Market Roundup
- OPEC agrees on oil output cut at Algiers meeting – Financial Times.
- US Federal government shutdown averted after Congress passes spending bill - Washington Post.
- KC Fed George – Wants slow but sure progress on raising rates, must not get behind curve, have to up rates quickly – Reuters.
- Cleveland Fed Mester – Wanted September rate hike, keeping rates too low risks future recession, running US economy ho is risky strategy, Fed risks getting behind curve if it delays rate hikes – Reuters.
- Japan Aug retail sales -2.1% y/y, -1.8% forecast, negative growth since Feb.
- MoF flow data week ended Sept 24 – Japanese buy net Y38.9 bln foreign stocks, Y1.1786 trln bonds, Y102.2 bln bills; foreign investors sell net Y211.7 bln Japanese stocks, Y2.8049 trln bonds, Y847.1 bln bills.
- Flow data week ended Sept 17 – Japanese buy net Y293.4 bln foreign stocks, Y1.3761 trln bonds, Y7.6 bln bills; foreign investors sell net Y817.4 bln Japanese stocks, Y526.1 bln bonds, buy Y304.5 bln bills.
- Japan Honda sets monthly production records worldwide – JCN.
- China’s debt signals are flashing red, local governments up to their old tricks with shadow financing – Nikkei.
- Australian Aug qtr job vacancies +4.5% to four-year high.
- RBNZ – Housing poses financial stability risk, NZD high – Reuters.
Economic Data Ahead
- (0300 ET/0700 GMT) Spain Aug retail sales; last +4.9% y/y.
- (0300 ET/0700 GMT) Spain Sep HICP - flash, +0.2% y/y forecast; last -0.3%.
- (0355 ET/0755 GMT) Germany Sep unemployment; last 2.68 mln nsa and sa.
- (0355 ET/0755 GMT) Germany Sep unemployment, 6.1%, -5k forecast; last 6.1%, -7k.
- (0430 ET/0830 GMT) Great Britain Aug money supply M4; last +1.2%.
- (0430 ET/0830 GMT) Great Britain Aug mortgage approvals, 60.15k forecast; last 60.91k.
- (0430 ET/0830 GMT) Great Britain Aug mortgage lending, GBP2.55 bln forecast; last GBP2.67 bln.
- (0430 ET/0830 GMT) Great Britain Aug consumer credit, GBP1.4 bln forecast; last GBP1.18 bln.
- (0500 ET/0900 GMT) Eurozone Sep economic sentiment index, 103.5 forecast; last 103.5.
- (0500 ET/0900 GMT) Eurozone Sep industrial sentiment index, -4.1 forecast; last -4.4.
- (0500 ET/0900 GMT) Eurozone Sep business climate index, 0.05 forecast; last 0.02.
- (0500 ET/0900 GMT) Eurozone Sep services sentiment index, 10.0 forecast; last 10.0.
- (0500 ET/0900 GMT) Eurozone Sep consumer confidence – final, -8.2 forecast; last -8.5.
- (0530 ET/0930 GMT) Belgium Sep CPI; last -0.05% m/m, +2.16% y/y.
- (0800 ET/1200 GMT) Germany Sep HICP – flash, unch m/m, +0.5% y/y forecast; last -0.1%, +0.3%.
- (0830 ET/1230 GMT) United States Q2 GDP – final, +1.3% forecast; prelim +1.1%.
- (0830 ET/1230 GMT) United States Q2 GDP deflator final, +2.3% forecast; prelim +2.3%.
- (0830 ET/1230 GMT) United States Q2 PCE prices – final, +2.0% forecast; prelim +2.0%.
- (0830 ET/1230 GMT) United States Q2 - core PCE prices, +1.8% forecast; prelim +1.8%.
- (0830 ET/1230 GMT) United States Q2 corporate profits – revised; prelim -2.4%.
- (0830 ET/1230 GMT) United States w/e initial jobless claims, 260k forecast; last 252k.
- (0830 ET/1230 GMT) United States Aug goods trade balance – advance; last $58.78 bln deficit.
- (1000 ET/1400 GMT) United States Aug pending home sales, unch m/m forecast; last +1.3% m/m, index 111.3.
Key Events Ahead
- N/A Geneva SIBOS conference, ECB/Slovenia CB Jazbe speaks in Ljubljana.
