Market Roundup
- German business morale falls to the lowest level since 2012 in August
- Oil rises on hopes of easing U.S.-China trade tension
- Gold surpasses $1,550 for the first time in over six years
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of July. The index stood at -0.02 in the prior month.
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have increased 1.1 percent in July after rising 1.9 percent in June, while non-defense capital goods orders excluding aircraft are likely to have eased 0.1 percent after gaining 1.5 percent the prior month.
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index surged as investors cheered on the Federal Reserve Chairman Jerome Powell comments, citing that the U.S. central bank will act as appropriate to keep the economy healthy. The greenback against a basket of currencies traded 0.7 percent up at 97.94, having touched a low of 97.17 on Friday, its lowest since August 9.
EUR/USD: The euro plunged from a 1-1/2 week peak hit earlier in the day after data showed Germany's business sentiment deteriorated more than expected in August to hit its lowest since November 2012, in a further sign that escalating trade disputes are pushing the German economy toward a recession. The European currency traded 0.2 percent down at 1.1118, having touched a high of 1.1163 earlier, its highest since August 14. Immediate resistance is located at 1.1192 (78.6% retracement of 1.1230 and 1.1060, a break above targets 1.1230 (August 12 High). On the downside, support is seen at 1.1095 (5-DMA), a break below could drag it below 1.1051 (August 23 Low).
USD/JPY: The dollar rebounded from a near 3-year low after U.S. President Donald Trump said China had contacted Washington overnight to say it wanted to return to the negotiating table. On Friday, Trump announced a 5 percent additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. products. The major was trading 0.5 percent up at 105.84, having hit a low of 104.44 earlier, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. durable goods orders. Immediate resistance is located at 106.16 (10-DMA), a break above targets 106.70 (21-DMA). On the downside, support is seen at 104.30, a break below could take it lower at 104.00.
GBP/USD: Sterling consolidated within narrow ranges as UK markets remain closed on account of Summer Bank Holiday. However, Brexit worries continued to weigh on investor sentiment. The major traded 0.4 percent down at 1.2239, having hit a high of 1.2293 on Friday, 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 1.2188 (5-DMA), a break below targets 1.2134 (10-DMA). Against the euro, the pound was trading 0.2 percent down at 90.82 pence, having hit a high of 90.28 on Thursday, it’s highest since July 29.
USD/CHF: The Swiss franc retreated from a near 2-week peak as the greenback surged on news that China wanted to return to the negotiating table with the U.S. The major trades 0.5 percent up at 0.9792, having touched a low of 0.9713 earlier, it’s lowest since August 14. On the higher side, near-term resistance is around 0.9831 (August 21 High)) and any break above will take the pair to next level till 0.9877 (August 23 High). The near-term support is around 0.9703 (August 6 Low), and any close below that level will drag it till 0.9659 (August 13 Low).
Equities Recap
European shares recovered after U.S. President Donald Trump said China had contacted Washington overnight to say it wanted to return to the negotiating table.
The pan-European STOXX 600 index gained 0.2 percent at 371.94 points, while the FTSEurofirst 300 rallied 0.2 percent to 1,462.99 points.
Britain's FTSE 100 trades 0.5 percent down at 7,094.98 points, while mid-cap FTSE 250 surged 0.2 to 19,236.13 points.
Germany's DAX rose 0.6 percent at 11,683.20 points; France's CAC 40 trades 0.8 percent higher at 5,368.24 points.
Commodities Recap
Crude oil prices rose after the United States and China both suggested they could ease up in a trade war that has undermined the outlook for the global economy and crude demand. International benchmark Brent crude was trading 1.3 percent higher at $59.82 per barrel by 1144 GMT, having hit a low of $58.29 on Friday, its lowest since August 16. U.S. West Texas Intermediate was trading 1.7 percent up at $54.78 a barrel, after falling as low as $52.95 earlier, its lowest since August 9.
Gold prices rose, surpassing the $1,550 per ounce mark for the first time in more than six years as investors rushed to safe haven assets driven by the heightened U.S.-China trade dispute. Spot gold was trading 0.3 percent up at $1,530.19 per ounce by 1146 GMT, having touched a high of $1,555.10 earlier, its highest since August 2013. U.S. gold futures were up 0.2 percent at $1,540.30.
Treasuries Recap
The U.S. Treasuries remained slightly higher during the afternoon session amid a muted trading day that witnessed data of little economic significance. However, this week’s few auctions and gross domestic product (GDP) for the second quarter of this year, due on August 29 shall provide some direction to the debt market. The yield on the benchmark 10-year Treasury yield remained tad down at 1.522 percent, the super-long 30-year bond yield lost a little over 1 basis point to 2.012 percent and the yield on the short-term 2-year suffered 2 basis points to 1.510 percent.
The German bunds remained narrowly mixed during European trading session ahead of the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released on August 27 by 06:00GMT and the 10-year auction, due to be held on the following day by 09:40GMT for further direction in the debt market. The German 10-year bond yields, which move inversely to its price, edged tad nearly 1 basis point up to -0.665 percent, the yield on 30-year note hovered around -0.157 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.883 percent.
The Australian government bond yields plummeted during Asian session of the first trading day of the week as fears of a global economic recession continued to cloud investors’ risk appetite. Also, Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday did little to help the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 2 basis points to 0.889 percent, the yield on the long-term 30-year bond slumped 7 basis points to 1.531 percent and the yield on short-term 2-year plummeted 6 basis points to 0.699 percent.
