Market Roundup
- BOJ to weigh tougher hurdles for easing exit - Nikkei.
- US fund investors kept buying bonds ahead of selloff – ICI.
- MoF flow data week ended Sept 10 – Japanese sell net Y449.3 bln foreign stocks, Y607.6 bln bonds, buy Y3.4 bln bills; foreign investors sell net Y479.0 bln Japanese stocks, buy Y1.0652 trln JGBs, Y2.0932 trln bills.
- Japan Sept Reuters Tankan mfg index +5, non-mfg +14, Aug +1, +18, Dec forecast at +9 and +22, Sept non-mfg index lowest since April ’13.
- Renault sells Y50 bln 0.23% 3-year samurais via MUFG/MS, SMBC Nikko – IFR.
- HSBC sells Y181.8 bln 3-tranche samurais via HSBC/Mizuho/Nomura/SMBC Nikko.
- JAMA cuts FY ‘16/17 vehicle sales forecast to 4.845 mln units, -1.9% y/y.
- Australia Aug employment -3.9k, unemployment 5.6%, participation 64.7%, +15k, 5.7% and 64.9% forecast, full-time employment +11.5k, slack seen persisting.
- Australia Sept MI inflation expectations off to +2.1% WM, +3.3% TM.
- New Zealand Q2 GDP +0.9% q/q, +3.6% y/y, +1.1% and +3.7% forecast, avge +2.8%, as forecast.
- New Zealand Aug BNZ/BNZ PMI 55.1, July 55.8.
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Aug unemployment, 6.2% nsa forecast; last 6.3% nsa, 7.0% sa.
- (0430 ET/0830 GMT) Great Britain Aug retail sales, -0.4% m/m, +5.4% y/y forecast; last +1.4%, +5.9%.
- (0430 ET/0830 GMT) Great Britain Aug - ex-fuel, -0.6% m/m, +5.0% y/y forecast; last +1.5%, +5.4%.
- (0500 ET/0900 GMT) Eurozone Jul trade balance, E25.0 bln surplus forecast; last E29.2 bln surplus.
- (0500 ET/0900 GMT) Eurozone Aug inflation – final, +0.1% m/m, +0.2% y/y forecast; flash -0.6%, +0.2%.
- (0500 ET/0900 GMT) Eurozone Aug – ex-food/energy, +0.2% m/m, +0.8% y/y forecast; flash -0.6%, +0.8%.
- (0830 ET/1230 GMT) United States Sep Philly Fed business sentiment index, 1.0 forecast; last 2.0.
- (0830 ET/1230 GMT) United States Sep NY Fed Empire State manufacturing index, -1.0 forecast; last -4.21.
- (0830 ET/1230 GMT) United States Q2 c/a balance, $120.5 bln deficit forecast; last $124.7 bln deficit.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 265k forecast; last 259k.
- (0830 ET/1230 GMT) United States Aug retail sales/ex-autos, -0.1%, +0.2% m/m forecast; last unch, -0.3%.
- (0830 ET/1230 GMT) United States Aug PPI - final demand, +0.1% m/m and y/y forecast; last -0.4%, -0.2%.
- (0830 ET/1230 GMT) United States Aug – ex-food/energy, +0.1% m/m, +1.0% y/y forecast; last -0.3%, +0.7%.
- (0915 ET/1315 GMT) United States Aug industrial output, -0.3% m/m forecast; last +0.7%.
- (0915 ET/1315 GMT) United States Aug capacity utilization, 75.7% forecast; last 75.9%.
- (1000 ET/1400 GMT) United States Jul business inventories, +0.1% m/m forecast; last +0.2%.
Key Events Ahead
- N/A India-US Economic Summit in New Delhi (final day).
- (0830 ET/1230 GMT) Spain E3-4 bln 0.75/1.3/1.95% 2021/26/30 Bono auctions.
- (0850 ET/1250 GMT) France E5-6 bln zero% 2019 and 2021 BTan auctions.
- (0850 ET/1250 GMT) France E0.75-1.25 bln 0.1% each 2021 and 2025 index-linked BTan auctions.
- (0700 ET/1100 GMT) BoE MPC policy announcement, 9-0 vote for no change to QQE, bank rate.
FX Beat
DXY: The dollar index against a basket of currencies trades slightly higher at 95.36, after rising to a 1-week high of 95.67 on Tuesday.
EUR/USD: The euro declined as the dollar edged up against major currencies ahead of next week's Federal Reserve policy meeting. The U.S. interest rate futures indicate that the Fed is unlikely to increase interest rate, however, markets will watch for cues in the Fed's statement that hints at a rate hike this year. The European currency trades lower at 1.1245, retreating from 3-days high. Investor’s attention will remain on Eurozone's trade balance and consumer price index, ahead of series of U.S. economic data for further cues on the major. Immediate resistance is located at 1.1250, break above could take it till 1.1330. On the lower side, support is seen at 1.1200, break below could drag it near 1.1158.
