Market Roundup
- CBRC - China will not open treasury futures market to banks soon - Reuters.
- US July business borrowing for new equipment $7 bln, -17% y/y, volume -30% from June’s $10 bln - ELFA.
- Australia sees upturn in public investment, home building booms – Reutes.
- Australia Q2 construction work done -3.7% q/q, -2.0% forecast.
- New Zealand July trade deficit NZ$433 mln, annual deficit NZ$3.03 bln, NZ$350 mln and 2.98 bln forecast, imports NZ$4.4 bln, exports 3.96 bln, NZ$4.45/4.07 bln forecast.
Economic Data Ahead
- (0400 ET/0800 GMT) Norway Jun labor force survey – unemployment, 4.7% forecast; last 4.7%.
- (0400 ET/0800 GMT) Norway Q3 oil investment fcst; last NOK165.9 bln this year, 153.2 bln next.
- (0430 ET/0830 GMT) Great Britain Jul BBA mortgage approvals; last 40.1k.
- (0730 ET/1130 GMT) United States Jul building permits – revised; prelim 1.15 mln AR, -0.1% m/m.
- (0900 ET/1300 GMT) Belgium Aug leading indicator index, 1.0 forecast; last 1.0.
- (0900 ET/1300 GMT) United States Jun monthly home prices; last +0.2% m/m, +5.6% y/y, 234.3.
- (1000 ET/1400 GMT) United States Jul exist home sales, 5.51 mln AR, -0.4% m/m forecast; last 5.57, +1.1%.
Key Events Ahead
- N/A Sweden SEK3.0/0.5 bln 3.5/2.25% 2022/32 government bond auctions.
- (0530 ET/0930 GMT) Germany E4 bln 2021 Bobl auction.
- (0700 ET/1100 GMT) Iceland CB policy announcement.
FX Beat
DXY: The dollar index, against a basket of currencies trades 0.1 percent up at 94.66, pulling away from a low of 94.21 touched in the previous session.
EUR/USD: The euro declined, breaching the 1.1300 handle, as markets remained cautious ahead of a gathering of global central bankers in Jackson Hole, Wyoming for fresh clues on the Federal Reserve interest rates hike this year. Data released on Tuesday showed U.S. new single-family home sales surprisingly rose in July, recording their highest level in nearly nine years as demand increased broadly, highlighting the housing market outlook and supporting the prospects of rate hike. The European currency trades lower at 1.2992, pulling away from a 7- week peak of 1.13663 touched last week. The immediate focus now remains on the U.S. existing home sales data ahead of Jackson Hole Symposium that commences tomorrow. Immediate resistance is located at 1.1318 (5-DMA), break above could take it till 1.1349/ 1.1400. On the lower side, support is seen at 1.1263 (10-DMA), break below targets 1.1240/ 1.1200.
USD/JPY: The greenback edged up as the dollar strengthened against its major peers on the back of upbeat US new home sales data. The major was also provided the much-needed support after the Japanese stocks rose higher, thus lifting the overall market sentiment. The dollar trades 0.1 percent up at 100.33, hovering away from a low of 99.94 touched in the previous session. Markets focus remains on the Jackson Hole Symposium for fresh insights on the Fed monetary policy outlook and any BoJ headline that indicates further easing next month. Amid a lack of fresh economic drivers investors will continue to track broad based sentiment, ahead of U.S. existing home sales data. Immediate support is seen at 100.03 (Aug-17 Low), break below could take it till 99.64. On the higher side, resistance is located at 100.93, break above targets 101.45/ 102.00.
GBP/USD: Sterling eased after rising above the 1.3200 handle in the previous session. The major came under renewed selling pressure as the U.S. dollar strengthened across the broad, while decline in the oil prices weighs on market sentiments. Sterling trades 0.1 percent lower at 1.3174, reversing previous session gains below the 1.3200 level. In absence of relevance from the UK, except for the BBA mortgage approvals data, markets attention will remains on the U.S. existing home sales figures, especially after stronger new home sales numbers released yesterday. Immediate resistance is located at 1.3250, break above could take it near 1.3300. On the down side, support is seen at 1.3149 (5-DMA), break below targets 1.3128/1.3101. Against the euro, the pound trades 0.1 percent lower at 85.71 pence.
