Market Roundup
- Gold gains ground on bargain hunting
- Oil nudges up on trade optimism
- EU Dombrovskis: European economy faces growing risks from Brexit, trade tensions
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 4,000 to a seasonally adjusted 212,000 for the week ended September 20, while continuing claims for the week ended September 13 is expected to rise to 1.665 million from previous week's reading of 1.661 million.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that gross domestic product increased at a 2 percent annual rate in the second quarter after rising at the same pace in the first quarter.
- (0830 ET/1230 GMT) The U.S. Census Bureau is likely to report that preliminary wholesale inventories rose 0.3 percent in July after posting a gain of 0.2 percent in June.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of August. The economy recorded a trade deficit of $72.34 billion in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the 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 1.7 percent.
- (1000 ET/1400 GMT) The National Association of Realtors is likely to report that U.S. pending home sales increased 0.9 percent in August after declining 2.5 percent in July.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending September 20.
- (1100 ET/1600 GMT) Federal Reserve Bank of Kansas City issues manufacturing activity index for the month of September. The indicator stood at -2 in the previous month.
Key Events Ahead
- (0930 ET/1330 GMT) European Central Bank (ECB) President Mario Draghi's Speech
- (0800 ET/1300 GMT) Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe's speech
- (1145 ET/1545 GMT) Federal Reserve Vice Chairman Richard Harris Clarida gives a speech
FX Beat
DXY: The dollar index rallied to a 3-week peak as the United States 2-year Treasury yields climbed from 1.60 percent to 1.68 percent, while the 10-year yields rose from 1.64 percent to 1.73 percent. The greenback against a basket of currencies traded 0.1 percent up at 99.07, having touched a high of 99.13 earlier, its highest since September 3.
EUR/USD: The euro plunged to a near 2-1/2 year low after European Union’s top economic commissioner Valdis Dombrovskis stated that economic growth in the EU is slowing down as the bloc faced increasing risks from global trade tensions and the unclear outcome of Brexit. The European currency traded 0.1 percent down at 1.0928 having touched a low of 1.0922 earlier, its lowest since May 2017. Immediate resistance is located at 1.0978 (September 3 High), a break above targets 1.1059 (September 10 High). On the downside, support is seen at 1.0900, a break below could drag it below 1.0870.
USD/JPY: The dollar declined amid fears about an impeachment inquiry into U.S. President Donald Trump and no clear view on progress in U.S.-China trade negotiations. The selling pressure intensified after China criticized the United States for imposing new sanctions on Chinese entities for knowingly transferring oil from Iran. The major was trading 0.2 percent down at 107.57, having hit a low of 107.04 on Tuesday, its lowest since September 9. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, gross domestic product, wholesale inventories, good trade balance, personal consumption expenditures, pending home sales and Fed officials' speeches Immediate resistance is located at 108.08 (September 20 High), a break above targets 108.53 (July 1 High). On the downside, support is seen at 107.26 (21-DMA), a break below could take it lower at 106.76 (September 6 Low).
GBP/USD: Sterling plunged to a 2-week low as traders remained concerned over the deepening confrontation in the British parliament over Brexit. The major traded flat at 1.2340, having hit a low of 1.2302 earlier, it’s lowest since September 12. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2449 (5-DMA), a break above could take it near 1.2526 (September 17 High). On the downside, support is seen at 1.2282 (September 12 Low), a break below targets 1.2233 (September 9 Low). Against the euro, the pound was trading 0.05 percent down at 88.56 pence, having hit a high of 87.85 on Friday, it’s highest since May 22.
USD/CHF: The Swiss franc fell to a 1-week low as risk sentiment improved after the Chinese commerce ministry said Beijing is in close communication with Washington and is preparing to make progress at trade talks in October. The major trades 0.3 percent up at 0.9942, having touched a high of 0.9947 earlier, it’s highest since September 19. On the higher side, near-term resistance is around 0.9956 and any break above will take the pair to next level till 0.9999 (June 17 High). The near-term support is around 0.9894 (21-DMA), and any close below that level will drag it till 0.9813 (August 22 Low).
Equities Recap
European shares advanced, bolstered by gains in technology shares as encouraging comments from China on trade with the United States boosted investor sentiment.
The pan-European STOXX 600 index surged 0.7 percent at 390.17 points, while the FTSEurofirst 300 rallied 0.7 percent to 1,534.81 points.
Britain's FTSE 100 trades 0.9 percent up at 7,359.84 points, while mid-cap FTSE 250 gained 0.4 to 19,858.19 points.
Germany's DAX rose 0.4 percent at 12,286.80 points; France's CAC 40 trades 0.7 percent higher at 5,622.10 points.
Commodities Recap
Crude oil prices steadied due to optimism that the United States and China could resolve their trade dispute, although the upside appears limited following Saudi Arabia’s moves to restore output quickly after attacks on its oil installations. International benchmark Brent crude was trading 0.1 percent down at $62.43 per barrel by 1036 GMT, having hit a low of $61.21 on Wednesday, its lowest since September 16. U.S. West Texas Intermediate was trading flat at $56.64 a barrel, after falling as low as $55.62 on Wednesday, its lowest since September 16.
Gold prices rose as investors resorted to bargain-hunting after a sharp decline in the previous session, although a firm greenback limited the upside. Spot gold was trading 0.4 percent up at $1,509.73 per ounce by 1038 GMT, having touched a low of $1,500.34 on Wednesday, its lowest since September 20. U.S. gold futures were up 0.2 percent at $1,515.9 per ounce.
Treasuries Recap
The German bunds edged tad higher during European trading session Thursday amid silent trading hours that witnessed data of little economic significance ahead of the European Central Bank’s (ECB) President Mario Draghi’s speech, scheduled to be delivered today by 13:30GMT. The German 10-year bond yield, which move inversely to its price, remained flat at -0.587 percent, the yield on 30-year note slipped 1-1/2 basis points to -0.148 percent and the yield on short-term 2-year too remained tad down at -0.727 percent.
The mid-to-long dated Japanese government bond yields rose after the central bank reduced purchases of the JGBs maturing in five to ten years. The benchmark 10-year JGB futures fell 0.10 point to 155.24. The 10-year cash JGB yield rose 1.5 basis points to minus 0.245 percent. At the shorter end of the curve, the two-year yield rose 1.5 basis points to minus 0.330 percent, while the five-year yield rose 1.5 basis points to minus 0.370 percent. In the super-long zone, the 20-year yield fell half a basis point to 0.170 percent and the 30-year yield fell one basis point to 0.345 percent, while the 40-year yield was flat at 0.420 percent.
The Australian government bonds suffered during Asian session Thursday tracking a similar movement in the U.S. Treasuries even as President Donald Trump faced an impeachment inquiry, although it appeared to be less controversial than investors had thought, thus forcing them to shift back to riskier equities, weighing on bond prices. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged nearly 1 basis point higher to 0.964 percent, the yield on the long-term 30-year bond hovered around 1.568 percent and the yield on short-term 2-year slipped 1 basis point to too traded flat at 0.744 percent.
