Market Roundup
- Australian Q2 Construction spending, +9.3% vs forecast 1.0%, last -0.7%
- Australian Jul Building approvals m/m, -1.7% vs forecast -5.0%, last 10.9%
- Citic warns legal battles threaten Australian iron ore mine's future
- Japan July retail sales +1.9% y/y, +1.0% eyed, May revised +2.2%
- Japan looks to whittle Y101 trln FY ’18 budget – Nikkei
- Japan July crude oil imports -2.5% y/y, LNG +3.6%, thermal coal +13.6%
- Tourists to Japan now spending more on the cheap - Nikkei
- US denies reports US-Japan to call for embargo on oil exports to North Korea
- Juncker blasts Britain for "huge" unanswered Brexit questions
- UK retailers see Brexit hit to consumers without detailed customs plans
- Merkel, Macron eye deeper Eurozone integration after German election
- U.N. condemns "outrageous" N. Korea missile launch, Pyongyang says more to come
- Moody's says G20 GDP growth to exceed 3 pct, warns of geopolitical risks
- S&P sees U.S. keeping AA+ rating if it avoids default
Economic Data Ahead
- (0300 ET/0700 GMT) Sweden Aug Consumer confidence, 103.0 eyed, last 102.2
- (0400 ET/0800 GMT) Great Britain Jul BOE Consumer credit, 1.50 bln eyed, last 1.45 bln
- (0400 ET/0800 GMT) Great Britain Jul Mortgage lending, 3.50 bln eyed, last 4.14 bln
- (0400 ET/0800 GMT) Great Britain Jul Mortgage approvals, 65.50k eyed, last 64.68k
- (0500 ET/0900 GMT) EU Aug Business climate, 1.06 eyed, last 1.05
- (0500 ET/0900 GMT) EU Aug Economic sentiment, 111.3 eyed, last 111.2
- (0500 ET/0900 GMT) EU Aug Industrial sentiment, 4.8 eyed, last 4.5
- (0500 ET/0900 GMT) EU Aug Services sentiment, 13.9 eyed, last 14.1
- (0800 ET/1200 GMT) Germany Aug CPI prelim, 0.1% m/m, 1.7% y/y eyed; last 0.4%, 1.7%
- (0800 ET/1200 GMT) Germany Aug HICP prelim, 0.1% m/m, 1.7% y/y eyed; last 0.4%, 1.5%
Key Events Ahead
- N/A Finland 10-year EUR benchmark via Barc/Danske/GS/NatWest/SG
- (0510 ET/0910 GMT) Greece E875 mln for 26-week auction
- (0520 ET/0920 GMT) Italy E1.25-1.75/E2.5-3.0/E2-2.5 bln for 5/7/10 year auction
FX Beat
DXY: The dollar rose from a 4-1/2 month lows touch in the previous session against the yen as investors' concerns over North Korea's latest missile test ebbed. The greenback against a basket of currencies traded flat at 92.34, having touched a low of 91.62 the day before, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -10.34 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after rising to a 2-1/2 year high above the 1.2000 handle in the previous session, as the greenback is seen reversing a part of its yesterday’s rebound from multi-year lows versus its major peers. The European currency traded 0.1 percent up at 1.1979, having touched a high of 1.2070 on Tuesday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 111.28 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on German CPI and the Eurozone economic sentiment index, ahead of the U.S. personal consumption expenditure, ADP employment change, and preliminary Q2 gross domestic product data. Immediate resistance is located at 1.2070 (Previous Session High), a break above targets 1.2100. On the downside, support is seen at 1.1913 (61.8% retracement 1.1661 and 1.2070), a break below could drag it near 1.1865 (50.0% retracement 1.1661 and 1.2070).
USD/JPY: The dollar extended gains for the third straight session, hitting a near 2-week high as investors' concerns over North Korea's latest missile test eased. The major was trading up at 109.87, having hit a high of 109.91 earlier its highest since Aug. 17. FxWirePro's Hourly Yen Strength Index stood at -129.02 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. personal consumption expenditure, ADP employment change and preliminary Q2 gross domestic product for further momentum. Immediate resistance is located at 109.94 (38.2% retracement of 110.96 and 108.27), a break above targets 110.33 (23.6% retracement of 110.96 and 108.27). On the downside, support is seen at 109.43 (10-DMA), a break below could take it near 109.00.
