Market Roundup
- USD/JPY -0.07%, EUR/USD -0.08%, GBP/USD -0.27%
- DXY +0.14%, DAX -0.2%, Brent -1.4%, Gold flat at 1313
- Kuroda- will keep very easy monetary conditions to support econ recovery
- Japan PM adviser says benefits of BOJ's negative rates 'very big'
- BoJ may push back rate cut until later date: Goldman
- Japan FinMin Aso – Up to BoJ to decide specific policy
- Aso- coordinating with BoJ to defeat defl. fiscal policy to play role
- Reuters survey – Japan Inc sees BoJ stimulus failing to spur inflation
- New Zealand Sept ANZ/RM consumer conf idx 121.0, Aug 117.7, highest since Jan
- Moody’s SA renewable debt mkt supported by positive credit developments
- RBS shares fall 3.2% after U.S Dept. Justice claim USD14 bln vs Deutsche bk
- EU officials- UK will give up on Brexit if negotiations tough enough-Telegraph
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. consumer price index likely rose 0.1 percent in August, after being flat in July. Excluding food and energy, the core CPI is expected to rise 0.2 percent after increasing 0.1 percent in July.
- (0830 ET/1230 GMT) Statistics Canada releases manufacturing sales data for the month of July. Manufacturing sales are likely to rise 1.0 percent after gaining 0.8 percent in June.
- (0830 ET/1230 GMT) Statistics Canada will report foreign portfolio investment in domestic stocks for the month of July.
- (0830 ET/1230 GMT) The Statistics Canada will release investment in foreign securities figures for the month of July.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index edged up 90.8 in September compared to a final reading of 89.8 in August.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Event Ahead
- (0945 ET/1345 GMT) FedTrade ops 30-yr Ginnie Mae max $1.550 bln.
- (1145 ET/1545 GMT) FedTrade ops 15-yr Fannie Mae/Freddie Mac max $550 mln.
FX Beat
DXY: The dollar index against a basket of currencies rose 0.2 percent at 95.48, pulling away from a low of 95.08 hit on Thursday following series of downbeat U.S. economic data.
EUR/USD: The euro declined, extending previous session losses as the dollar's recovery picked up pace across the board. The major weakened as investors remain cautious ahead of Federal Reserve policy meeting amid persisting risk-off environment, triggered by tumbling stocks and oil prices. Data released earlier showed Eurozone's labor cost in the second quarter coming at 1.0 percent versus previous revised reading of 1.6 percent. The European currency trades 0.2 percent lower at 1.1219, pulling further away from a 1-week high of 1.1283 hit in the previous session. The short term trend is slightly weak as long as resistance 1.1300 (trend line joining 1.16163 and 1.13663). On the higher side, any break above 1.1300 will take the pair till 1.1300/ 1.13270/ 1.1360. The major support is around 1.1189 (55- day EMA) and any break below targets 1.1138 (200- day MA)/1.1100. Overall trend reversal is only above 1.1360.
USD/JPY: The Japanese yen edged up and was on course to gain for a second week after downbeat U.S. retail sales data slashed lingering speculation of the Federal Reserve hiking interest rates next week. The BoJ will conduct a comprehensive review of its current policy framework which includes negative interest rates with a massive asset-buying programme, however, markets focus on whether the central bank will cut rates deeper into negative territory. The dollar trades 0.2 percent lower at 101.89, hovering away from a 1-week peak of 103.35 hit earlier in the week. The short term trend is slightly bearish as long as resistance 104.80 holds. The major resistance is around 103.40 and break above targets 103.80/104.60, while the minor resistance is around 103. On the lower side, major support is around 101.80 and any break below 101.80 will drag the pair till 101.20/100.55/100.
GBP/USD: Sterling declined against the dollar and the euro as investors worried over another cut in interest rates this year despite recent economic fundamentals pointed towards a less significant hit to the British economy than had been anticipated. On Thursday's policy meeting, the Bank of England held rates at their record lows, however, indicated that it would cut them again to just above zero before the end of the year. Sterling trades 0.5 percent lower at 1.3168, hovering towards a 2-week low of 1.3138 struck on Wednesday. The pair upside is capped by 10–day MA and it should break above 1.3290 (10- day MA) for further bullishness. Any break above 1.3295 will take it to next level till 1.3350/ 1.3400/ 1.3480. Any close above 1.3480 confirms major bullishness. The minor resistance is around 1.3240. On the lower side, any break below 1.3155 will drag it down till 1.3100/1.3050. Against the euro, the pound trades 0.4 percent lower at 85.23 pence, retreating from a high of 84.68 pence touched in the previous session.
USD/CHF: The Swiss franc declined, reversing most of its previous session gains as the dollar strengthened despite diminishing expectations of Federal Reserve rate hike next week. The major trades 0.4 percent higher at 0.9754, hovering towards a peak of 0.9789 hit earlier in the week. On the higher side, any break above 0.9806 will take the pair till 0.9845/0.9880. Any break below 0.9700 will take it to next level till 0.9670. The short-term weakness can be seen only below 0.9630.
AUD/USD: The Australian dollar tumbled below the 0.7500 handle, as the greenback attempted a minor recovery from downbeat retails sales led-slump. The Aussie trades 0.2 percent lower at 0.7498, having touched an intra-day high of 0.7526. The major is likely to remain on the downside amid declining crude oil prices and on concerns that global central banks were reaching the limits of policy stimulus. On the higher side, any break above 0.7540 (9- day MA) will take the pair till 0.7570/0.7600. The major support is around 0.7440 and break below will drag it till 0.7390 (200- day MA).
