Market Roundup
- Yen steadies as yield curve inversion deepens
- Gold holds near six-year high on economic gloom
- Oil rises following a drop in U.S. inventories
Economic Data Ahead
- (0400 ET/0800 GMT) EZ Private Loans YoY July
- (0400 ET/0800 GMT) EZ Money Supply 3m July
- (0400 ET/0800 GMT) EZ Money Supply YoY July
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index edged higher, as 10-year Treasury yields fell faster than 2-year yields deepening the inversion between the two. The greenback against a basket of currencies traded 0.05 percent up at 98.06, having touched a low of 97.17 on Friday, its lowest since August 9.
EUR/USD: The euro declined, extending losses for the third straight session, as Germany’s economy contracted on weaker exports in the second quarter, due to escalating trade disputes and waning foreign demand. The European currency traded 0.05 percent down at 1.1084, having touched a high of 1.1163 on Monday, its highest since August 14. Investors’ attention will remain on EZM3 money supply, ahead of the speeches by Fed's Barkin and Daly. Immediate resistance is located at 1.1119 (38.2% retracement of 1.1230 and 1.1051), a break above targets 1.1162 (61.8% retracement). On the downside, support is seen at 1.1065 (August 20 Low), a break below could drag it below 1.1030.
USD/JPY: The dollar slightly nudged up, reversing some of its previous session losses, as markets continue to fear a global slowdown and the ramifications of a protracted trade dispute between the U.S. and China. The major was trading 0.1 percent up at 105.85, having hit a low of 104.44 on Monday, its lowest since November 2016. 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 106.43 (21-DMA), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.26 (August 9 Low), a break below could take it lower at 105.05 (August 12 Low).
GBP/USD: Sterling eased after rising to a 4-week peak in the previous session on news that Britain's opposition Labour Party leader, Jeremy Corbyn, said he would do everything necessary to prevent Britain leaving the European Union without a transition deal on October 31. The major traded 0.1 percent down at 1.2278, having hit a high of 1.2309 on Tuesday, it’s highest since July 29. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2331 (61.8% retracement of 1.2522 and 1.2079), a break above could take it near 1.2417 (78.6% retracement). On the downside, support is seen at 1.2231 (5-DMA), a break below targets 1.2172 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 90.27 pence, having hit a high of 90.16 on Tuesday, it’s highest since July 29.
AUD/USD: The Australian dollar eased, extending previous session losses, as fears of global economic slowdown and trade war weighed on market sentiment. The Aussie trades 0.2 percent down at 0.6737, having hit a low of 0.6689 on Monday, it’s lowest since August 7. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6677 (August 7 Low), a break below targets 0.6630. On the upside, resistance is located at 0.6799 (August 2 1 High), a break above could take it near 0.6822 (August 8 High).
NZD/USD: The Zealand dollar plunged to multi-year lows, as renewed caution about resolving the U.S.-China trade war drove investors to safe-haven assets. The Kiwi trades 0.5 percent down at 0.6329, having touched a low of 0.6326 earlier, its lowest level September 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6403 (10-DMA), a break above could take it near 0.6458 (21-DMA). On the downside, support is seen at 0.6315, a break below could drag it below 0.6275.
Equities Recap
Asian shares tumbled as deeper worries about the global economy and trade dented investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.06 percent
Tokyo's Nikkei declined 0.2 percent to 20,491.41 points, Australia's S&P/ASX 200 index rallied 0.4 percent to 6,497.80 points and South Korea's KOSPI gained 0.7 percent to 1,938.74 points.
Shanghai composite index fell 0.2 percent to 2,897.97 points, while CSI 300 index traded 0.2 percent down at 3,810.68 points.
Hong Kong’s Hang Seng traded 0.1 percent higher at 25,687.38 points. Taiwan shares added 0.5 percent to 10,434.29 points.
Commodities Recap
Crude oil prices eased, weighed down by concerns about global growth amid the raging trade war between the United States and China. International benchmark Brent crude was trading 0.4 percent lower at $59.90 per barrel by 0428 GMT, having hit a low of $58.29 on Friday, its lowest since August 16. U.S. West Texas Intermediate was trading 0.4 percent down at $55.43 a barrel, after falling as low as $52.95 on Monday, its lowest since August 9.
Gold prices declined, hovering away from a more than 6-year high hit earlier in the week on fears of an economic slowdown amid a protracted Sino-U.S. trade conflict. Spot gold was trading 0.4 percent down at $1,535.85 per ounce by 0431 GMT, having touched a high of $1,555.10 on Monday, its highest since August 2013. U.S. gold futures inched up 0.1 percent to $1,553.30 an ounce.
Treasuries Recap
The Australian government bonds jumped during Asian session Wednesday amid turmoil of ongoing risks of trade war while the U.S. Treasury yield curve continued inversion, indicating red signals of plausible recession. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped nearly 3-1/2 basis points to 0.884 percent, the yield on the long-term 30-year bond plunged 6 basis points to 1.489 percent and the yield on short-term 2-year slipped 1-1/2 basis points to 0.724 percent.