USD/JPY: The Japanese yen extended gains on fading expectations that the Bank of Japan will take drastic easing steps at the Sept. 20-21 meeting, when it conducts the comprehensive assessment of its policies. Increasing concerns about the policy effectiveness of the global major central banks have triggered a downturn in risk sentiment, strengthening the bid tone of around the yen. The dollar trades 0.1 percent lower at 102.28, having touched an early low of 101.94, and pulling further away from a 1-week high of 103.35 hit in the previous session. The movements in the pair will be driven by developments surrounding BoJ and Fed policy outlook, ahead of U.S. economic data, including retail sales, PPI, unemployment claims and industrial production figures. Immediate resistance is located at 102.74, break above targets 103.00. On the downside, support is seen at 101.94 (Session Low), break below could take it near 101.55.
GBP/USD: Sterling gained, retreating from a 2-week low struck in the previous session, as markets await Bank of England monetary policy outcome. On Wednesday, the major hit a low of 1.3138, its lowest since Sept. 1 as mixed labor market data did little to change expectations that the central bank will remain accommodative on its monetary policy. Sterling trades 0.1 percent up at 1.3248, having touched an intra-day high of 1.3277. Attention will remain on BoE's policy decision, with markets anticipating the central bank to stay pat after delivering a comprehensive package of policy easing measures in August. Immediate resistance is located at 1.3295 (10-DMA)/ 1.3300, break above could take it near 1.3350. On the downside, support is seen at 1.3200, break below targets 1.3167/ 1.3150. Against the euro, the pound trades 0.2 percent up at 84.87 pence, having touched a 2-week low of 85.44 pence in the previous session.
AUD/USD: The Australian dollar consolidates near 7-week lows, as mixed employment report failed to boost investor sentiments. Australia's unemployment rate s.a in August edged down to 5.6 percent, beating forecast and previous 5.7 percent, however, employment change declined 3,900 in August, below projections of 15,000 gain and previous 26,100, while part-time employment fell 15,400 from previous 69,600. However, the losses remain limited as higher oil and copper prices offered some support. The major is likely to remain on the downside amid persistent risk-off market sentiment. The Aussie trades lower at 0.7460, within the sight of 1-1/2 month low of 0.7442 hit on Tuesday. Immediate support is seen at 0.7440, break below could drag it till 0.7400. On the upside, resistance is located at 0.7500, break above targets 0.7498 (5-DMA).
NZD/USD: The New Zealand dollar declined after domestic data indicated that the economy grew slightly slower than expected. New Zealand's second quarter GDP figures showed annual growth at 3.6 percent, below projections of 3.7 percent, while quarterly growth was 0.9 percent just under estimates of 1.1 percent. However, growth still surpassed the RBNZ's prediction of 0.8 percent, with household consumption, home building and exports remaining strong. The Kiwi trades 0.2 percent lower at 0.7268, after rising as high as 0.7301 earlier in the session. The major is likely to remain pressured amid persisting risk-off trades and growing uncertainty over world's central banks action. Immediate resistance is located at 0.7333 (10-DMA), break above targets 0.7350. On the downside, support is seen at 0.7234 (2-week low), break below could drag it till 0.7200.
Equities Recap
Asian shares traded in a volatile market as investors wary on fading ability of major central banks to stimulate growth.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent.
Tokyo's Nikkei shed 1.26 pct at 16,405.01 points, Australia's S&P/ASX 200 index rose 0.27 pct at 5,241.80 points and Hong Kong’s Hang Seng was trading 0.63 percent up at 23,331.57 points.
China, Taiwan and South Korea’s markets remain closed today.
Commodities Recap
Crude oil prices edged up, after declining around 3 percent in the previous session, largely supported by an unexpected drop of 559,000 barrels in U.S. crude inventories last week. Global benchmark Brent crude oil was trading 0.1 percent up at $46.00 per barrel at 0355 GMT, having dropped to a low of $45.94 on Wednesday. U.S. West Texas Intermediate crude rose 0.1 percent at $43.62 a barrel, hovering around a low of $43.41 hit in the previous session.
Gold prices extended gains, halting a 5-day losing streak in the previous session, as the safe-haven metal strengthened as investors remained cautious over major central banks stance to stimulate growth. Spot gold was little changed at $1,322.31 an ounce by 0407 GMT, pulling away from a low of $1313.19 hit on Wednesday, its lowest since September 2. U.S. gold futures were steady at $1,326.70 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7398 percent higher by 0.023, while 5-year was at 1.2162 percent up by 0.021 bps.
The Australian government bonds traded mixed as country’s official unemployment rate declined to two-year low in August. The yield on the benchmark 10-year Treasury note fell nearly 1 basis point to 2.161 percent, the yield on long-term 15-year note also dipped 2 basis points to 2.550 percent and the yield on short-term 3-year climbed 1-1/2 basis points to 1.647 percent.
The New Zealand government bonds closed flat as investors did not react to the higher second-quarter gross domestic product (GDP). The yield on the benchmark 10-year bond remained steady at 2.555 percent, the yield on 7-year note also ended flat at 2.210 percent and the yield on short-term 2-year note dipped 1-1/2 basis points to 1.950 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year up 3.5 Canadian cents to yield 0.583 percent and the benchmark 10-year rising 40 Canadian cents to yield 1.187 percent. The 10-year yield touched its highest since June 23 at 1.281 percent on Wednesday.
