Market Roundup
- EUR/USD -0.25%, USD/JPY 0.30%, GBP/USD -0.29%, EUR/GBP 0.03%
- DXY 0.25%, DAX -0.14%, FTSE 0.08%, Brent -0.51%, Gold -0.63%
- U.S.-China trade war escalates as new tariffs kick in
- Investors lash Australian dlr on political turmoil, NZ$ subdued
- Russian rouble hits lowest in more than two years on sanctions fears
- Lira falls as Turkey says U.S. waging 'economic war'
- EZ Aug Markit Manufacturing Flash PMI, 54.6, 55.0 forecast, 55.1 previous
- EZ Aug Markit Service PMI, 54.4, 54.4 forecast, 54.2 previous
- EZ Aug Markit Composite PMI, 54.4, 54.5 forecast, 54.3 previous
- Germany Aug Markit Composite Flash PMI, 55.7, 55.2 forecast, 55.0 previous
- France Aug Markit Composite Flash PMI, 55.1, 54.6 forecast, 54.4 previous
- France Aug Business Climate Manufacturing 110, 108 forecast, 108 previous, 109 revised
- Great Britain Aug CBI Distributive Trades, 29, 13 f'cast, 20 previous
- Britain's 'no deal' Brexit plans spell out trade disruption for firms
- ECB must not delay rolling back stimulus: Weidmann
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 3,000 to a seasonally adjusted 215,000 for the week ended August 17, while continuing claims for the week ended August 10 is expected to rise to 1.731 million from a previous reading of 1.721 million
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of June. The index gained 0.2 percent in May.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of August. The index posted a final reading of 55.3 in the previous month.
- (0945 ET/1345 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index edged down to 55.9 from a final reading of 56.0 in the prior month.
- (0945 ET/1345 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of August. The index is expected to rise to 56.3 from a final reading of 55.7 in the prior month.
- (1000 ET/1400 GMT) The U.S. new single-family home sales are expected to have increased 2.2 percent to a seasonally adjusted annual rate of 645,000 units in July. New home sales dropped 5.3 percent in June to a seasonally adjusted annual rate of 631,000 units.
- (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of August. The index posted a final reading of -0.6 in the prior month.
- (1100 ET/1500 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of August. The indicator stood at 22 in the previous month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 17.
Key Events Ahead
- N/A Jackson Hole Symposium commences
FX Beat
DXY: The dollar index bounced back from a near 3-week low as a new round of U.S. tariffs on $16 billion worth of Chinese imports took effect, prompting Beijing to retaliate with its own levies on American goods worth the same amount. The greenback against a basket of currencies trades 0.2 percent up at 95.26, having touched a low of 94.93 the day before, its lowest since August 2. FxWirePro's Hourly Dollar Strength Index stood at 15.15 (Neutral) by 1000 GMT.
EUR/USD: The euro declined from a 2-week peak touched in the previous session after Bundesbank President Jens Weidmann warned against a delay in normalization European Central Bank’s stimulus programme, stating that the ECB should roll back its programme as inflation was consistent with its target. The European currency traded 0.1 percent down at 1.1585, having touched a high of 1.1622 on Wednesday, its highest since August 8. FxWirePro's Hourly Euro Strength Index stood at 95.12 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 1.1628 (August 8 High), a break above targets 1.1667 (August 2 High). On the downside, support is seen at 1.1492 (5-DMA), a break below could drag it till 1.1450 (10-DMA).
USD/JPY: The dollar rallied to a 6-day peak after the Federal Reserve's latest policy meeting minutes signalled a September interest rate hike, but also examined how global trade disputes could batter businesses and households. The major was trading 0.2 percent up at 110.79, having hit a high of 110.93 earlier, its highest since August 17. FxWirePro's Hourly Yen Strength Index stood at -86.34 (Slightly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. new home sales, unemployment benefit claims, housing price index and prelim Markit PMI's. Immediate resistance is located at 111.08 (78.6% retracement of 111.43 and 109.77), a break above targets 111.43 (August 15 High). On the downside, support is seen at 110.45 (5-DMA), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling slumped from a 2-week peak after Britain's 'no deal' Brexit plan indicated that British firms trading with the European Union will face trade disruption if the government is unable to negotiate an exit deal with Brussels before it leaves the bloc next March. The major traded 0.1 percent down at 1.2896, having hit a high of 1.2936 on Wednesday; it’s highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at 9.75 (Neutral) 1000 GMT. Immediate resistance is located at 1.2977 (61.8% retracement of 1.3173 and 1.2661), a break above could take it near 1.3173 (July 26 High). On the downside, support is seen at 1.2812 (5-DMA), a break below targets 1.2783 (10-DMA). Against the euro, the pound was trading flat at 89.82 pence, having hit a low of 90.05 on Wednesday, it’s lowest since August 9.
