.9848, hovering towards a high of 0.9850, it’s highest since July 28. Data released earlier by UBS showed that Switzerland’s consumption indicator for the month of July rose 1.32 from previous 1.21. Any break above 200- day MA will take the pair to next level till 0.9900/0.9960. It is bullish as long as support 0.9740 holds. On the lower side, any break below 0.9740 will drag it till 0.9690 (daily Tenkan-Sen) /0.9630.The minor support is around 0.97720 (23.6% retracement of 0.95371 and 0.98470). The short term weakness can be seen only below 0.9630.
AUD/USD: The Australian dollar trimmed gains after rising to an early high of 0.7533 as the greenback continues to gain traction on increasing expectations of Fed interest rate hike this year. The Aussie trades 0.1 percent up at 0.7515, hovering around 1-month lows of 0.7500 touched on Wednesday. Investors await U.S ADP employment report and pending home sales data, ahead of Australia's retail sales and capital expenditure due tomorrow. On the higher side, any break above 0.7575 (21-day MA) will take the pair till 0.7650/0.7700/0.7760. The major support is around 0.7500 and break below will drag it till 0.7480/0.7420.
NZD/USD: The New Zealand dollar rose, recovering most of its previous session losses, after a private survey by ANZ bank showed that business sentiment rose in August. The Kiwi rose 0.4 percent at 0.7247, hovering away from a 2-week low of 0.7204 struck in the previous session. Investor’s attention will remain of series of U.S. economic reports, ahead of New Zealand's second quarter terms of trade index data. Immediate resistance is located at 0.7266 (10-DMA), break above targets 0.7300. On the downside, support is seen at 0.7200, break below could drag it till 0.7164.
Equities Recap
European shares hit fresh 2-week high, while bond yields rose, with 10-year U.S. Treasury yields set for their biggest monthly rise in over a year as investors speculate the Fed to raise interest rates this year.
MSCI global stock index was flat, while MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.35 percent.
The pan-European STOXX 600 index added 0.17 percent at 345.34 points, while the FTSEurofirst 300 index edged up 0.15 percent at 1,359.17 points.
Britain's FTSE 100 trades 0.24 percent down at 6,803.41 points, while mid-cap FTSE 250 dropped 0.26 percent at 17,800.79 points.
Germany's DAX fell 0.22 percent at 10,634.10 points; France's CAC 40 trades 0.5 percent higher at 4,479.20 points.
Tokyo's Nikkei climbed 0.97 pct at 16,887.40, Australia's S&P/ASX 200 index declined 0.70 pct at 5,439.80 points and South Korea's KOSPI shed 0.25 percent at 2,034.65 points.
Shanghai composite index rose 0.4 pct at 3,085.49 points, while CSI300 index gained 0.5 pct at 3,327.79 points. Hong Kong's Hang Seng index added 0.2 pct at 22,976.88 points.
Commodities Recap
Crude oil prices slumped, hitting fresh 2-week lows, as a stronger U.S. dollar and increasing stocks of physical oil weighed on prices, however, prices remained on course for a monthly gain of more than 10 percent. Brent crude oil was trading 0.9 percent lower at $48.21 per barrel at 1026 GMT, its lowest since August 16. U.S. West Texas Intermediate crude oil was at $46.02 a barrel, down 0.5 percent, having touched a 2-week low of $45.79.
Gold edged higher, hovering away from near 2-month lows touched in the previous session as the dollar slightly weakened. Spot gold rose 0.3 percent $1,31.83 an ounce at 1032 GMT, having shed 1 percent on Tuesday to touch a 2-month low of $1,309.07. U.S. gold futures were up $1 at $1,317.50.
Treasuries Recap
The US Treasuries held relatively steady with light selling in the long-end of the curve ahead of ADP employment estimate. The yield on the benchmark 10-year Treasury note hovered around 1.57 percent mark, the yield on 5-year note climbed nearly 1 basis point to 1.190 percent and the yield on short-term 2-year note also rose 1 basis point to 0.809 percent.
The UK gilts traded narrowly mixed after recent economic data came in stronger than expected. The yield on the benchmark 10-year gilts fell 1 basis point to 0.633 percent, the super-long 40-year bond yield climbed 1 basis point to 1.108 percent and the yield on short-long 2-year bond slid 1 basis point to 0.145 percent.
The German 10-year bund yields continued to hover between -0.05 percent to -0.10 percent mark Wednesday as markets look to be holding steady in advance of European Central Bank (ECB) monetary policy meeting scheduled next week. The yield on the benchmark 10-year bond hovered around -0.090 percent mark, the yield on long-term 30-year note remained steady at 0.424 percent and the yield on short-term 2-year bond dipped ½ basis points to -0.623 percent.
The Japanese government bonds traded nearly mixed as investors await the benchmark 10-year JGB auction, which is scheduled to take place on Thursday at 03:45 GMT. The benchmark 10-year bond yield hovered around -0.071 percent mark, the super-long 30-year JGB yield climbed 2 basis points to 0.418 percent, the 5-year JGB yield remained steady at -0.178 percent and the short-term 2-year JGB yield climbed ½ basis point to -0.193 percent.
The Australian government bonds traded nearly flat Wednesday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note hovered around 1.890 percent mark and the yield on short-term 2-year remained steady at 1.449 percent.