AUD/USD: The Australian dollar declined as investors were reluctant to take big positions ahead of Federal Reserve Chair speech at the Jackson Hole Symposium later in the week. The Aussie edged down 0.1 percent to $0.7607, hovering towards a 2-week low of 0.7583 struck earlier in the week. The bid tone around the major weakened following the release of worse-than expected Australian construction output data amid falling oil prices. The economy's construction output data for second quarter came in at -3.7 percent versus projections of -2.0 percent and previous -0.3 percent. Markets focus now remains on the U.S. existing home sales data and EIA crude inventory figures for further momentum on the pair. Immediate support is seen at 0.7583 (Aug 22 Low), break below could drag it to 0.7550. On the higher side, resistance is located 0.7655 (Previous Session High), break above targets 0.7691 /0.7700.
NZD/USD: The New Zealand dollar was little changed as an overnight rally was stemmed by slightly weaker-than-expected trade figures. On Tuesday, the major rose to a 3-week high of 0.7344, however, it failed to sustain above 0.7300 levels after New Zealand's trade balance data showed that the deficit expanded more than expected. The economy's trade deficit for the month of July was NZ$433 million, more than the NZ$350 million as anticipated. The Kiwi trades flat at 0.7288, having touched an early low of 0.7268. Investors will closely watch the U.S. crude oil inventories and existing home sales data for further cues. Immediate resistance is located at 0.7320, break above targets 0.7350. On the lower side, support is seen at 0.7252 (10-DMA)), break below could drag it near 0.7200.
Equities Recap
Asian shares held on to recent gains, facilitated by Wall Street's overnight rise, despite falling oil prices following a unexpected build in U.S. crude stocks.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent in early trade, . It has risen more than 14 percent since late June to hit a 1-year high last week.
Tokyo's Nikkei added 0.61 pct at 16,597.30, Australia's S&P/ASX 200 index rose 0.13 pct at 5,560.90 points and South Korea's KOSPI trades 0.3 percent down at 2,043.03 points.
Shanghai composite index added 0.1 percent at 3,092.07 points, while CSI300 index was trading 0.1 percent lower at 3,339.22 points.
Hong Kong’s Hang Seng was trading 0.8 percent lower at 22,818.26 points. Taiwan shares shed 0.2 pct at 9,017.38 points.
Commodities Recap
Crude oil prices edged down, after a surprise build in U.S. crude stocks weighed on market sentiments. International Brent crude oil was trading down at $49.35 a barrel at 0414 GMT, while U.S. West Texas Intermediate crude was flat at $47.54 a barrel.
Gold edged down, extending losses for the fourth consecutive session, as investors remained on the sidelines waiting for fresh insights from the Federal Reserve later this week on interest rate hikes this year. Spot gold was little changed at $1,337.45 an ounce at 0404 GMT, within the sight of 2-week low of $1331.64 touched on Monday. U.S. gold shed 0.3 percent to $1,342.60 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5526 percent, while 5-year was at 1.1429 percent.
The Australian government bonds traded modestly lower, following a surge in equities during a relatively quiet session. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose more than 1/2 basis point to 1.913 percent and the yield on short-term 2-year climbed nearly 1 basis point to 1.438 percent.
The New Zealand government bonds closed lower as investors cashed in profits after relishing previous gains. Also, investors shrugged off disappointing July trade balance dataThe yield on the benchmark 10-year bond increased 2 basis points to 2.295 percent and the yield on 7-year note also ended ½ basis point higher at 1.965 percent and the yield on short-term 2-year note also bounced 1/2 basis point to 1.790 percent.
Canadian government bond prices were mixed across the maturity curve, with the 2-year bond down 0.5 of a Canadian cent to yield 0.555 percent and the benchmark 10-year rising 3 Canadian cents to yield 1.022 percent. The curve flattened, as the spread between the 2- and 10-year yields narrowed by 0.6 of a basis point to 46.7 basis points, its narrowest since June 2008, indicating outperformance for longer-dated maturities.
