Market Roundup
- EUR/USD 0.05%, USD/JPY 0.05%, GBP/USD 0.01%, EUR/GBP 0.04%
- DXY -0.04%, DAX 0.61%, FTSE 0.19%, Brent -1.02%, Gold -0.2%
- EZ Aug Markit Mfg Final PMI 57.4 vs 57.4, 57.4 forecast
- Germany Aug Markit/BME Mfg PMI 59.3 vs 59.4, 59.4 forecast
- Great Britain Aug Markit/CPIS Mfg PMI 56.9 vs 55.1, 55.3 revised, 55.0 forecast
- ECB to announce QE cutback in Oct; shut programme by end-2018 - Rtrs poll
- ECB'S Nowotny: Would not over-interpret or dramatize Euro’s rise vs USD, issue regarding QE is how to initiate careful normalization, not abrupt end
- Swiss PMI rises to 61.2 pts in August, highest since 2011
- Putin warns N. Korea situation on verge of 'large-scale conflict'
- Oil falls after Harvey floods U.S. refineries
- Gold edges lower, but N. Korea worries lend support
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of August. The report is likely to show 180,000 jobs were added compared with an increase of 209,000 in July.
- (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of August. The rate stood at 62.9 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that unemployment rate remained unchanged at 4.3 percent in August.
- (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.2 percent in August after climbing 0.3 percent in the month before.
- (0930 ET/1330 GMT) The Markit Economics reports Canada's Manufacturing PMI for the Month of August. The indicator stood at 55.5 in the prior month.
- (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of August. The index is likely to show a final reading of 52.5 after posting similar gains in the previous month.
- (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' index rose to 56.5 in August from a final reading of 56.3 in July.
- (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.5 percent in July after falling 1.3 percent in the previous month.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
- (130 ET/1930 GMT) Autodata Corp releases U.S. auto sales figures for August. Vehicles sales are likely to have declined to 16.60 million units in July from 16.73 million in June.
Key Events Ahead
- N/A The second round of the North American Free Trade Agreement (NAFTA) talks involving the United States, Mexico and Canada begins in Mexico City.
- (1000 ET/1400 GMT) The Board of Governors of the Federal Reserve conducts an open meeting to discuss the Final Rule Establishing Restrictions on Qualified Financial Contracts of Systemically Important U.S. Banking Organizations and the U.S. Operations of Systemically Important Foreign Banking Organizations at the Marriner S. Eccles Federal Reserve Board Building in Washington, D.C.
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.475 bn)
FX Beat
DXY: The dollar consolidated within narrow ranges versus its major peers as investors’ awaited U.S. nonfarm payroll report and ISM Manufacturing PMI figures for further insight on the strength of the U.S. economy. The greenback against a basket of currencies traded 0.1 percent up at 92.63, having touched a low of 91.62 on Tuesday, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at 32.36 (Neutral) by 1000 GMT.
EUR/USD: The euro steadied above the 1.1900 handle, as investors prepared for a European Central Bank meeting next week where policymakers are expected to discuss the impact of the currency's strength. The European currency traded flat at 1.1911, having touched a high of 1.2070 on Tuesday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at -41.35 (Neutral) by 1000 GMT. The pair has taken support near 21- day EMA at 1.1813 and any break below will drag it down till 1.1770/ 1.1745. On the higher side, 1.19765 (61.8% fibo) will be acting as near term intraday resistance and any break above will take it till 1.2000/1.2070 (161.8% retracement).
USD/JPY: The dollar rebounded after easing from a 2-week peak in the prior session as continuous improvement in investors' risk appetite and easing geopolitical tensions dented the Japanese Yen's safe-haven appeal. Investors now await U.S. nonfarm payrolls report, which is expected to show that employers added 180,000 jobs in August. The major was trading 0.2 percent up at 110.14, having hit a high of 110.67 on Thursday, its highest since Aug. 16. FxWirePro's Hourly Yen Strength Index stood at -100.78 (Highly Bearish) by 1000 GMT. On the lower side, any break below 108 confirms minor weakness, a decline till 106 likely. The pair is facing minor resistance at 110.67 (55- day EMA) and any convincing break above will take it till 111.15 (100- day MA)/112.
GBP/USD: Sterling steadied above the 1.2900 handle after data showed Britain's factories grew a lot more strongly than expected in August, indicating that the economy might be picking up speed after a slow first half of 2017. The Markit/CIPS UK Manufacturing Purchasing Managers' Index rose to 56.9 in August from 55.3 in July, surpassing forecasts. Sterling traded flat at 1.2922, having hit a low of 1.2852 the prior session, its lowest since August 25. FxWirePro's Hourly Sterling Strength Index stood at 88.59 (Slightly Bullish) by 1000 GMT. The near term resistance is around 1.29380 and any break above will take the pair to next level till 1.29785 and 1.3000/1.3030. On the lower side, near term support stands at 1.2850 (cloud bottom in daily chart) and any break below will drag it down till 1.2800/1.27730. Against the euro, the pound was trading 0.1 percent down at 92.17 pence, having hit a multi-month low of 93.06 pence earlier in the week.