- N/A ECB VP Constancio chairs panel discussion at Frankfurt ECB conference.
- N/A BoE Paterson at Maastricht conference, BoE Hogg at FT London conference.
- N/A Sweden NDO SEK750/250 mln 1/0.125% 2025/32 inflation-linked bond sales.
- (0300 ET/0700 GMT) Austria FinMin Schelling speaks at London CEE forum, IMF Sweden review.
- (0400 ET/0800 GMT) ECB/Finland CB Liikanen speaks in Helsinki.
- (0500 ET/0900 GMT) Philly Fed Harker speaks in Dublin, ECB ChiefEcon Praet speaks in Halle.
- (0500 ET/0900 GMT)Italy E3.5-4/2-2.5 bln 0.35/1.25% 2021/26 BTP auctions.
- (0500 ET/0900 GMT) Italy E1.5-2 bln 0.26% 2023 CCTeu auction.
- (0850 ET/1250 GMT) Atlanta Fed Lockhart speaks at Orlando forum.
- (1000 ET/1400 GMT) Fed Gov Powell speaks at St Louis Fed conference.
- (1300 ET/1700 GMT) ECB/Buba Weidmann, ECB/Austrila CB Nowotny speak in Berlin.
- (1400 ET/1800 GMT) Minny Fed Kashkari at Rapid City, South Dakota town hall.
- (1615 ET/2015 GMT) KC Fed Goerge speaks at KC Fed conference in Kansas City.
- (1710 ET/2110 GMT) FOMC Chair Yellen speaks at Washington DC conference.
FX Beat
DXY: The dollar edged down as commodity-linked currencies gained after OPEC agreed to cut oil output. The dollar index against a basket of currencies traded flat at 95.48, hovering towards a 1-week high of 95.74 hit in the previous session.
EUR/USD: The euro rose, extending gains above the 1.1200 handle, as the dollar weakened after OPEC members agreed to curb output in an unexpected deal. On Wednesday the major declined to a 1-week low, weighed down by concerns surrounding Deutsche Bank, however, it recovered after Fed Chair Janet Yellen said that there was no schedule for raising rates. The European currency trades 0.1 percent up at 1.1233, pulling away from a low of 1.1181 hit in the previous session, it’s lowest since September 21. Markets now await Eurozone's sentiment data, U.S. gross domestic product and Fed Yellen speech for further momentum on the pair. Immediate resistance is located at 1.1257 (Sept 22 High), break above could take it till 1.1280/ 1.1300. On the downside, support is seen at 1.1200 (10-DMA), break below could drag it till 1.1181 (Previous Session Low).
USD/JPY: The dollar rallied as markets sentiment strengthened after OPEC agreed to cut oil output, dampening the safe-haven yen. The Japanese yen also came under renewed selling pressure after data showed Japan's large retailer's sales for the month of August slumped 3.6 percent, against estimate of 1.8 percent fall and previous 0.6 percent gain. On an annualized basis it declined 2.1 percent from previous 0.2 percent drop. The greenback trades 1.02 percent higher at 101.70, having touched fresh 1-week high of 101.72 earlier in the session. Investors await series of U.S. economic data including GDP, unemployment benefit claims, PCE, and pending home sales data. But focus will remain on speeches by Fed's Yellen, Harker; Lockhart; Powell and Kashkari for further cues on U.S. monetary outlook. Immediate resistance is located at 101.78 (10-DMA), break above targets 102.10/ 102.40. On the downside, support is seen at 100.65 (Session Low), break below could take it near 100.00.
GBP/USD: Sterling edged up after declining on Bank of England policymaker's comments in the previous session. BoE Deputy Governor Minouche Shafik stated that the central bank was likely to add more monetary stimulus to Britain's economy in order to curb the Brext impact. Sterling trades up at 1.13022, having touched a near 1-week high of 1.3057 earlier in the session. Investor’s attention will remain on UK's consumer credit and mortgage approvals for further cues on major. Immediate resistance is located at 1.3087 (Sept 23 High), break above could take it over 1.3100. On the downside, support is seen at 1.2980, break below targets 1.2915. Against the euro, the pound trades 0.1 percent down at 86.24 pence, within the sight of 5-week low of 87.16 pence hit on Monday.
