Market Roundup
- Japan chief govt spokesman: If such Fx moves continue, government ready to take appropriate action
- Japan chief govt spokesman: Excess volatility, disorderly Fx moves have negative impact on economy
- Japan chief govt spokesman: Recent forex market extremely nervous
- Japan chief govt spokesman: Will continue to monitor markets closely
- Japan sep Nikkei mfg PMI flash increase to 50.3 vs previous 49.5
- Argentina Q2 GDP yy increase to -3.4 % (forecast -2.55 %)
- Singapore august all items CPI -0.3 pct y/y (Reuters poll -0.4 pct)
- Singapore august core CPI +1.0 pct y/y (Reuters poll +1.1 pct)
- Nikkei Sept Flash MFG PMI 50.3 vs 49.5 in August
- Japan Sept flash manufacturing PMI shows expansion for 1st time in 7 months
- OPEC in new push to clinch first deal to curb output since 2008 – Reuters
Economic Data Ahead
- (0300 ET/0700 GMT) France Markit Mfg Flash PMI
- (0300 ET/0700 GMT) France Markit Serv Flash PMI
- (0300 ET/0700 GMT) France Markit Comp Flash PMI
- (0330 ET/0730 GMT) Germany Markit Mfg Flash PMI
- (0330 ET/0730 GMT) Germany Markit Serv Flash PMI
- (0330 ET/0730 GMT) Germany Markit Comp Flash PMI
- (0400 ET/0800 GMT) Eurozone Markit MFG Flash PMI Sept – 51.5 exp; last 51.7
- (0400 ET/0800 GMT) Eurozone Markit Serv Flash PMI Sept – 52.8 exp; last 52.8
- (0400 ET/0800 GMT) Eurozone Markit Comp Flash PMI Sept – 52.8 exp; last 52.9
FX Beat
DXY: The dollar gained but was on track for weekly losses after the Fed cut its 2017, 2018 rates outlook and BoJ altered policy framework. The dollar index against a basket of currencies trades 0.1 percent up at 95.47, pulling away from a 2-week low of 95.05 hit in the previous session.
EUR/USD: The euro edged down after rising to a 1-week peak in the previous session, as the dollar recovered some ground from Federal Reserve policy outlook led-slump. The major stalled its two-day rally and reversed gains below the 1.1200 handle, after upbeat U.S. unemployment claims and housing price index suggested that the economy was growing strong. However, the downside is likely to remain capped after data released overnight showed Eurozone's preliminary consumer confidence for the month of September at -8.2, in line with consensus. The European currency trades 0.1 percent down at 1.1198, hovering away from a high of 1.1257, however, was up 1.1 percent for the week. Investors attention will remain on preliminary manufacturing data from the both the continents, ahead of speeches from Fed’s officials. Immediate resistance is located at 1.1220, break above could take it till 1.1250. On the downside, support is seen at 1.1183 (5-DMA), break below could drag it till 1.1150.
USD/JPY: The dollar rose, extending gains above the 101.00 handle, however, was on track to end this week lower after the Federal Reserve reduced its long-term interest rate expectations and the Bank of Japan adjusted its monetary policy framework. On Thursday, vice finance minister for international affairs Masatsugu Asakawa, stated that the Japanese financial authorities are closely watching for speculative currency market moves and would respond if required. The major traded 0.4 percent higher at 101.10, pulling away from a near 4-week low of 100.10 touched in the previous session but was poised to shed 1.1 percent for the week. Markets will continue to track broad based market sentiment ahead of U.S preliminary Markit manufacturing PMI. Immediate resistance is located at 101.50, break above targets 102.00/ 102.25. On the downside, support is seen at 100.30, break below could take it lower 100.00.
GBP/USD: Sterling declined after rising to a near 1-week high above the 1.3100 handle following hawkish comments from Bank of England's Kristen Forbes. On Thursday, the major rose as high as 1.3120, however, it trimmed gains to close out at 1.13074. Sterling trades 0.2 percent lower at 1.3041, reversing most of previous session gains. Investors will continue to digest headlines from the BoE policymakers amid lack of relevant data from the economy. Immediate resistance is located at 1.3115 (10-DMA), break above could take it near 1.3185. On the downside, support is seen at 1.3022, break below targets 1.3000. Against the euro, the pound trades 0.2 percent down at 85.85 pence, within the sight of a 4-week low of 86.31 pence touched earlier in the week.
