Market Roundup
- China fears hit stocks (S&P -2.6%) and oil (-7.70%), boost volatility.
- Gold up as dollar, shares fall on China worries.
- Atlanta Fed: US economy on track to grow 1.3% in Q3 up from 1.2% on Friday (GDPNow).
- SNB's Jordan: CHF clearly overvalued, will have to live negative interest rates for considerable time, current negative rates not the lowest possible point.
- US Fed's Rosengren says liftoff timing less important than pace of tightening, low inflation gives Fed latitude to hike slowly, oil price fall could bring less inflationary pressure.
- U.S. construction spending rises to seven-year high. US Markit Manufacturing PMI Final Aug 53, 52.9-previous.
- US ISM Manufacturing PMI Aug 51.1, forecast- 52.6, 52.7-previous.
- Canada RBC Manufacturing PMI SA Aug 49.4, 50.8-previous.
- Brazil Markit Manufacturing PMI Aug 45.8, 47.2-previous.
- Mexico Markit Manufacturing PMI Aug 52.4, 52.9-previous.
- Canada hit by recession as economic growth shrank in Q2.
- Canada's Harper: econ back on track cites June GDP growth, strong growth expected for rest of year.
- Chile Central Bank lowers economic growth forecast, hikes inflation view, sees hikes near year end.
- New Zealands's Fonterra: Dairy prices rise (+10.9%), volumes drop at auction.
Looking Ahead - Economic Data (GMT)
- 23:30 Australia AIG Services Index Aug 54.12-previous
- 01:30 Australia GDP QQ* Q2 forecast- 0.4%, 0.9%-previous
- 01:30 Australia GDP YY* Q2 forecast- 2.2%, 2.3%-previous
- 01:30 Australia GDP Final Consumption* Q2 0.5%-previous
- 01:30 Australia GDP Capital Expenditure* Q2 -1.2%-previous
- 01:30 Australia GDP Chain Price Index* Q2 0%-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1220 levels and currently trading at 1.1307 levels. The pair has made session high at 1.1313 and hit lows at 1.1233 levels. The dollar eased against euro on Tuesday as weak Chinese factories data drove investors to unwind bets against the euro widely used to fund positions in riskier assets. The data showed the manufacturing sector of the world's No. 2 economy shrinking at its fastest in three years, aggravating wide worries about world growth and igniting sell-offs in equities. The euro rose 1 percent to $1.1310 extending its recovery from last week's one-week low of $1.1156. It was last trading at $1.1265, up 0.45 percent on the day. On the data front, Euro zone manufacturing growth eased last month, despite factories barely raising prices, adding to the European Central Bank's woes as it battles to spur expansion and inflation, a survey showed. Markit's final manufacturing Purchasing Managers' Index was 52.3 last month, below an earlier flash reading that suggested it had held steady at July's 52.4. Meanwhile, Germany Europe's largest economy's manufacturing PMI jumped to 53.3 from July's 51.8. To the upside, immediate resistance can be seen at 1.1350. To the downside, immediate support level is located at 1.1285 levels.
GBP/USD is supported in the range of 1.5261 levels and currently trading at 1.5307 levels. It reached session high at 1.5358 and dropped to session low at 1.5302 levels. The Sterling slipped against US dollar for second straight session on Tuesday. Sterling lost ground against the dollar after a weaker-than-expected survey of manufacturing sentiment added to arguments for another prolonged hold of Bank of England interest rates. The pound has suffered along with the dollar from a week of turmoil around China's financial markets and economic outlook which has trimmed some bets on the prospect of rise in British and U.S. borrowing costs. Meanwhile A two-year continues jobs growth across British factories came to an end last month as manufacturing activity expanded at a slower pace, a survey showed, suggesting the sector is unlikely to boost economic growth much this quarter. UK Manufacturing Purchasing Managers' Index (PMI) fell in August to 51.5 from 51.9 in July, surprisingly falling below expectations for a rise to 52.0. To the upside, immediate resistance can be seen at 1.5352. To the downside, immediate support level is located at 1.5295 levels.