AUD/USD: The Australian dollar rose above the 0.7700 handle to a 3-week high largely on the back of a surge in oil prices after the OPEC agreed to restrain output. The major extended the bullish momentum for the fourth consecutive session, however, it trimmed gains as markets remain cautious whether the OPEC would stand firm on its decision until November 30th meeting. The Aussie trades flat at 0.7690, after rising to a high of 0.7710, it’s highest since Sept 8. Markets will continue to track overall market sentiment ahead of the Fed speaks and the much-awaited U.S. final GDP figures due later in the day. Immediate support is seen at 0.7660 (5-DMA), break below could drag it till 0.7640. On the upside, resistance is located at 0.7730, break above targets 0.7750.
NZD/USD: The New Zealand dollar climbed, as a rebound in oil prices strengthened the bid tone around the Kiwi. On Wednesday, the major slumped to a near 1-month low of 0.7232 on RBNZ easing concerns, however, it has retreated from that level after the OPEC agreed upon a first output cut deal in 8- years, boosting market sentiments. The Kiwi trades 0.1 percent up at 0.7292, hovering just below the 0.7300 handle. Immediate resistance is located at 0.7314 (20-DMA), break above targets 0.7330/ 0.7350. On the downside, support is seen at 0.7260 (Sept 27 Low), break below could drag it till 0.7200.
Equities Recap
Asian shares advanced, while oil prices extended gains strengthening stock markets after OPEC members agreed to curb output in an unexpected deal.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.8 percent, led by a bounce in energy shares.
Tokyo's Nikkei rose 1.39 percent at 16,693.71 points, Australia's S&P/ASX 200 index advanced 1.04 percent at 5,468.70 points and South Korea's KOSPI added 0.85 percent at 2,070.29 points.
Shanghai composite index gained 0.43 percent at 3,001.28 points, while CSI300 index was trading 0.53 percent higher at 3,247.59 points.
Hong Kong’s Hang Seng was trading 0.18 percent up at 23,661.53 points. Taiwan shares climbed 0.8 percent at 9,270.90 points.
Commodities Recap
Crude oil prices edged down, having gained nearly 6 percent in the previous day after OPEC agreed to limit its production to a range of 32.5-33.0 million barrels per day and on a fall in U.S. crude stocks for the fourth straight week. International benchmark Brent crude was trading 0.5 percent lower at $48.63 per barrel at 0402 GMT, having touched a high of $49.07 in the previous session, its highest since September 9. U.S. West Texas Intermediate crude declined 0.1 percent at $47.10 a barrel, after gaining 5.3 percent in the previous session.
Gold prices gained as the dollar tumbled after OPEC agreed on oil output cuts in the first such deal since 2008. Spot gold rose 0.3 percent to $1,324.74 an ounce by 0409 GMT, having declined to a low of $1317.89, its weakest since September 21. U.S. gold futures were up 0.4 percent at $1,328.30 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5874 percent higher by 0.02 bps, while 5-year was 0.016 bps up at 1.1460 percent.
The Japanese government bonds traded lower as crude oil futures rose sharply after the OPEC producers' group surprised the market with a deal to slash output. The benchmark 10-year bond yield rose 1-1/2 basis points to -0.074 percent, the yield on long-term 30-year note climbed 1/2 basis point to 0.467 percent and the yield on short-term 2-year note bounced nearly 1 basis point to -0.285 percent.
The Australian government bonds slumped as investors moved away from the safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.023 percent, the yield on 12-year note jumped 2-1/2 basis points to 2.181 percent and the yield on short-term 2-year climbed nearly 1 basis point to 1.594 percent.
The New Zealand government bonds closed modestly higher as investors speculated that the Reserve Bank of New Zealand (RBNZ) will lower its key interest rate in its November monetary policy decision. The yield on the benchmark 10-year bond fell 1 basis point to 2.355 percent, the yield on 7-year note ended 1 basis point lower at 2.110 percent and the yield on short-term 2-year note also slid 1 basis point to 1.945 percent.
The Canadian government bond prices were lower across the yield curve, with the 2-year down 3.5 Canadian cents to yield 0.516 percent and the benchmark 10-year falling 11 Canadian cents to yield 0.978 percent. The 10-year yield earlier touched a new record low intraday at 0.915 percent.
