Market Roundup
- EUR/USD 0.31%, USD/JPY -0.05%, GBP/USD 0.57%, EUR/GBP -0.26%
- DXY -0.21%, DAX 0.4%, FTSE 0.24%, Brent 0.16%, Gold -0.02%
- Great Britain Retail Sales (y/y), 3.3%, 2.3% forecast, 3.5% previous
- EU leaders keep up pressure on May to take Brexit deal
- OECD trims economic outlook over trade and emerging market woes
- German real wages rise despite higher inflation
- China plans import tariff cuts as soon as October - Bloomberg
- Japan PM Abe wins extended term, faces Trump trade challenge
- Japan's Abe says has met key goal on jobs, distances himself from BOJ inflation target
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 6,000 to a seasonally adjusted 210,000 for the week ended September 14, while continuing claims for the week ended September 7 is expected to rise to 1.705 million from a previous reading of 1.1696 million.
- (0830 ET/1230 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity increased to 17.0 in September from 11.9 in August.
- (0830 ET/1230 GMT) The ADP releases Canada's labor market report for August. The economy added 11,600 jobs in the previous month.
- (1000 ET/1400 GMT) National Association of Realtors is likely to report that U.S. existing home sales rose 0.3 percent to an annual rate of 535,000 million units in August from 5.34 million units in the month before.
- (1000 ET/400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of September. The index posted a final reading of -1.9 in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending September 14.
Key Events Ahead
- (1115 ET/1515 GMT) Bundesbank President Jens Weidmann speaks in Freiburg, Germany
- (1320 ET/1720 GMT) ECB's Peter Praet Address on “Challenges to monetary policy normalization” at conference “Sustainable Policy Responses – EU and US Perspectives” organized by SUERF in New York City.
FX Beat
DXY: The dollar index fell to 7-week low after a survey by Reuters indicated that the U.S. economy will expand at a robust pace in coming quarters but slow to 2 percent by the end of 2019. The greenback against a basket of currencies trades 0.3 percent down at 94.24, having touched a low of 94.22 earlier, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at -24.40 (Neutral) by 0900 GMT.
EUR/USD: The euro surged above the 1.1700 handle as German real wages rose in the second quarter despite the highest inflation rate in more than five years, indicating that household spending will continue to boost growth. The economy's nominal wages increased by 2.5 percent from April to June while inflation increased to 2.0 percent year-on-year. The European currency traded 0.3 percent up at 1.1712, having touched a high of 1.1724 on Tuesday, its highest since Aug 28. FxWirePro's Hourly Euro Strength Index stood at 4.21 (Neutral) by 0900 GMT. Immediate resistance is located at 1.1718 (August 30 High), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1584 (August 31 Low), a break below could drag it till 1.1542 (September 5 Low).
USD/JPY: The dollar consolidated within a narrow range as investors refrained from taking big positions, ahead of the Federal Reserve meeting next week, where it is expected to raise its benchmark rates and provide further insights on the path for future rate hikes. The major was trading flat at 112.26, having hit a high of 112.44 on Wednesday, its highest since July 20. FxWirePro's Hourly Yen Strength Index stood at -115.75 (Highly Bearish) by 0900 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. existing home sales and unemployment benefit claims data. Immediate resistance is located at 112.62 (July 12 High), a break above targets 112.92 (July 17 High). On the downside, support is seen at 111.76 (September 17 Low), a break below could take it lower 111.35 (September 5 Low).
GBP/USD: Sterling rallied to a fresh 2-month peak above the 1.3200 handle after data showed British retail sales data surpassed forecasts as shoppers maintained their strong summer spending spree in August. Moreover, growing optimism that Britain and the European Union can seal a Brexit deal at an EU leaders summit boosted the upward momentum. The major traded 0.6 percent up at 1.3226, having hit a high of 1.3229 earlier; it’s highest since July 17. FxWirePro's Hourly Sterling Strength Index stood at 81.31 (Slightly Bullish) 0900 GMT. Immediate resistance is located at 1.3244 (July 12 High), a break above could take it near 1.3274 (July 5 High). On the downside, support is seen at 1.3098 (September 19 Low), a break below targets 1.3056 (10-DMA). Against the euro, the pound was trading 0.3 percent up at 88.55 pence, having hit a high of 88.54, it’s highest since July 17.
