- EUR/GBP drops from 7437 5month high to 7381 levels.
- EUR/USD plays in between 1.1282-1.1218 and soft on cross action.
- USD/JPY bounces out of 119.25 to 120.05 levels.
- Sterling boosted by order speculation linked to EU payments.
- Dollar better bid, cable apart, DXY 96.07 high vs 95.708 low.
- Norges Bank Gov-NOK weakened more than anticipated after rate cut.
- Euro Zone September Consumer Confidence -7.1 vs -6.9 previous flash, -7.1 expected.
- Euro zone September Econ Sentiment 105.6 vs 104.1 previous, 104.1 expected.
- Euro zone September Inflation Expectations 3.2 vs 3.1 previous.
- UK August Consumer Credit GBP860mln vs 1.1953bln previous, 1.2bln expected.
- UK August mortgage lending bln vs 2.709bln previous, 2.9bln expected.
- UK August M4 money supply -0.4% vs 1.0% previous.
- UK September CBI Distributive trades +49 vs 24 prev, 28 expected.
- (0830 ET/1230 GMT) Canada Producer Price.
- (0900 ET/1300 GMT) US July CaseShiller 20, +0.8% nsa, +0.1% m/m sa eyed; last +1.0%, -0.1%.
- (0900 ET/1300 GMT) US July CaseShiller 20, +5.1% y/y eyed; last +5.0%.
- (1000 ET/1400 GMT) US September consumer confidence index, 96.1 eyed; last 101.5.
- (1030 ET/1430 GMT) US September Dallas Fed Texas services revenues/outlook indices; last 9.3, 2.1.
Key Events Ahead
- (1300 ET/1700 GMT) ECB/Buba Weidmann speech in Wiesbaden.
- (1540 ET/1940 GMT) BoE Gov Carney speech in London.
FX Recap
EURUSD: The US dollar appreciated sharply against the euro, moving from daily lows to new daily highs as the pair was seen trading around $1.1220 during London trading hours on Tuesday. Today Spain CPI came with negative numbers at -0.9% vs previous -0.4%. Later in the session, the US consumer confidence index for September is due. Pair is supported above 1.1200 levels. It made intraday high at 1.1281 and low at 1.1219. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1100 (434M), 1.1140-50 (400M), 1.1275 (250M).
USDJPY: The yen and the Swiss franc were the main winners today as risk aversion swept global markets, underpinning flows into currencies traditionally sought in times of financial uncertainty. The yen was 0.4 pct higher, trading at 119.43 yen per dollar. The Japanese currency lost ground and shaved-off entire gains versus the greenback as improving risk-conditions on stabilizing European stocks and expectations of a higher start for the Wall Street, boosts the sentiment around the US dollar. Pair is supported around 120.00 levels. Pair made intraday high at 120.04 and low at 119.25 levels. Looking ahead, market will focus on US macroeconomic data for the further movement. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 119.00-10 (1BLN), 120.70 (380M).
USD/CHF: The Swiss franc was up 0.4 pct at 0.9699 francs. The euro slipped against both the yen and the franc but outperformed the dollar, rising 0.2 pct on the day to trade at $1.1260. Tomorrow Switzerland will release KOF economic indicator as well as UBS consumption indicator for the further direction of the parity. It made intraday high at 0.9749 and low at 0.9687 levels. Initial support is seen at 0.9663 and resistance is seen around 0.9815 levels.
GBPUSD: Sterling edged up from a 7-week low against the euro, with traders eyeing a speech by BoE's Chief later in the day for clues on when UK interest rates might start to rise. The pound crept up 0.1 pct versus the dollar to $1.5192, against the Euro; it gained 0.3 pct to 73.87 pence, having earlier eased to 74.37 pence, the pound's weakest since early August. Sterling remains slightly higher on Tuesday although finding it difficult to halt a consecutive seven-day downward rally versus the dollar. According to August data, mortgage lending has rose in the UK by the most since May 2008, with net lending to individuals reaching £4.3. The number of mortgage approvals increased to 71,030. The demand for new houses has been steadily increasing in the UK, and prices are reaching record levels, which at some point, may affect the economic development of the region. Pair made intraday high at 1.5205 and low at 1.5156 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.
NZDUSD: The New Zealand dollar recovered against its US namesake on Tuesday, adding to losses from the previous session, with economic fundamentals signalling a shaky outlook for growth in New Zealand. The diverging monetary policy path has been the main driver of the New Zealand dollar's depreciation, with the Reserve Bank of New Zealand cutting interest rates three times so far this year, and signalling further cuts to come, while the US Federal Reserve (Fed) has signalled that it is likely to raise interest rates for the first time in almost a decade next month. It made intraday high at 0.6355 and low at 0.6288 levels. Market now awaits US macroeconomic data for the further direction. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUDUSD: The Australian dollar recovered the early losses and currently trading around 0.6983 levels. It made intraday high at 0.6989 and low at 0.6936 levels. Traders are waiting for a set of US macro data from Wednesday onwards, including the ADP report, the manufacturing ISM and the non-farm payrolls report, along with the unemployment rate from the US. Further volatility will very likely come after these events. Initial support is seen at 0.6908 and resistance at 0.7245 levels.
Equities Recap
Global stocks fell to their lowest in more than two years as pressure built on raw materials prices and emerging markets, driving shares in commodity trading firms lower on Tuesday.
The pan-European FTSEurofirst 300 index fell 1 pct, dragged by biotech firms, Britain's FTSE 100 opened down as much as 0.8 pct, Germany's DAX fell 0.6 pct down and France's CAC40 dropped 1 pct in early deals.
Tokyo's Nikkei index fell 4 pct to an 8-month low, MSCI's broadest index of Asia-Pacific shares outside Japan slid 2.0 pct, having earlier touched its lowest levels since June 2012. MSCI's all-country index of world shares lost 0.8 percent, touching its lowest since September 2013.
The CSI 300 index fell 2 pct and the Shanghai Composite lost 2.1 pct. Hong Kong's Hang Seng dropped 3 pc.
Commodities Recap
Oil prices surged on Tuesday after US tightened supplies, outweighing concerns over the health of the Chinese economy. Brent crude oil rose 45 cents at $47.79 a barrel by 0940 GMT. U.S. light crude oil was 40 cents up, at $44.83. U.S. crude remained unchanged at $44.43 a barrel.
Gold was little changed on Tuesday, as fears over a looming U.S. rate hike offset any safe-haven bids from weaker equities. Spot gold was also little changed at $1,132.50 an ounce.
Treasuries Recap
The yield on the benchmark U.S. 10-year note was at 2.068 pct.
JGB prices ended the day slightly higher in quiet trading, sending yields down by 1bp to 2bp on the day in the 7-yr and longer zone. JGB yields opened modestly lower on the back of stronger US TSY bonds overnight and weaker Tokyo stocks, and then moved in a very narrow range of 0.5bp or less across the curve before ending the afternoon session at their intraday lows.
UK Gilts started 27 ticks higher than the settlement of 118.93, as expected, as the flight to quality continues against the global commodity declines.
German 10-yr Bund yields plunged 3 bps to 0.57 pct, within a range of one-month low hit last week, other euro zone bond yields fell 1-3 bps lower.
New Zealand government bonds were largely unchanged. Australian government bond futures climbed to multi-week highs, with the 3-year bond contract was 8 ticks higher at 98.210. The 10-year contract climbed 10 ticks to 97.3800, leading to a bearish flattening of the curve.
