Market Roundup
- Supreme Court rules PM Johnson's suspension of parliament was unlawful
- RBA governor says further policy easing may be required
- German business morale bounces
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 2.2 percent in July from 2.1 percent in the previous month.
- (0900 ET/1300 GMT) The Federal Housing Finance Agency releases its housing price index for the month of July. The index gained 0.3 percent in June.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish its Manufacturing Index for September. The index posted a decline of 11in the prior month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1230 ET/1630 GMT) European Central Bank Vice-president Luis De Guindos' speech
FX Beat
DXY: The dollar index rose, hovering towards a 1-1/2 week peak hit in the previous session after San Francisco Fed President Mary Daly acknowledged that the Fed’s policy easing has only partially offset the various drags on the economy. The greenback against a basket of currencies traded up at 98.65, having touched a high of 98.83 on Monday, its highest since September 12.
EUR/USD: The euro consolidated below the 1.1000 handle as Monday's weak eurozone survey data raised concerns the economy was struggling to gain traction despite another measure of stimulus by the European Central Bank earlier this month. The major is expected to remain on the downside after Ifo institute stated that a slight improvement in the leading Ifo business climate index of Germany did not indicate a change of trend, adding that the German economy is likely to shrink again in the third and stagnate in the fourth quarter. The European currency traded down at 1.0989 having touched a low of 1.0966 on Monday, its lowest since September 12. Immediate resistance is located at 1.1030 (5-DMA), a break above targets 1.1059 (September 10 High). On the downside, support is seen at 1.0963 (August 30 High), a break below could drag it below 1.0927 (September 12 High).
USD/JPY: The dollar rebounded after falling to a near 2-week low in the prior session, as risk sentiment improved after U.S. Treasury Secretary Steven Mnuchin’s confirmation that he and Trade Representative Robert Lighthizer would meet Chinese Vice Premier Liu He in two weeks’ time. The major was trading 0.2 percent up at 107.71, having hit a low of 107.31 on Monday, its highest since September 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing price index and consumer confidence. Immediate resistance is located at 107.92 (July 1 High), a break above targets 108.53 (July 1 High). On the downside, support is seen at 107.11 (21-DMA), a break below could take it lower at 106.62 (September 6 Low).
GBP/USD: Sterling rose, halting a 2-day losing streak after Britain’s Supreme Court ruled that British Prime Minister Boris Johnson had acted unlawfully when he advised Queen Elizabeth to suspend Parliament weeks before Brexit and therefore the suspension was void. The major traded 0.2 percent up at 1.2489, having hit a high of 1.2526 on Thursday, it’s highest since July 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2503 (September 16 High), a break above could take it near 1.2526 (September 17 High). On the downside, support is seen at 1.2382 (July 17 Low), a break below targets 1.2312 (September 12 Low). Against the euro, the pound was trading 0.2 percent up at 88.26 pence, having hit a high of 87.85 on Friday, it’s highest since May 22.
USD/CHF: The Swiss franc rallied, extending gains for the fourth straight session, as concerns mounted over a slowing global economy after a survey out of the Eurozone on Monday showed business growth stalled this month. The major trades 0.05 percent down at 0.9893, having touched a low of 0.9889 on Friday, it’s lowest since September 16. On the higher side, near-term resistance is around 0.9923 (September 9 High) and any break above will take the pair to next level till 0.9999 (June 17 High). The near-term support is around 0.9870 (September 9 Low), and any close below that level will drag it till 0.9854 (September 13 Low).
Equities Recap
European shares surged after Washington said the United States and China would resume trade talks.
The pan-European STOXX 600 index rose 0.2 percent at 390.79 points, while the FTSEurofirst 300 rallied 0.2 percent to 1,536.22 points.
Britain's FTSE 100 trades 0.1 percent down at 7,318.67 points, while mid-cap FTSE 250 eased 0.3 to 19,975.08 points.
Germany's DAX rose 0.05 percent at 12,347.97 points; France's CAC 40 trades 0.2 percent higher at 5,644.05 points.
Commodities Recap
Crude oil prices declined, extending losses for the third straight session as Saudi Arabia was expected to restore oil output faster than anticipated following attacks last week. International benchmark Brent crude was trading 0.9 percent down at $63.83 per barrel by 1033 GMT, having hit a high of $69.64 last week, its highest since May 30. U.S. West Texas Intermediate was trading 0.9 percent up at $57.95 a barrel, after falling as low as $57.33 on Monday, its lowest since September 16.
Gold prices steadied after rising to a more than 2-week peak in the previous session on global slowdown fears and tensions in the Middle East, while an improved U.S.-China trade tone capped gains. Spot gold was trading flat at $1,521.79 per ounce at 1036 GMT, having touched a high of $1,526.74 on Monday, its highest since September 6. U.S. gold futures were down 0.3 percent to $1,527.10 per ounce
Treasuries Recap
The U.S. Treasuries flattened during the afternoon session ahead of the country’s Conference Board consumer confidence survey results for the month of September, scheduled to be released today by 14:00GMT. Also, the short-term 2-year auction, due later today will direct markets thoroughly. The yield on the benchmark 10-year Treasury yield slipped 1/2 basis point to 1.703 percent, the super-long 30-year bond yield edged tad 1 percent down to 2.143 percent and the yield on the short-term 2-year hovered around 1.675 percent.
The German bunds traded nearly flat during European trading session after the country’s Ifo business climate index cheered market participants. However, investors will keep a close eye on the 10-year auction, scheduled to be held on September 25 by 09:40GMT and European Central Bank President Mario Draghi’s speech, due to be delivered later today. The German 10-year bond yield, which move inversely to its price, remained flat at -0.581 percent, the yield on 30-year note slipped 1/2 basis point to -0.121 percent and the yield on short-term 2-year hovered around -0.716 percent.
The Japanese government bonds jumped at close after returning from a long weekend holiday, following closure for Autumn Equinox as investors await the release of the Bank of Japan’s (BoJ) minutes of the July monetary policy meeting, today by 23:50GMT for further direction in the bond market. The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 20 basis points to -0.240 percent, the yield on the long-term 30-year suffered nearly 2 basis points to 0.337 percent and the yield on short-term 2-year slumped 16 basis points to -0.319 percent.
The Australian government bonds edged tad higher during Asian session of the second trading day of the week amid a muted session that witnessed data of little economic significance amid burgeoning worries for global growth after the release of weak European economic data yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped tad 1/2 basis point to 0.987 percent, the yield on the long-term 30-year bond also remained an inch lower at 1.583 percent and the yield on short-term 2-year hovered around 0.752 percent.
