Market Roundup
- German inflation slows, jobless edges up as economy splutters
- German minister eyes tax cuts for `Mittelstand'
- French economy shrugs off euro zone slowdown in second quarter
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 6,000 to a seasonally adjusted 215,000 for the week ended Aug. 23, while continuing claims for the week ended Aug. 16 is expected to rise to 1.680 million from previous weeks of 1.674 million.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that preliminary gross domestic product increased at a 2.0 percent annual rate in the second quarter after surging at a 2.1 percent pace in the first quarter.
- (0830 ET/1230 GMT) The U.S. Census Bureau reports its preliminary wholesale inventories for the month of July. The indicator stayed flat in June.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of July. The economy recorded a trade deficit of $74.16 billion in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the preliminary personal consumption expenditures (PCE) price index for the second quarter. The index is expected to rise 2.3 percent, while core PCE is likely to increase 1.8 percent.
- (0830 ET/1230 GMT) Statistics Canada is likely to report that current account deficit narrowed to C$9.80 billion in the second quarter, compared with a deficit of C$17.35 billion in the previous quarter.
- (1000 ET/1400 GMT) The National Association of Realtors is likely to report that U.S. pending home sales stayed flat in July after rising 2.8 percent in June.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending August 23.
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index surged after China’s Commerce Ministry stated that U.S. and China should create conditions for progress in negotiations and that Beijing was against escalating the trade war. The greenback against a basket of currencies traded 0.1 percent up at 98.29, having touched a low of 97.17 on Friday, its lowest since August 9.
EUR/USD: The euro declined, extending losses for the fourth straight session, as German inflation likely slowed in August from the prior month, sliding further below the European Central Bank’s target ahead of its Sept. 12 policy meeting at which fresh stimulus is expected. The European currency traded 0.05 percent down at 1.1070, having touched a high of 1.1163 on Monday, its highest since August 14. . 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 rose, extending previous session gains as markets await for the next step in terms of trade talks between U.S. and China. The major was trading 0.1 percent up at 106.23, 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. unemployment benefit claims, preliminary gross domestic product, flash wholesale inventories, goods trade balance, prelim personal consumption expenditure and pending home sales. Immediate resistance is located at 106.73 (August 23 High), 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 consolidated within narrow ranges after slumping to a near 1-week low in the previous session, as Prime Minister Boris Johnson’s government challenged opponents of Brexit in parliament to collapse the government or change the law if they wanted to prevent Britain’s exit from the European Union. The major traded flat at 1.2208, 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 1.2273 (August 22 High), a break above could take it near 1.2309 (August 27 High)). On the downside, support is seen at 1.2147 (21-DMA), a break below targets 1.2108 (August 22 Low)). Against the euro, the pound was trading flat at 90.68 pence, having hit a high of 90.16 on Tuesday, it’s highest since July 29.
USD/CHF: The Swiss franc slumped to a near 1-week low, as China’s commerce ministry said that China and the United States were discussing the next round of face-to-face trade talks scheduled for September. The major trades 0.1 percent up at 0.9842, having touched a low of 0.9713 on Monday, it’s lowest since August 14. On the higher side, near-term resistance is around 0.9877 (August 23 High) and any break above will take the pair to next level till 0.9907 (August 2 High). The near-term support is around 0.9771 (August 21 Low), and any close below that level will drag it till 0.9703 (August 6 Low).
Equities Recap
European shares rose, boosted by easing in Italy’s political tensions and hopeful news from Beijing in the trade war.
The pan-European STOXX 600 index rallied 1.05 percent at 376.71 points, while the FTSEurofirst 300 gained 1.1 percent to 1,482.24 points.
Britain's FTSE 100 trades 1.1 percent up at 7,192.05 points, while mid-cap FTSE 250 surged 0.3 to 19,268.34 points.
Germany's DAX rose 1.0 percent at 11,825.19 points; France's CAC 40 trades 1.3 percent higher at 5,439.09 points.
Commodities Recap
Crude oil prices consolidated within narrow ranges despite a sharp fall in U.S. inventories last week. International benchmark Brent crude was trading flat at $60.42 per barrel by 1129 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 up at $56.12 a barrel, after falling as low as $52.95 on Monday, its lowest since August 9.
Gold prices eased after rising to a near a 6-year peak earlier in the week as fears of a global recession, exacerbated by the protracted U.S.-China trade war, drove interest for safe havens. Spot gold was trading 0.3 percent down at $1,535.92 per ounce by 1131 GMT, having touched a high of $1,555.10 on Monday, its highest since August 2013. U.S. gold futures were down 0.1 percent at $1,547.10.
Treasuries Recap
The U.S. Treasuries plunged during the afternoon session ahead of the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released today by 12:30GMT, besides, the 7-year auction, also due today by 17:00GMT. Further, the weekly initial jobless claims and goods trade balance for July will add direction to the debt market. The yield on the benchmark 10-year Treasury yield jumped 3 basis points to 1.498 percent, the super-long 30-year bond yield surged 4 basis points to 1.980 percent and the yield on the short-term 2-year traded 2 basis points higher at 1.524 percent.
The German bunds suffered during European trading session even as the country’s unemployment data for the month of August disappointed market sentiments. However, investors shall now eye the eurozone’s consumer price inflation (CPI) data for the similar period, scheduled to be released on August 30 by 09:00GMT for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, jumped 2 basis points to -0.699 percent, the yield on 30-year note surged nearly 4 basis points to -0.234 percent while the yield on short-term 2-year traded nearly steady at -0.889 percent.
The Australian government bonds rallied during Asian session after the U.S. Treasury yield closed near record-low following bulk hedging by investors against riskier assets such as oil and equities. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged nearly 1 basis point higher to 0.882 percent, the yield on the long-term 30-year bond surged 1-1/2 basis points to 1.485 percent and the yield on short-term 2-year remained flat at 0.726 percent.