AUD/USD: The Australian dollar edged down, halting its 4-day rally, but was set for its best weekly performance in two months. On Thursday, the major strengthened after the Reserve Bank of Australia governor Phillip Lowe gave an upbeat assessment of the economy and highlighted the limits to monetary policy, stating that it was not required to cut rates further, after already easing twice this year. The Aussie trades 0.1 percent down at 0.7632, pulling away from a more than 2-week high hit in the previous session. In absence of macro -fundamentals from both the continents, the pair will be driven by overall market sentiment. Immediate support is seen at 0.7604 (Previous Session Low), break below could drag it till 0.7565 (20-DMA). On the upside, resistance is located at 0.7674 (2-week High), break above targets 0.7700.
NZD/USD: The New Zealand dollar continues to decline, extending losses below the 0.7300 handle after the RBNZ left rates on hold at 2.0 percent on Thursday but signaled further easing. The bid tone around the Kiwi weakened as the U.S. dollar recovered across the broad, support by better-than-expected unemployment claims data amid falling crude oil prices. The Kiwi traded 0.5 percent lower at 0.7277, off- 2-week high of 0.7370 and was set to end the week flat, however, is up 6.6 percent so far this year. Immediate resistance is located at 0.7330 (Sept 16 High), break above targets 0.7380. On the downside, support is seen at 0.7255, break below could drag it near 0.7200.
Equities Recap
Asian shares hovered around 14-month highs on revived speculation that the Fed is settling into a phase of very gradual interest rate hikes.
MSCI's broadest index of Asia-Pacific shares outside Japan was steady and within the range of its highest levels since July 2015 that it touched early September.
Tokyo's Nikkei lost 0.32 percent at 16,754.02 points, Australia's S&P/ASX 200 index climbed 1.06 percent at 5,431.30 points and South Korea's KOSPI added 0.07 percent at 2,051.47 points.
Shanghai composite index edged down 0.12 percent at 3,038.76 points, while CSI300 index was trading 0.30 percent lower at 3,281.67 points.
Hong Kong’s Hang Seng was trading 0.1 percent down at 23,736.84 points. Taiwan shares added 0.53 percent at 9,284.62 points.
Commodities Recap
Crude oil prices edged down, after rising to more than 1-week high on Thursday, as markets remained cautious on the outcome of an OPEC ministers meeting next week in Algeria over production cooperation to restrain global oversupply. International benchmark Brent crude was trading 0.4 percent lower at $47.24 per barrel at 0401 GMT, pulling away from a high of $47.80, its highest since Sept 13. U.S. West Texas Intermediate crude eased 0.56 percent at $45.80 a barrel.
Gold prices eased after rising to a 2-week high in the previous session, however, was set for the biggest weekly gain in nearly two months. Spot gold was trading 0.25 percent lower at $1,334.08 an ounce by 0408 GMT, hovering away from a high of $1343.56, but was on course for a 2 percent rise this week, its biggest gain since late July. U.S. gold futures were down 0.3 percent at $1,341.20 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.6201 percent lower by 0.012 bps, while 5-year was at 1.1691 percent down by 0.005 bps.
The Japanese 10-year government bond yield fell 2.0 basis points to minus 0.050 percent while the 30-year yield fell 5.0 basis points to 0.460 percent, hitting a 2-week low.
The Australian government bonds saw mixed performance day as markets continued to digest the September FOMC statement, coupled with relatively mixed United States economic data.The yield on the benchmark 10-year Treasury note fell 4 basis points to 2.058 percent, the yield on long-term 15-year note also dipped 4 basis points to 2.420 percent and the yield on short-term 2-year bounced 1-1/2 basis points to 1.619 percent.
The New Zealand government bonds closed higher as investors poured into safe-haven assets after the Reserve Bank of New Zealand in its monetary policy statement hinted at lowering its key interest rate further due to persistent weak consumer inflation. The yield on the benchmark 10-year bond fell 7 basis points to 2.410 percent, the yield on 7-year note ended 5 basis points lower at 2.135 percent and the yield on short-term 2-year note slid 1 basis point to 1.890 percent.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 2-year bond firmed 1 Canadian cent to yield 0.571 percent and the benchmark 10-year rose 43 Canadian cents to yield 1.101 percent. The 10-year yield touched its lowest since Sept. 9 at 1.097 percent, while the spread between the 2-year and 10-year yields narrowed by 4.2 basis points to 53 basis points, indicating outperformance for longer-dated maturities.
