Market Roundup
- EUR/USD 0.23%, USD/JPY 0.96%, GBP/USD 1.61%, EUR/GBP -1.33%
- DXY -0.31%, DAX -0.1%, FTSE -1.28%, Brent 0.04%, Gold -0.47%
- Hawkish rate steer from BoE MPC's Vlieghe--previously MPC's most dovish
- ECB to announce in Oct plans to reduce QE; buy bonds through June 2018
- Expansion of euro zone only after it gets stronger - France's Le Maire
- EZ Aug Eurostat Trade NSA, Eur 23.2B vs 26.6B, forecast 21.4B
- EZ Q2 Labour Costs YY 1.8% vs 1.5%
- EZ Q2 Wages in Euro Zone 2.0% vs 1.4%
- Ex-BOJ economist says c. bank may allow rates to rise in 2018
- North Korea fired another missile over Japan
- Japan Reuters Tankan Sept mfg index +25, non-mfg +34, Aug +27, +29
- Japan Non-mfg index best since June ’15, Dec mfg index eyed at +21, non-mfg +28
- Japan Inc holds off on floating bonds amidst North Korea to-do - Nikkei
- Oil falls as markets dip on North Korea tensions
- Gold slips as investors shrug off N. Korea; Fed rate hike outlook weighs
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of New York is expected to report that New York State manufacturing activity index eased to 19 percent in September after rising to 25.2 percent in August.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.1 percent in August, after advancing 0.6 percent in July. While excluding autos, retail sales are likely to have gained 0.5 percent, after posting similar in the previous month.
- (0915 ET/1315 GMT) The Federal Reserve is likely to report that industrial production rose 0.1 percent in August, after increasing 0.2 in the prior month.
- (0915 ET/1315 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 76.8 percent in August, from 76.7 percent in July.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index declined to 95.1 in September, after posting a final reading of 96.8 in August.
- (1000 ET/1400 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.2 percent in July, after rising 0.5 percent in June.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $2.225 bn)
FX Beat
DXY: The dollar eased versus most of its major peers, except the yen as investors cautiously awaited the release of U.S. retail sales report later in the day. The greenback against a basket of currencies traded 0.2 percent down at 91.83, having touched a low of 91.01 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -5.78 (Neutral) by 1000 GMT.
EUR/USD: The euro rose, extending previous session gains after a Reuters poll showed the European Central Bank will announce a six-month extension to its asset purchase programme in October but will reduce how much it buys each month to 40 billion euros from January. The European currency traded 0.3 percent up at 1.1948, having touched a low of 1.1838 the day before, its lowest since Aug. 31. FxWirePro's Hourly Euro Strength Index stood at 5.35 (Neutral) 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 it 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 7-week high above the 111.00 handle as traders shrugged off the latest missile fired over Japan by North Korea. Investors’ attention now remains on U.S. retail sales data, which is expected to edge up 0.1 percent in August, after advancing 0.6 percent in July. The major was trading 0.9 percent up at 111.28, having hit a high of 111.33 earlier, its highest since Jul. 428 FxWirePro's Hourly Yen Strength Index stood at -176.49 (Highly Bearish) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. Any break above 111.15 (100 day MA) confirms minor bullishness, a jump till 112 likely.
GBP/USD: Sterling advanced above the 1.3600 handle to hit a fresh 14-month high after Bank of England policymaker Gertjan Vlieghe reiterated that the central bank could hike interest rates in coming months. The major traded 1.5 percent up at 1.3591, having hit a high of 1.3616 earlier, its highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 174.13 (Highly 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 it down till 1.3450/1.3400. Against the euro, the pound was trading 1.1 percent up at 87.93 pence, having hit a high of 87.74 pence earlier, its highest since Jul. 17.
