Market Roundup
- Britain's banks face 25% earnings hit from no-deal Brexit - Citigroup
- EU's 'door remains open' to UK Brexit proposals
- No-deal Brexit will happen on October 31 if there is no backstop agreement: Maas
- Gold headed for a fourth monthly gain
- Oil prices fall but set for big weekly gain
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Commerce Department releases personal income figures for July, which is expected to rise 0.3 percent, after rising 0.4 percent in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of July. The index rose at an annualized rate of 1.6 percent in the prior month, while core PCE is likely to have increased 0.2 percent after posting similar gains in the previous month.
- (0830 ET/1230 GMT) The U.S. Personal spending is likely to rise 0.5 percent in the month of July after surging 0.3 percent in June.
- (0830 ET/1230 GMT) Statistics Canada releases its Raw Material Price Index for the month of July. The index posted a decline of 5.9 percent in June.
- (0830 ET/1230 GMT) Statistics Canada will report its industrial producer prices for the month of July. The indicator fell 1.4 percent in the prior month.
- (0830 ET/1230 GMT) Statistics Canada is expected to report that gross domestic product increased 0.1 percent in June after rising 0.2 percent in the previous month.
- (0945 ET/1345 GMT) Chicago Purchasing Managers' Index is likely to show that business conditions rose to 47.5 in August from 44.4 last month.
- (1000 ET/1400 GMT) The University of Michigan is likely to report that the U.S. consumer sentiment index stayed unchanged at 92.1 in August.
- (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index surged, as investors risk sentiment improved after China’s commerce ministry said a September round of meetings was being discussed by both the economies. The greenback against a basket of currencies traded 0.1 percent up at 98.56, having touched a high of 98.61 earlier, its highest since August 1.
EUR/USD: The euro slumped to a 1-month low, as yesterday's weak German inflation data reinforced views the ECB would cut its benchmark interest rate and announce a new round of quantitative easing at September’s meeting. The European currency traded 0.2 percent down at 1.1035, having touched a low of 1.1033 earlier, its lowest since August 1. Immediate resistance is located at 1.1064 (23.6% retracement of 1.1163 and 1.1033), a break above targets 1.1098 (50% retracement). On the downside, support is seen at 1.1030, a break below could drag it below 1.1000.
USD/JPY: The dollar declined against the safe-haven Japanese yen as Washington is due to start imposing 15 percent tariffs on $125 billion worth of goods from China on Sunday. The major was trading 0.2 percent down at 106.35, 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. personal consumption expenditure - price index. 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 105.65 (August 28 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling tumbled, extending losses for the third straight session, weighed down by the prospect of an economically damaging withdrawal from the European Union, and another showdown between the government and parliament that may end in a general election. The major traded down at 1.2180, 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 1.2234 (5-DMA), a break above could take it near 1.2273 (August 22 High). On the downside, support is seen at 1.2148 (21-DMA), a break below targets 1.2108 (August 22 Low). Against the euro, the pound was trading 0.1 percent down at 90.66 pence, having hit a high of 90.16 on Tuesday, it’s highest since July 29.
USD/CHF: The Swiss franc plunged to a 1-month low, as the greenback surged on hopes for a rapprochement on trade between Beijing and Washington. The major trades 0.2 percent up at 0.9885, having touched a high of 0.9895 earlier, it’s highest since August 2. On the higher side, near-term resistance is around 0.9907 (August 2 High) and any break above will take the pair to next level till 0.9949 (July 31 High). The near-term support is around 0.9814 (August 2 Low), and any close below that level will drag it till 0.9771 (August 21 Low).
Equities Recap
European shares traded near 1-month highs, boosted by a surge in German real estate companies and on news that trade tensions between the United States and China were easing.
The pan-European STOXX 600 index rallied 0.9 percent at 380.22 points, while the FTSEurofirst 300 gained 0.9 percent to 1,496.06 points.
Britain's FTSE 100 trades 0.8 percent up at 7,237.87 points, while mid-cap FTSE 250 surged 0.6 to 19,413.59 points.
Germany's DAX rose 1.2 percent at 11,979.98 points; France's CAC 40 trades 0.9 percent higher at 5,502.62 points.
Commodities Recap
Crude oil prices declined but were still headed for the biggest weekly increase since early July, boosted by a decline in U.S stocks, a looming hurricane in Florida and an easing of U.S.-China trade dispute. International benchmark Brent crude was trading 1.4 percent lower at $60.07 per barrel by 1114 GMT, having hit a low of $58.29 last week, its lowest since August 16. U.S. West Texas Intermediate was trading 1.2 percent down at $55.88 a barrel, after falling as low as $52.95 on Monday, its lowest since August 9.
Gold eased as equity markets and the greenback firmed, but fears of a global economic slowdown and uncertainty about the U.S.-China trade war kept the safe-haven metal on track for its fourth straight monthly rise. Spot gold was trading 0.1 percent down at $1,525.42 per ounce by 1116 GMT, having touched a high of $1,555.10 on Monday, its highest since August 2013 and has gained nearly 8 percent so this month, heading for a fourth consecutive monthly gain. U.S. gold futures were down 0.1 percent at $1,535.20 an ounce.
Treasuries Recap
The U.S. Treasuries slipped slightly during te afternoon session ahead of the country’s monthly personal income and spending figures, including the closely watched deflators, for July, scheduled to be released today by 12:30GMT. The final reading of the University of Michigan’s consumer confidence survey for August is also due for release later today. The yield on the benchmark 10-year Treasury yield edged tad nearly 1 basis point higher to 1.523 percent, the super-long 30-year bond yield also rose 1 basis point to 1.990 percent and the yield on the short-term 2-year too traded 1 basis point higher at 1.540 percent.
The German bunds remained narrowly mixed during European trading session after the country’s retail sales for the month of July disappointed market participants, while eurozone’s consumer price inflation (CPI) for August remained unchanged, leading to sideways trading in the debt market. The German 10-year bond yield, which move inversely to its price, slipped nearly 1 basis point to -0.699 percent, the yield on 30-year note edged tad up to -0.208 percent while the yield on short-term 2-year traded steady at -0.907 percent.
The Australian government bonds suffered during Asian session tracking a similar movement in the U.S. Treasuries after a 7-year auction failed to draw sufficient investor demand amid signs of easing trade tensions between the U.S. and China. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged 1-1/2 basis points higher to 0.889 percent, the yield on the long-term 30-year bond rose 1 basis point to 1.479 percent while the yield on short-term 2-year remained flat at 0.724 percent.