USD/CHF: The Swiss franc edged up, drifting away from a 6-day low touched in the previous session as the greenback eased following weakness in the U.S. Treasury yields. The major trades 0.1 percent down at 0.9656, having touched a low of 0.9600 on Tuesday. it’s lowest since April 17. FxWirePro's Hourly Swiss Franc Strength Index stood at -67.66 (Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9702 (38.2% retracement of 0.9865 and 0.9600) and any break above will take the pair to next level till 0.9734 (50.0% retracement). The near-term support is around 0.9585 and any close below that level will drag it till 0.9553.
Equities Recap
European shares rallied as fears over a U.S.-China trade war eased, while sterling surged to 2-month peak on the back of better-than-expected Britain retail sales.
The pan-European STOXX 600 index rallied 0.5 percent at 381.73 points, while the FTSEurofirst 300 index surged 0.5 percent to 1,493.60 points.
Britain's FTSE 100 trades 0.2 percent up at 7,346.56 points, while mid-cap FTSE 250 gained 0.1 percent to 20,510.73 points.
Germany's DAX rose 0.4 percent at 12,265.23 points; France's CAC 40 trades 0.6 percent higher at 5,426.42 points.
Commodities Recap
Crude oil prices surged, extending previous session gains on news of another fall in U.S. crude inventories and signs that OPEC may not increase production to compensate for the loss of Iranian exports affected by U.S. sanctions. International benchmark Brent crude was trading 0.2 percent up at $79.47 per barrel by 1004 GMT, having hit a high of $79.79 earlier, its highest since September 12. U.S. West Texas Intermediate was trading 0.4 percent up at $71.04 a barrel, after rising as high as $71.47 on Wednesday, its highest since July 13.
Gold prices edged down after rising to a 6-day peak as investors turned cautious ahead of next week's U.S. Federal Reserve policy meeting. Spot gold was 0.1 percent up at $1,202.17 by 1009 GMT, having hit a high of $1212.55 last week, its highest since Aug. 28. U.S. gold futures were up 0.1 percent at $1,209.30 an ounce.
Treasuries Recap
The U.S. Treasuries gained ahead of the country’s August existing home sales figures, the September Philly Fed indices, the usual weekly claims numbers and the Fed’s Q2 flow of funds. The yield on the benchmark 10-year Treasuries fell 1 basis point to 3.072 percent, the super-long 30-year bond yields slumped nearly 2 basis points to 3.219 percent and the yield on the short-term 2-year traded tad lower at 2.803 percent.
The United Kingdom’s gilts traded mixed during European session after the country’s August retail sales figures cheered market expectations, albeit down from the previous reading in July, revised higher. The yield on the benchmark 10-year gilts, hovered around 1.605 percent, the super-long 30-year bond yields slumped nearly 2 basis points to 1.940 percent and the yield on the short-term 3-year traded tad higher at 0.895 percent.
The New Zealand bonds ended lower after the country’s gross domestic product (GDP) for the second quarter of this year, rose above market expectations, lending a weaker tone to debt prices. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped 2 basis points to 2.633 percent, the yield on the long-term 20-year note rose 1/2 basis point to 2.955 percent and the yield on short-term 2-year closed nearly 1 basis point higher at 1.740 percent
The Japanese government bond prices remained tad lower during late Asian session as investors are hoping to see a slight rise in the country’s consumer price inflation (CPI) figures, due to be released today for further direction in the debt market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered at 0.119 percent, the yield on the long-term 30-year note rose 1/2 basis point to 0.857 percent and the yield on short-term 2-year also remained tad higher at -0.103 percent.
The Australian government bonds slumped across the curve during Asian session after the U.S. 10-year Treasuries yield surged to 4-month high on expectations of the Federal Reserve policy tightening. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 2.718 percent, the yield on the long-term 30-year bond traded 1 basis point higher at 3.207 percent and the yield on short-term 2-year climbed 1-1/2 basis points to 2.137 percent.
