Market Roundup
- Tokyo holiday
- China's central bank sees some success in cutting interbank lending risk - Reuters
- Oil jumps 2% in Asia on hopes of an OPEC agreement on limiting supply
- Venezuela says OPEC, non-OPEC oil stabilizing deal close
- Most Asian equity markets and risk currencies rise on OPEC hopes/oil rise
- Merkel's party suffers rout in Berlin in migrant policy backlash
- Westpac New Zealand Consumer survey 108 in Q3 up from 106 in Q2
- Australia's Port of Melbourne sold for $7.3 bln to QIC-led group
Economic Data Ahead
- (0400 ET/0800 GMT) Eurozone Current account for July last EUR 37.6 BLN
- (0400 ET/0800 GMT) Eurozone Net Investment Flow for July last EUR 21.4 BLN
Key Events Ahead
No Significant Event Scheduled
FX Beat
DXY: The dollar index against a basket of currencies declined 0.2 percent at 95.85, having touched a 2-week high of 96.11 on Friday after U.S. consumer prices rose more than expected in August, strengthening expectations that the Federal Reserve would hike interest rates this year.
EUR/USD: The euro steadied after declining to more than 1-week low below the 1.1200 handle on Friday as the dollar rallied across the broad following upbeat U.S. consumer prices. The CPI rose more than expected in August, while core CPI posted its biggest increase since February, indicating a steady build-up of inflation that could allow the Fed to hike interest rates this year. The major trades 0.2 percent up, attempting to recover from its steepest fall to 1.1149 and lowest since September 6. Investor’s attention will remain on Eurozone's current account figures and construction output report, ahead of U.S. NAHB housing market index for further cues on the currency. Immediate resistance is located at 1.1183, break above could take it over 1.1200. On the lower side, support is seen at 1.1123, break below could drag it near 1.1100.
USD/JPY: The Japanese yen edged up amid broad-based greenback weakness, as investors await the Bank of Japan and Federal Reserve monetary policy outcome for fresh direction. Both the central bank's policy decisions are due on Wednesday, with markets widely anticipating the BoJ to ease policy further, while the Fed is likely to keep the policy steady this month, following recent series of downbeat U.S. fundamentals. The dollar trades 0.2 percent down at 102.02, attempting to sustain gains above the 102.00 handle. Trading in the yen is likely to remain subdued, with the Japanese financial markets closed on account of a public holiday. Immediate resistance is located at 102.50, break above targets 102.75/ 103.00. On the downside, support is seen at 101.73 (Previous Session Low), break below could take it near 101.55.
GBP/USD: Sterling recovered after declining below the 1.3000 handle on Friday following robust U.S. inflation data and prospects on another cut in UK interest rates this year. The major fell 1.1 percent in the previous session and was down 1.3 percent last week, its weakest performance since early July. Sterling trades 0.3 percent up at 1.3037, retreating from a 2-week low of 1.2994 struck last week. In absence of relevant UK economic fundamentals, investors’ will track broad based market sentiment. Immediate resistance is located at 1.3085, break above could take it near 1.3138 (5-DMA). On the downside, support is seen at 1.2975, break below targets 1.2900. Against the euro, the pound trades up at 85.66 pence, pulling away from a 3-week low of 85.81 pence touched in the prior session.
AUD/USD: The Australian dollar regained the 0.7500 handle, as its U.S counterpart declined on low expectations of a Federal Reserve interest rate hike this week. The major's bullish momentum was extended largely on the back of higher commodities’ prices and mixed US treasury yields, amid improving risk -sentiment. The Aussie trades 0.6 percent higher at 0.7533, having hit a fresh 5-day high at 0.7539 earlier in the session. Investors now await U.S. housing data and RBA’s latest meeting minutes for further cues on the pair. Immediate support is seen at 0.7475 (Session Low), break below could drag it near 0.7462/ 0.7450. On the upside, resistance is located at 0.7550, break above targets 0.7580/ 0.7600.
NZD/USD: The New Zealand dollar rallied after domestic data indicated to a strong economy, with consumer confidence nudging higher and boost in the services sector. The major recovered from Friday's 0.6 percent fall after Westpac consumer survey for the third quarter came in at 108 versus previous 106. The Kiwi trades 0.6 percent higher at 0.7302, attempting to extend gains above the 0.7300 handle. Investors will focus on RBNZ rate decision due on Wednesday, where the central bank is expected to keep interest rate unchanged and await more inflation data. Attention will also remain on global dairy prices and FOMC decision due later in the week. Immediate resistance is located at 0.7336 (10-DMA), break above targets 0.7380/ 0.7400. On the downside, support is seen at 0.7234 (Sept 13 Low), break below could drag it till 0.7200.
Equities Recap
Asian shares gained, as investors wait eagerly for the central bank policy meetings outcomes in the United States and Japan this week.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.8 percent, though that remained well short of recent 1-year peaks.
Liquidity was subdued with the Japanese markets closed for a public holiday.
Australia's S&P/ASX 200 index edged down 0.04 percent at 5,294.80 points and South Korea's KOSPI advanced 0.9 percent at 2,016.86 points.
Shanghai composite index gained 0.5 percent at 3,017.90 points, while CSI300 index was trading 0.6 percent higher at 3,258.09 points.
Hong Kong’s Hang Seng was trading 0.8 percent up at 23,542.51 points. Taiwan shares added 2.8 percent at 9,152.88 points.
Commodities Recap
Crude oil prices gained by more than 1 percent after Venezuela said OPEC and non-OPEC producers were finalizing an output stabilizing deal and as conflicts in Libya increased concerns that efforts to restart crude exports could be interrupted. Global benchmark Brent crude oil was trading 1.20 percent higher at $46.53 per barrel at 0402 GMT, pulling away from a 2-week low of $46.38 touched on Friday. U.S. West Texas Intermediate crude rose 1.55 percent at $43.84 a barrel, having hit a low of $42.72 in the previous session, its lowest since August 11.
Gold rose, recovering from a 2-week low struck on Friday, as investors remained cautious ahead of Bank of Japan and Federal Reserve policy meetings this week. Spot gold was trading 0.4 percent up at $1,314.51 an ounce by 0408 GMT, having declined 0.3 percent to $1,306.26 on Friday, its lowest since Sept. 1. U.S. gold futures rose 0.3 percent to $1,313.50 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.6943 percent lower by 0.007, while 5-year was at 1.2016 percent down by 0.008 bps.
The Australian government bonds traded modestly lower during a relatively quiet session that witnessed data of little significance as investors remained focused on the Federal Reserve and Bank of Japan’s monetary policy decision scheduled to be held this week. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.178 percent, the yield on long-term 15-year note climbed more than 1 basis point to 2.559 percent and the yield on short-term 2-year jumped 4 basis points to 1.623 percent.
The New Zealand government bonds traded nearly flat as investors await the Reserve Bank of New Zealand’s monetary policy decision, which is scheduled to be held on September 21. The yield on the benchmark 10-year bond hovered around 2.59 percent mark, the yield on 7-year note remained steady at 2.255 percent and the yield on short-term 2-year note stood flat at 1.975 percent.
