Market Roundup
- UK PM May backs down on parliament vote over her Brexit terms, asked for room to negotiate – Bloomberg.
- BoJ Gov Kuroda – Will ease policy again if needed, including more negative rates if merits outweigh costs, JGB buys to influence yield curve to fluctuate @Y80 trln – Reuters.
- BoJ Policy Board Harada – Must ease further without hesitation if price target in doubt, on sudden changes in global economy, merits of ease outweigh costs, BoJ quite distant from reaching limits of policy – Reuters.
- Japan Aug core machinery orders -2.2% m/m, -5.5% eyed, July +4.9%, series very volatile but better than eyed, moving up? +11.6 y/y, +6.5% eyed.
- Japan set to drop sales tax on buying virtual currency – Nikkei.
- Australia Oct Westpac/MI consumer confidence index +1.1% m/m, +4.7% y/y to 102.4, Sept +0.3% m/m.
- AOFM March ‘47 bond book AUD13 bln+, price 101 bp over 10-year futures - IFR.
Economic Data Ahead
- (0245 ET/0645 GMT) France Sep HICP – final, -0.2% m/m, +0.5% y/y eyed; prelim +0.3%, +0.4%.
- (0500 ET/0900 GMT) Eurozone Aug industrial output, +1.5% m/m, +1.1% y/y eyed; last -1.1%, -0.5%.
- (0500 ET/0900 GMT) Switzerland Oct ZEW investor sentiment index; last 2.7.
- (0700 ET/1100 GMT) New Zealand Sep PMI (manufacturing); last 55.1.
- (1000 ET/1400 GMT) United States Aug JOLTS job openings, 5.72 mln eyed; last 5.87 mln.
Key Events Ahead
- N/A Sweden SEK10 bln 96-day treasury bill auction.
- (0300 ET/0700 GMT) Austria FinMin Schelling presents the budget.
- (0330 ET/0730 GMT) SNB Zurbruegg speaks in Zurich.
- (0500 ET/0900 GMT) BoE DepGov Cunliffe House of Lords testimony.
- (0500 ET/0900 GMT) Italy E6.25 bln 12-month BOT auction.
- (0510 ET/0910 GMT) Greece E625 mln 13-week treasury bill auction.
- (0515 ET/0915 GMT) ECB Coeure at Brussels public exchange of views on Greece.
- (0530 ET/0930 GMT) UK DMO GBP850 mln 0.125% 2036 index-linked Gilt auction.
- (0700 ET/1100 GMT) Norges Bank Gov Olsen speaks in Lillehammer.
- (0800 ET/1200 GMT) NY Fed Dudley (voter, dove) open-press fireside chat in Albany.
- (0940 ET/1340 GMT) KC Fed George (voter, hawk) speaks at Chicago symposium.
- (1400 ET/1800 GMT) FOMC September 20-21 meeting minutes.
- (1700 ET/2100 GMT) ECB Mersch speaks at Harvard University.
FX Beat
DXY: The dollar came under selling pressure on minor correction and partial sterling rebound. The greenback against a basket of currencies trades down at 97.65, having touched an 11-week high of 97.76 in the previous session.
EUR/USD: The euro extended previous session losses, hitting more than 2-month low as investors awaited the minutes of the Federal Reserve Open Market Committee's September meeting for clues on hiking interest rates this year. The major attempted a minor recovery before falling down to a low of 1.1041, its lowest since July 27. The euro trades flat at 1.1048, having touched an intra-day high of 1.1067. Markets attention will remain on Eurozone's industrial production figures, ahead of FOMC minutes release. Immediate resistance is located at 1.1085, break above could take it till 1.1100 /1.1130. On the downside, support is seen at 1.1024, a break below could drag it till 1.1000.
USD/JPY: The dollar consolidates between a narrow range near the 103.50 level, after rising above the 104.00 handle in the previous session on growing expectations of U.S interest rate hike. The major came under fresh selling pressure after BoJ’s Kuroda and Harada reiterated the central bank's willingness to ease further by slashing rates further into negative territory. The pair trades flat at 103.48, having touched a near 4-week high of 104.07 on Tuesday. Investors focus now shifts towards US JOLTS jobs opening data, FOMC minutes and speeches from the Fed officials for further insights on the U.S. monetary policy outlook. Immediate resistance is located at 103.80, a break above targets 104.30. On the downside, support is seen at 103.20, a break below could take it near 102.80.