GBP/USD: Sterling held firm near 2-week highs hit in the previous session, as the greenback against a basket of currencies consolidated near its lowest level since January 2015.The major traded 0.1 percent up at 1.2927, having hit a high of 1.2978 on Tuesday, its highest since August 14. FxWirePro's Hourly Sterling Strength Index stood at 47.51 (Neutral) by 0400 GMT. Investors’ focus will remain on the UK consumer credit and mortgage approval figures, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.2978 (Previous Session High), a break above could take it near 1.3053 (August 8 High). On the downside, support is seen at 1.2900, a break below targets 1.2864 (5-DMA). Against the euro, the pound was trading 0.1 percent up at 92.58 pence, having hit a 10-1/2 month low of 93.06 pence in the prior session.
AUD/USD: The Australian dollar rallied to a 1-month high after domestic data showed a big improvement in the construction activity and a drop in the building approvals. The economy's construction work done rose 9.3 percent in the second quarter, beating the forecast of 1.0 percent, while, the building approvals dropped 1.7 percent m/m and 13.9 percent y/y in July, versus a forecast of -5.0 percent and -16.6 percent, respectively. The Aussie trades 0.5 percent up at 0.7984, having hit a high of 0.7995 earlier, it’s strongest since Aug. 1. FxWirePro's Hourly Aussie Strength Index stood at 53.99 (Bullish) by 0500 GMT. Investors will continue to digest upbeat domestic data, ahead of U.S. economic releases. Immediate support is seen at 0.7928 (5-DMA), a break below targets 0.7866 (August 24 Low). On the upside, resistance is located at 0.8000, a break above could take it near 0.8042 (August 1 High).
NZD/USD: The New Zealand dollar steadied after easing from a 1-week high in the previous session, however, it is poised for its worst monthly fall since January 2016 as talk of central bank intervention to limit its gains weighed on market sentiment. The Kiwi trades 0.2 percent up at 0.7260, having touched a high of 0.7298 on Tuesday, its highest level since Aug. 22. FxWirePro's Hourly Kiwi Strength Index was at 13.00 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7300, a break above could take it near 0.7337 (August 21 High). On the downside, support is seen at 0.7218 (Previous Session Low), a break below could drag it till 0.7200.
Equities Recap
Asian shares rose following overnight gains on Wall Street, while the dollar rebounded from a 2-1/2-year low as concerns about North Korea's firing of a missile over Japan eased.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.35 percent.
Tokyo's Nikkei rallied 0.7 percent to 19,501.27 points, Australia's S&P/ASX 200 index edged down 0.01 percent to 5,668.60 points and South Korea's KOSPI gained 0.06 percent to 2,366.22 points.
Shanghai composite index eased 0.06 percent to 3,363.78 points, while CSI300 index was trading 0.01 percent down at 3,833.85 points.
Hong Kong’s Hang Seng was trading 0.9 percent higher at 28,028.86 points. Taiwan shares added 0.7 percent to 10,569.40 points.
Commodities Recap
Crude oil prices declined as flooding and storm damage in the wake of Hurricane Harvey had shut one-fifth of U.S. oil refineries, raising fears of a fuel shortage. International benchmark Brent crude was trading 0.3 percent down at $51.78 per barrel by 0434 GMT, having hit a low of $51.41 the prior session, its weakest since Aug. 21. U.S. West Texas Intermediate was trading 0.05 percent down at $46.27 a barrel, after falling as low as $45.74 the day before, its highest since Jul. 24.
Gold prices steadied after hitting a more than nine-month peak in the previous session, as the dollar nursed losses near multi-year lows on tensions surrounding North Korea. Spot gold rose 0.2 percent to $1,312.65 per ounce as of 0441 GMT, having hit the highest since Nov. 9 at 1,325.89 in the previous session. U.S. gold futures for December delivery fell 0.4 percent to $1,313.70 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.148 percent higher by 0.012 bps, while 5-year yield was 0.014 bps up at 1.721 percent.
The Japanese government bonds lost ground in early trading after reading the country’s higher-than-expected retail sales for the month of July, released late Wednesday. The yield on the benchmark 10-year Treasury note fell slightly to 0.01 percent, the yield on long-term 30-year also remained tad 1 basis point lower at 0.83 percent and the yield on short-term 2-year hovered around -0.15 percent.
The Australian 10-year bond yields surged to a level last seen on August 3 as investors continue to engage in risk averse trading after North Korea fired a test missile over Japan on Tuesday. The yield on the benchmark 10-year Treasury note jumped nearly 7 basis points to 2.69 percent, the yield on 15-year note surged 6-1/2 basis points to 2.99 percent and the yield on short-term 2-year also climbed nearly 6 basis points higher at 1.89 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year price up 4 Canadian cents to yield 1.245 percent, and the benchmark 10-year rising 27 Canadian cents to yield 1.836 percent. The 10-year yield touched its lowest intraday level since July 6 at 1.805 percent.