NZD/USD: The New Zealand dollar edged down, but trimmed losses to trade above the 0.7300 handle. The major retreated from session's low of 0.7291 as risk sentiment improved across the broad, however, it struggled to extend the recovery amid renewed weakness in oil prices. The Kiwi trades 0.15 percent lower at 0.7304, attempting to sustain gains above the 0.7300 level. Immediate resistance is located at 0.7339 (10-DMA), break above targets 0.7365. On the downside, support is seen at 0.7268 (Aug-24 Low), break below could drag it near 0.7200.
Equities Recap
European shares declined and were on track for their worst weekly performance in three months, while bonds rebounded as downbeat U.S. retail sales figures reduced expectations of Federal Reserve rate hike next week.
MSCI's 47-country All World index reversed gains and was set for its fourth week of losses in the last five. While MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, but it was on course for a loss of 2.4 percent for the week.
The pan-European STOXX 600 index decreased 0.32 percent at 340.02 points, while the FTSEurofirst 300 index shed 0.13 percent at 1,337.35 points.
Britain's FTSE 100 trades 0.15 percent up at 6,740.29 points, while mid-cap FTSE 250 climbed 0.76 percent at 17,886.25 points.
Germany's DAX declined 0.40 percent at 10,389.01 points; France's CAC 40 trades 0.46 percent lower at 4,353.67 points.
Tokyo's Nikkei gained 0.70 pct at 16,519.29 points and Australia's S&P/ASX 200 index rose 1.02 pct at 5,293.40 points.
South Korean, Chinese, Taiwanese and Hong Kong’s markets are closed for holidays.
Commodities Recap
Crude oil prices declined, reversing most of its previous session gains, as markets continue to wary over rising U.S. rig counts and that returning Libyan and Nigerian exports would increase the global supply glut. Global benchmark Brent crude oil was trading 0.8 percent lower at $46.00 per barrel at 0932 GMT, hovering towards a low of $45.66 touched on Thursday, its lowest since Sept 2.. U.S. West Texas Intermediate crude declined 0.71 percent at $43.37 a barrel, pulling near a 2-week low of $43.24 hit in the previous session.
Gold price steadied near its 2-week low, but was set for its first weekly loss in three as investors rushed towards more riskier assets ahead of series of policy decisions next week by the Reserve Bank of New Zealand, the Bank of Japan and the Federal Reserve. Spot gold was steady at $1,314.44 an ounce by 0941 GMT and was on course to end the week down about 1 percent. U.S. gold futures fell about 0.1 percent to $1,317.10 an ounce.
Treasuries Recap
The United States economic data released Thursday disappointed market as retail sales, producer price index and industrial production remained well below the consensus expectations. The benchmark 10-year Treasury yield fell below 1.70 percent mark (down 4 basis points to 1.663 percent) and the yield on short-term 2-year note also dipped below 0.80 percent (down 1 basis point to 0.726 percent).
The UK gilts strengthened as the Bank of England in its monetary policy meeting decided to leave its official bank rate on hold at 0.25 percent and the programme of gilt purchases, financed via reserves issuance, was paused at 435 billion pounds. The yield on the benchmark 10-year gilts fell 3-1/2 basis points to 0.859 percent, the super-long 40-year bond yield dipped 2 basis points to 1.449 percent and the yield on short-term 3-year bond slid 1-1/2 basis points to 0.147 percent.
The German 10-year bund yields again turned negative after a week as the United States Federal Reserve September rate hike hopes faded after reading a series of disappointing economic data released Thursday. The yield on the benchmark 10-year bond fell more than 4 basis points to -0.008 percent, the yield on long-term 30-year note dipped 3-1/2 basis points to 0.623 percent and the yield on short-term 2-year bond slid 1 basis point to -0.655 percent.
The Eurozone periphery bonds gained following the benchmark German bunds. The French 10-year bond yields fell 5 basis points to 0.217 percent, Irish 10-year bonds yield dipped 6 basis points to 0.447 percent, Italian equivalent ticked 3-1/2 basis points lower to 1.298 percent, Netherlands 10-year bonds yield tumbled 4 basis points to 0.093 percent, Portuguese equivalents inched 1 basis points lower to 3.405 percent and the Spanish 10-year bonds yield slid 2 basis points to 1.052 percent.
The Japanese government bonds remained little changed during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield remained steady at -0.031 percent, the super-long 30-year note yield hovered around 0.568 percent and the short-term 2-year JGB yield stood flat at -0.265 percent.
The New Zealand government bonds closed modestly higher as investors remained cautious ahead of the Reserve Bank of New Zealand’s monetary policy decision, which is scheduled to be held on September 21. The yield on the benchmark 10-year bond fell 1 basis point to 2.580 percent, the yield on 7-year note also ended 1 basis point lower at 2.245 percent and the yield on short-term 2-year note dipped 1 basis point to 1.965 percent.
The Australian government bonds traded mixed during a relatively quiet session that witnessed data of little significance as investors remained focused on the Federal Reserve and Bank of Japan’s monetary policy decision scheduled next week. The yield on the benchmark 10-year Treasury note remained steady at 2.165 percent, the yield on long-term 15-year note also dipped 1/2 basis point to 2.552 percent and the yield on short-term 2-year slid 4 basis points to 1.583 percent