USD/CHF: The Swiss franc eased against the dollar as gains across global equity markets underpinned the prevalent risks-on environment. The major trades 0.2 percent up at 0.9598, having touched a high of 0.9679 the prior session, it’s highest since Aug. 23. FxWirePro's Hourly Swiss Franc Strength Index stood at 53.44 (Bullish) by 1000 GMT. Major near term intraday resistance is around 0.9630 and any break above confirms minor bullishness, a jump till 0.9680/0.9700/0.9725 likely. The near term support is around 0.9580, which formed a triple bottom and any break below will drag the pair till 0.95295/0.9500.
AUD/USD: The Australian dollar declined, reversing some of its previous session gains, as crude oil prices eased amid ongoing turmoil in the oil industry with nearly a quarter of U.S. refining capacity offline. The Aussie trades 0.2 percent down at 0.728, having hit a high of 0.7995 on Wednesday, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at-45.04 (Neutral) by 1000 GMT. On the lower side, near term support is around 0.7875 (61.8% retracement) and any break below will drag the pair till 0.7800. The near term resistance is around 0.8070 and any break above targets 0.8100/0.8150.
Equities Recap
European shares rallied as financials and media stocks advanced, while the greenback steadied against a basket of currencies ahead of U.S. Nonfarm payroll report.
The pan-European STOXX 600 index gained 0.5 percent to 375.73 points, while the FTSEurofirst 300 index advanced 0.5 percent to 1,476.44 points.
Britain's FTSE 100 trades 0.2 percent up at 7,445.53 points, while mid-cap FTSE 250 fell 0.2 percent to 19,762.48 points.
Germany's DAX rose 0.7 percent at 12,138.58 points; France's CAC 40 trades 0.9 percent higher at 5,129.51 points.
Commodities Recap
Crude oil prices declined, reversing most of its previous session gains in the wake of Hurricane Harvey, which knocked out over a quarter of the U.S. refining industry. International benchmark Brent crude was trading 0.8 percent down at $52.28 per barrel by 0946 GMT, having hit a low of $50.53 on Wednesday, its weakest since Aug. 17. U.S. West Texas Intermediate was trading 0.9 percent down at $46.64 a barrel, after falling as low as $45.52 the prior day, its lowest since Jul. 24
Gold prices eased on mild profit-taking following a rally in the previous session, while investors awaited U.S. jobs data for direction on interest rates. Spot gold was down 0.2 percent at $1,318.05 per ounce as of 0948 GMT, not far from the more-than-nine-month high of 1,325.94 hit on Tuesday, and was poised for a weekly gain of more than 2 percent.
U.S. gold futures were up 0.2 percent at $1,324.20.
Treasuries Recap
The U.S. Treasuries steadied as investors wait to watch the country’s employment report for the month of August, due today by 12:30GMT. Also, the ISM manufacturing index by 14:00GMT will add further direction to the debt market. The yield on the benchmark 10-year Treasury hovered around 2.12 percent, the super-long 30-year bond yields nearly 1 basis point higher at 2.73 percent and the yield on short-term 2-year note traded flat at 1.32 percent.
The UK gilts traded lower Friday as the country’s manufacturing PMI for the month of August beat market expectations, coming in at 56.9, from 55.3 in July. The yield on the benchmark 10-year gilts rose nearly 1 basis point to 1.04 percent, the super-long 30-year bond yields also climbed 1 basis point to 1.71 percent and the yield on the short-term 2-year remained flat at 0.18 percent.
The German government bonds remained range-bound Friday even as the country’s manufacturing Purchasing Managers’ Index (PMI) rebounded during the month of August as output, new orders and new export business all rose more sharply than in July, with the latter expanding at the fastest rate since May 2010. The German 10-year bond yields hovered around 0.36 percent, the yield on 30-year note traded flat at 1.12 percent and the yield on short-term 2-year also remained steady at -0.73 percent.
The Japanese government bonds remained flat Friday as investors covered previous short positions amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury note hovered around 0.01 percent, the yield on long-term 30-year flat at 0.83 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.17 percent.
The New Zealand bonds rallied at the time of closing Friday amid a silent trading session that witnessed data of little economic significance. Also, investors have largely shrugged off the decline in the country’s Q2 terms of trade, pushing bond prices higher. At the time of closing, the yield on the benchmark 10-year Treasury note slid 1 basis point to 2.89 percent, the yield on 7-year note also fell 1 basis point to 2.73 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.03 percent.
The Australian bonds climbed on the last trading day of the week Friday, tracking strength in the U.S. Treasuries after consumer spending data showed continuing low inflation, and as tensions with North Korea kept up demand for the safe haven bonds. The yield on the benchmark 10-year Treasury note slumped nearly 4 basis points to 2.69 percent, the yield on 15-year note also plunged 4 basis points to 2.98 percent and the yield on short-term 2-year also traded 1/2 basis point lower at 1.88 percent.
