Market Roundup
- N. Korea considers missile strike on Guam after Trump's 'fire and fury" warning
- EconMin Motegi – Looking to stick to primary budget fiscal discipline
- Discipline as important as economic growth, CPI only key indicator
- Japan’s heavy industries take hit from flagging big projects -Nikkei
- Japan Jul money supply M2 +4.0% y/y, M3 +3.4%, broadest liquidity +3.4%
- China Jul PPI y/y 5.5% vs 5.5%
- China Jul CPI, 1.4% vs 1.5% y/y, 0.1% vs -0.2% m/m
- Australia Aug Consumer Sentiment, -1.2% vs 0.4%
- Australia Jun Housing finance, +0.5% vs 1.0%, revised +1.1%
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Jun Industrial Output SA, 0.20% m/m, 3.40% y/y eyed; last 0.70%, 2.80%
Key Events Ahead
- (0510 ET/0910 GMT) Greece E875 mln for 13-week auction
- (0530 ET/0930 GMT) Germany E4.0 bln for 5 yr auction
FX Beat
DXY: The dollar steadied versus most of its major peers as strong US JOLTS job openings data raised optimism over prospects of additional Fed rate hike action in 2017. The greenback against a basket of currencies traded up at 93.64, having touched a high of 93.88 the day before, it’s highest since July 28. FxWirePro's Hourly Dollar Strength Index stood at 58.23 (Bullish) by 0500 GMT.
EUR/USD: The euro eased, extending previous session losses, as the greenback rebounded versus a basket of currencies. On Tuesday, the major slumped to a near 2-week low as the dollar gained momentum after a strong JOLTS report showed U.S. Job Openings at 6.163 million in June, a record high and above market expectation of 5.775 million. The European currency traded 0.1 percent down at 1.1736, having touched a low of 1.1715 the day before, its lowest since Jul. 26. FxWirePro's Hourly Euro Strength Index stood at -63.54 (Bearish) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the U.S. unit labor cost, nonfarm productivity, and wholesale inventories figures. Immediate resistance is located at 1.1800, a break above targets 1.1850. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).
USD/JPY; The dollar tumbled to an eight-week low against the yen as the latest bout of geopolitical tensions stemming from the Korean Peninsula sent investors seeking safety into safe-haven assets. The Japanese currency was also supported by ex-BOJ Kuichi's comments, citing that the central bank may consider policy normalization and may change the 10-year yield target to 3-5 years. The major was trading 0.4 percent down at 109.93, having hit a low of 109.74 earlier, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 129.95 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. unit labor cost, nonfarm productivity and wholesale inventories figures for further momentum. Immediate resistance is located at 110.29 (78.6% retracement of 112.19 and 109.74), a break above targets 110.70 (61.8% retracement of 112.19 and 109.74). On the downside, support is seen at 109.63 (June 12 Low), a break below could take it near 109.22 (June 6 Low).
GBP/USD: Sterling slumped, extending losses for the fifth consecutive session, as investors grew more bearish about Britain's economic outlook after consumer spending fell for the third month in a row in July. Moreover, the extension of the greenback's rally in the wake of the stronger US JOLTS job openings data also undermined the bid tone around the major. Sterling traded 0.1 percent down at 1.2980, having hit a low of 1.2952 the prior day, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at -79.29 (Slightly Bearish) by 0400 GMT. Investors’ focus will remain on UK inflation report hearing, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3050 (21-DMA), a break above could take it near 1.3114 (10-DMA). On the downside, support is seen at 1.2932 (July 20 Low), a break below targets 1.2893 (July 5Low). Against the euro, the pound was trading flat at 90.43 pence, having hit a 10-month low of 90.87 the prior session.
AUD/USD: The Australian dollar declined to a 3-week low following weak domestic home loan growth data and weaker-than-expected Chinese July CPI figures. Australia's home loan growth slowed to 0.5 percent in July against expected figure of 1.5 percent, while Chinese July PPI came-in as expected at 5.5 percent y/y and the CPI printed at 1.4 percent y/y, missing the estimate of 1.5 percent. The Aussie trades 0.4 percent down at 0.7876, having hit a low of 0.7855 earlier, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at -68.02 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7850, a break below targets 0.7800. On the upside, resistance is located at 0.7933 (5-DMA), a break above could take it near 0.7959 (10-DMA).