USD/CHF: The Swiss franc rose, having retreated from a 3-week low in the previous session, as latest missile fired over Japan by North Korea underpinned demand for safe-haven assets. The major trades 0.2 percent down at 0.9606, having touched a high of 0.9705 in the previous session, it’s highest since Aug. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -114.13 (Highly Bearish) by 1000 GMT. The short term trend is still bullish as long as support 0.9535 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 convincing break above will take it to next level till 0.97730/0.9808.
AUD/USD: The Australian dollar climbed, extending previous session gains despite renewed North Korea missile launch threat. The Aussie trades 0.2 percent up at 0.8019 having hit a low of 0.7956 the day before, it’s lowest since Sept. 5. FxWirePro's Hourly Aussie Strength Index stood at 35.80 (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 slumped, as another missile launch by North Korea triggered a fresh bout of risk aversion, while sterling rallied to a 14-month high above the 1.3600 handle following Bank of England policymaker Gertjan Vlieghe 's comments.
The pan-European STOXX 600 index dropped 0.1 percent to 381.20 points, while the FTSEurofirst 300 index fell 0.2 percent to 1,498.23 points.
Britain's FTSE 100 trades 1.1 percent down at 7,213.89 points, while mid-cap FTSE 250 fell 0.9 percent to 19,350.30 points.
Germany's DAX eased 0.1 percent at 12,532.31 points; France's CAC 40 trades 0.05 percent lower at 5,221.79 points.
Commodities Recap
Crude oil prices rallied, extending gains for the fifth consecutive session, on the back of bullish demand forecasts and U.S. refineries restarting, while global markets weakened following North Korea's latest missile launch. International benchmark Brent crude was trading 0.5 percent up at $55.53 per barrel by 1006 GMT, having hit a high of $55.96 on Thursday, its strongest since Apr. 13. U.S. West Texas Intermediate was trading 0.4 percent up at $49.89 a barrel, after rising as high as $50.47 the day before, its highest since May. 25.
Gold prices declined, reversing most of its previous session gains, as markets shrugged off North Korea's latest missile launch over Japan, while strong U.S. inflation data underpinned the likelihood of another interest rate hike. Spot gold was trading 0.4 percent down at $1,323.80 an ounce by 1010 GMT and was down over 1 percent for the week. U.S. gold futures for December delivery gained 0.1 percent to $1,331.
Treasuries Recap
The U.S. Treasuries remained mixed Friday as investors wait to watch the country’s retail sales for the month of August and the industrial production for the same period, scheduled to be released today by 12:30GMT and 13:5GMT respectively. The yield on the benchmark 10-year Treasury hovered around 2.20 percent, the super-long 30-year bond yields down nearly 1 basis point to 2.78 percent and the yield on short-term 2-year note traded nearly 1-1/2 basis points higher at 1.38 percent.
The UK gilts flat Friday in tight trading session after Yesterday’s hawkish statement from the BoE made explicit that the majority on the MPC now expects to tighten policy over coming months. The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.24 percent, the super-long 30-year bond yields hovered around 1.85 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.39 percent.
The German government bonds traded flat Friday as investors wait to watch the Eurogroup meeting, scheduled to be held later today, besides, the common currency bloc’s consumer price-led inflation index for the month of August, due on September 18 by 09:00GMT. The German 10-year bond yields, which moves inversely to its price, hovered around 0.41 percent, the yield on 30-year note flat at 1.21 percent and the yield on short-term 2-year traded 1 basis point lower at -0.71 percent.
The New Zealand bonds closed on the downside on the last trading day of the week as investors wait to watch the country’s second-quarter gross domestic product (GDP), scheduled to be released on September 20 amid a silent trading session that lacked data of vital 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 bonds continued to incur losses, albeit at a slower pace after U.S. Treasury yields rose in overnight session, with the two-year yield hitting a seven-week peak as domestic consumer prices rose, rekindling bets that the Federal Reserve would raise interest rates for a third time this year. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.75 percent, the yield on 15-year note climbed 1 basis point to 3.05 percent and the yield on short-term 2-year traded 2 basis points higher at 1.95 percent.