GBP/USD: Sterling rebound after declining to 1.2089 in the previous session, largely benefiting from news that British Prime Minister Theresa May had accepted that Parliament should be allowed to vote on her Brexit plan. The major tumbled to a 31-year low of 1.1904 last Friday as investors wary over the impact on Britain’s economy after exiting from the European Union. Sterling gained 1.4 percent to 1.2293, after rising as high as 1.2324 and now attempts to take out the 1.2400 handle. Investors will continue to track developments surrounding the Brexit procedure, ahead of UK Housing Price Balance survey. Immediate resistance is located at 1.2361 (5-DMA), a break above could take it near 1.2440. On the downside, support is seen at 1.2100, break below targets 1.1900. Against the euro, the pound trades 1.3 percent higher at 89.89 pence.
AUD/USD: The Australian dollar recovered after slumping to 3-week lows in the previous session, boosted by strong demand for a long-term government bond sale and upbeat domestic data. Australia's Westpac consumer confidence for the month of October rose 1.1 percent from previous 0.3 percent, indicating positive investors’ sentiment in economic activity. However, the recovery appears to be fragile as the People’s Bank of China set the yuan sharply lower, triggering a fresh bout of risk aversion. The Aussie rose 0.5 percent to 0.7579, pulling away from a 3-week low of 0.7533 hit on Tuesday. Markets will track overall market sentiment, ahead of US JOLTS report and FOMC September meeting minutes release. Immediate support is seen at 0.7530, a break below could drag it till 0.7500. On the upside, resistance is located at 0.7603 (20-DMA), a break above targets 0.7645.
NZD/USD: The New Zealand dollar retreated from a near 2-1/2 month low touched in the previous session, largely driven by a short-covering rally after the recent sell-off. The major also benefited from a minor correction in the US dollar across the board and improving risk sentiment amid easing Brexit fears. However, the upside is limited as Reserve Bank of New Zealand's warning about further policy easing to push inflation higher, weakened the bid tone around the Kiwi. The pair trades 0.2 percent higher at 0.7070, having touched a 2-1/2 low of 0.7047 in the previous session. Investors await Fed speeches and FOMC meeting minutes amid a lack of significant fundamental drivers. Immediate resistance is located at 0.7118 (5-DMA), break above targets 0.7150/ 0.7180. On the downside, support is seen at 0.7010, a break below could drag it lower 0.7000.
Equities Recap
Asian shares touched 3-week lows, following overnight losses on the Wall Street, while the British pound recovered from lows in a volatile trading session.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent.
Tokyo's Nikkei slumped 1.09 percent at 16,840.00 points, Australia's S&P/ASX 200 index lost 0.17 percent at 5,470.40 points and South Korea's KOSPI edged down 0.1 percent at 2,029.86 points.
Shanghai composite index declined 0.3 percent at 3,056.39 points, while CSI300 index traded 0.2 percent lower at 3,298.05 points.
Hong Kong’s Hang Seng was trading 1.01 percent down at 23,311.26 points. Taiwan shares rose 0.3 percent to 9,252.60 points.
Commodities Recap
Crude oil prices edged up, as markets await for talks between OPEC producers and non-OPEC producers on curbing output to end a glut in the global market. International benchmark Brent crude was trading 0.2 percent up at $52.57 per barrel at 0404 GMT, having touched a 1-year high of $53.71 on Monday. U.S. West Texas Intermediate crude was flat at $50.87 a barrel, after hitting a 4-month high of 51.57 earlier in the week.
Gold prices rose, recovering most of its previous session losses, as the U.S. dollar eased ahead the Federal Reserve September policy meeting minutes, which could provide more clues on any interest rate hikes this year. Spot gold gained 0.4 percent at $1,253.20 an ounce by 0410 GMT, drifting away from a 4-month low of 1,241.27 hit on Friday. U.S. gold futures fell 0.1 percent to $1,255 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7780 percent higher by 0.019 bps, while 5-year was 0.02 bps up at 1.3141 percent.
The Australian government bond futures eased, with both the 3-year and the 10-year bond contracts down 3 ticks at 98.31 and 97.750 respectively.
The New Zealand government bonds gained, sending yields 1 basis point lower at the short end of the curve.
The Canadian government bond prices fell across the yield curve, with the 2-year off 2 Canadian cents to yield 0.603 percent and the benchmark 10-year down 28 Canadian cents to yield 1.200 percent. The 10-year yield touched its highest level since Sept. 14 at 1.257 percent.