NZD/USD: The New Zealand dollar extended its losing streak into a fourth day in the wake of disappointing Chinese CPI releases and weaker oil prices. Investors are certain that the Reserve Bank of New Zealand will leave its cash rates at a record low 1.75 percent and reinforce the need for low rates at its policy review this week. The Kiwi trades 0.2 percent down at 0.7317, having touched a low of 0.7308 the prior day, its lowest level since July 18. FxWirePro's Hourly Kiwi Strength Index was at -123.74 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7361 (78.6% retracement of 0.7558 and 0.7308), a break above could take it near 0.7398 (21-DMA). On the downside, support is seen at 0.7300, a break below could drag it till 0.7272.
Equities Recap
Asian shares declined as investors sought safe-haven assets following a fresh bout of geopolitical tensions stemming from the Korean Peninsula.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 percent.
Tokyo's Nikkei declined 1.4 percent to 19,724.53 points, Australia's S&P/ASX 200 index rose 0.4 percent to 5,765.40 points and South Korea's KOSPI slumped 1.01 percent to 2,369.98 points.
Shanghai composite index fell 0.4 percent to 3,269.94 points, while CSI300 index was trading 0.1 percent down at 3,729.38 points.
Hong Kong’s Hang Seng was trading 0.5 percent lower at 27,713.48 points. Taiwan shares shed 0.9 percent to 10,470.38 points.
Commodities Recap
Crude oil prices consolidated within a narrow range on doubts lingering over OPEC's ability to restrain supply as promised, despite a bigger than expected fall in U.S. oil inventories. International benchmark Brent crude was trading flat at $51.92 per barrel by 0439 GMT, having hit a high of $52.90 last week, its strongest since May 25. U.S. West Texas Intermediate was trading 0.2 percent up at $49.01 a barrel, after rising as high as $50.40 last week, its strongest since May 25.
Gold prices rose, rebounding from a near 2-week low hit in the previous session, amid rising tensions between the United States and North Korea after the North responded to warnings from U.S. President Donald Trump with a threat to strike the U.S. territory of Guam. Spot gold rose 0.4 percent to $1,264.78 per ounce at 0444 GMT, having touched a low of $1,251.46 on Tuesday, its lowest since July 26. U.S. gold futures for December delivery rose 0.6 percent to $1,270.40 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.251 percent lower by 0.031 bps, while 5-year yield was 0.027 bps down at 1.807 percent.
The Japanese 10-year government bond yields struck a 6-week high after investors poured into safe-haven assets, following growing tensions over the Korean Peninsula as the country prepares to go into a long holiday starting Friday on account of Mountain Day. The yield on the benchmark 10-year Treasury note hovered around 0.07 percent, the yield on long-term 30-year note traded flat at 0.87 percent and the yield on short-term 2-year too traded steady at -0.10 percent.
The Australian bonds slumped, tracking firmness in the U.S. Treasuries after the overnight 3-year note auction showed up strongly. The yield on the benchmark 10-year Treasury note jumped 1-1/2 basis points to 2.65 percent, the yield on the 15-year note climbed 1 basis point to 2.94 percent while the yield on short-term 2-year hovered around 1.79 percent.
The New Zealand bonds gained at close as investors wait to read the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision scheduled to be unveiled today by 21:00GMT. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.83 percent, the yield on 7-year note also slid 1 basis point to 2.68 percent and the yield on short-term 2-year too ended 1 basis point lower at 2.01 percent.
The longer-term Canadian government bond prices were lower across the maturity curve, with the 2-year price down 2.5 Canadian cents to yield 1.256 percent and the benchmark 10-year falling 13 Canadian cents to yield 1.937 percent. The Canada-U.S. two-year bond spread stood at -10.3 basis points, while the 10-year spread was at -33.4 basis points.