USD/CHF: The Swiss franc rose, extending gains for the fifth straight session, as the latest round of U.S.-China tariffs triggered risk-off market sentiment. The major trades 0.1 percent down at 0.9825, having touched a low of 0.9808 the day before, it’s lowest since June 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 71.08 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9875 (38.2% retracement of 0.9982 and0.9808) and any break above will take the pair to next level till 0.9895 (50.0% retracement). The near-term support is around 0.9810 and any close below that level will drag it till 0.9785.
Equities Recap
European shares advanced, underpinned by gains in tech, healthcare, and consumer staples stocks, while the greenback surged as the United States and China escalated their trade war, implementing 25 percent tariffs on $16 billion worth of each other's goods.
The pan-European STOXX 600 index advanced 0.1 percent at 384.33 points, while the FTSEurofirst 300 index surged 0.1 percent to 1,503.72 points.
Britain's FTSE 100 trades 0.05 percent up at 7,576.17 points, while mid-cap FTSE 250 gained 0.2 percent to 20,690.83 points.
Germany's DAX fell 0.2 percent at 12,365.37 points; France's CAC 40 trades 0.1 percent higher at 5,424.34 points.
Commodities Recap
Crude oil prices slumped as an escalating trade dispute between the United States and China offset the impact of a decline in U.S. commercial crude inventories. International benchmark Brent crude was trading 0.4 percent down at $74.59 per barrel by 1045 GMT, having hit a high of $74.97 the day before, its highest since July 31. U.S. West Texas Intermediate was trading 0.4 percent lower at $67.82 a barrel, after rising as high as $68.12 on Wednesday, its highest since August 14.
Gold prices declined, retreating from a 1-week high hit in the previous session, as intensifying U.S.-China trade war and expectations of higher interest rates boosted the greenback. Spot gold was 0.5 percent down at $1,189.30 an ounce at 1048 GMT, having hit a high of $1201.46 on Wednesday, its highest since August 14. U.S. gold futures were down 0.7 percent at $1,194.80.
Treasuries Recap
The U.S. Treasuries lost ground ahead of today’s release of the weekly initial jobless claims and 5-year auction, both scheduled for later today. The yield on the benchmark 10-year Treasuries rose 1/2 basis point to 2.82 percent, the super-long 30-year bond yields flat at 2.98 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 2.60 percent.
The German bunds remained in a tight range during European session after the country’s August manufacturing PMI for the month of August fell, also missing market expectations for the same. The German 10-year bond yields, which move inversely to its price, remained range-bound at 0.349 percent, the yield on 30-year note traded steady at q.007 percent and the yield on short-term 2-year rose 1 basis point to -0.600 percent.
The New Zealand bonds closed higher after global dairy prices slumped at the overnight GlobalDairyTrade (GDT) price auction, shrugging off the higher-than-expected reading in the country’s retail sales for the second quarter of this year. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped nearly 1/2 basis point to 2.615 percent, the yield on the long-term 20-year note slumped nearly 1-1/2 basis points to 2.925 percent and the yield on short-term 2-year also closed nearly 1-1/2 basis points lower at 1.720 percent.
The Japanese government bonds remained range-bound during late Asian session ahead of the country’s national consumer price inflation (CPI) data for the month of July, scheduled to be released today by 23:30GMT. However, risk sentiments remain supported in a muted trading that witnessed data of little economic significance. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained flat at 0.093 percent, the yield on the long-term 30-year note hovered around 0.845 percent and the yield on short-term 2-year too traded steady at -0.118 percent.
The Australian bonds gained across the curve on Thursday after Prime Minister Malcolm Turnbull’s three cabinet members resigned and supported Peter Dutton for the next prime minister and Liberal leader. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.526 percent, the yield on the long-term 30-year bond also dipped 1-1/2 basis points to 3.031 percent and the yield on short-term 2-year slumped 2-1/2 basis points to 1.984 percent.