USD/JPY is supported around 119.54 levels and currently trading at 119.67 levels. It peaked to hit session high at 120.16 and made session lows at 119.52 levels. The dollar eased against the Japanese yen on Tuesday,after The ISM Manufacturing PMI disappointed the dollar bulls, dropping to 51.1 from 52.7 in August, its lowest since May 2013..The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.1 from 52.7 the month before, marking the lowest reading since May 2013. The reading was short of the expected 52.6, according to analysts. The dollar was last off 1.20 percent to 119.80 yen, having retreated from a high of 121.76 yen set late last week. With China moving to clamp down on speculation in the currency forwards market, analysts expect markets to stabilize in coming days. That in turn could see the focus return to U.S. data, including a jobs and wages report due on Friday. To the upside, immediate resistance can be seen at 119.58. To the downside, immediate support level is located at 119.22 levels.
USD/CAD is supported at 1.3151levels and is trading at 1.3213 levels. It has made session high at 1.3327 and lows at 1.3117 levels. The Canadian dollar was steady against its U.S. counterpart on Tuesday, sharply paring earlier losses after second-quarter domestic growth data indicated the economy was finally turning around heading into the third quarter. Hit by a plunge in crude prices over the past year, Canada's economy contracted by an annualized 0.5 percent in the second quarter, indicating a recession in the first half of the year. The downturn prompted the Bank of Canada to cut interest rates by 25 basis points twice this year. Economic activity in June grew by a better-than-expected 0.5 percent, however, the first monthly increase in six months. Analysts forecasted 0.2 percent growth. The loonie rallied to a session high shortly after the figures were released, after the market stabilized the loonie started to give up its early gains against US dollar, by the late US session the loonie gave up all the gains it made earlier to trade around 1.3212 levels. To the upside, immediate resistance can be seen at 1.3255. To the downside, immediate support level is located at 1.3225levels.
Equities Recap
European equities fell sharply on Tuesday, with miners slumping after weak manufacturing data from China renewed concerns for the economic health of the world's biggest metals consuming country.
UK's benchmark FTSE 100 closed down by 3.1percent, the pan-European FTSEurofirst 300 ended the day down by 2,9 percent, Germany's Dax ended down by 2.6 percent, France's CAC finished the day down by 2.6 percent.
Wall Street slumped more than 2 percent on Tuesday, pushing all three major indexes into the red for the year, after weak data from China escalated fears that the slowdown in the world's second-largest economy will constrain global growth. Dow Jones closed down by 2.81 percent, S&P 500 ended down by 2.92 percent, Nasdaq finished the day down by 2.92 percent.
Commodities Recap
Gold rose 1 percent on Tuesday as the dollar and global equities dropped on fresh signs of economic weakness in China and uncertainty over the timing of the Federal Reserve's first interest rate increase in nearly a decade.
Spot gold rose to a session high of $1,147.16 an ounce and was up 0.6 percent at $1,140.50 an ounce by 2:34 p.m. EDT, while U.S. gold for December delivery settled up 0.6 percent at $1,139.80 an ounce.
Oil prices tumbled 8 percent on Tuesday in volatile trading that sent Brent futures back below $50 a barrel as weak Chinese data revived concerns about demand for petroleum after crude's three-day rally of more than 20 percent.
Brent crude slumped $4.59, or 8.48 percent, to settle at $49.56 a barrel, after falling as low as $49.24.U.S. crude fell $3.79, or 7.7 percent, to settle at $45.41, after dropping as low as $45.13 following an 8.8 percent gain on Monday.
Treasuries Recap
U.S. Treasuries prices rose on Tuesday after data showing weakness in the Chinese and U.S. manufacturing sectors fueled safe-haven bids, while possible selling of long-dated Treasuries by foreign central banks capped those bonds' gains.
U.S. 10-year Treasuries were last up 8/32 in price to yield 2.17 percent, from a yield of 2.20 percent late on Monday. The 30-year bond was up 2/32, with the yield little changed from where it stood late Monday, at 2.93 percent. The yield earlier hit a session high of 2.964 percent, just below Monday's one-month high of 2.965 percent.Two-year notes were up 2/32 to yield 0.71 percent, from a yield of 0.74 percent late on Monday.
