Market Roundup
- Japan PM Abe – Government will work with BoJ to defeat deflation - Reuters.
- US TsySec Lew – No Fed surprises for emerging markets – Reuters.
- SF Fed Williams (non-voter) – US economy can handle rate hike, harder and harder to justify incredibly low-interest rates, significant differences of opinion inside Fed, Yellen good moderator, will stay till term-end – Reuters.
- BoE Gov Carney – UK economy performing as expected but business investment and real estate market softening, will adjust to Brexit – Herald Scotland.
- ECB/Ireland CB Lane – Up to supervisors to mitigate risks of low rates.
- Italy cuts growth, hikes deficit forecasts, ’16 growth +0.8%, deficit 2.4% of GDP, debt/GDP ratio 132.8%, previous +1.2%, 2.3%, 132.4%.
Economic Data Ahead
- (0245 ET/0645 GMT) France Sep consumer confidence index; last 96.
- (0300 ET/0700 GMT) Sweden Sep manufacturing confidence index; last 97.7.
- (0300 ET/0700 GMT) Sweden Sep consumer confidence index, 95.1 eyed; last 93.9.
- (0400 ET/0800 GMT) Italy Sep consumer confidence index, 109.1 eyed; last 109.2.
- (0400 ET/0800 GMT) Italy Sep business confidence index, 101.0 eyed; last 101.1.
- (0500 ET/0900 GMT) Italy Aug wage inflation; last unch m/m, +0.6% y/y.
- (0830 ET/1230 GMT) United States Aug durable goods orders, -1.4% m/m eyed; last +4.4%.
- (0830 ET/1230 GMT) United States Aug - ex-transport/defense, -0.4%, -1.1% m/m eyed; last +1.3%, +3.7%.
- (0830 ET/1230 GMT) United States Aug – non-defense capital goods ex-air, -0.2% m/m eyed; last +1.5%.
Key Events Ahead
- N/A OPEC meeting in Algeria (final day).
- N/A Geneva SIBOS conference (till tomorrow), Riksbank executive board meets.
- N/A Sweden SEK5 bln each 82 and 166-day treasury bill auctions.
- N/A Norway NOK3 bln 4.5% 2019 NST-473 government bond auction.
- N/A France mandates BNP Paribas, CA, JPM, Natixis, RBS for 2047 linker.
- (0400 ET/0800 GMT) BoE DepGov Shafik speaks at London Bloomberg event.
- (0400 ET/0800 GMT) ECB Pres Draghi, VP Constancio speak at Frankfurt conference.
- (0500 ET/0900 GMT) Italy E6 bln 6-month treasury bill auction.
- (0530 ET/0930 GMT) Germany E4 bln zero% 2018 Schatz auction.
- (0530 ET/0930 GMT) ECB 3-month LTRO operation, E6.4 bln allotment eyed, E7.7 bln maturing.
- (0845 ET/1245 GMT) Minny Fed Kashkari in Minneapolis fireside chat.
- (0730 ET/1330 GMT) ECB Pres Draghi addresses Bundestag.
- (1000 ET/1400 GMT) FOMC Chair semi-annual House testimony.
- (1015 ET/1415 GMT) St Louis Fed Bullard speaks at St Louis conference
- (1130 ET/1530 GMT) ECB/BdF Villeroy parliamentary testimony in Brussels.
- (1330 ET/1730 GMT) Fed Evans' speech
- (1630 ET/2030 GMT) Cleveland Fed Mester speaks in Cleveland.
- (1915 ET/2315 GMT) KC Fed George speaks at Kansas City dinner.
FX Beat
DXY: The dollar gained as upbeat US consumer confidence and services PMI data strengthened the bid tone around the greenback. The dollar index against a basket of currencies trades 0.1 percent up at 95.56, hovering towards a 1-week high of 95.67.
EUR/USD: The euro edged up, after retreating from an 11-day high of 1.1279 touched on Monday. The major tumbled to a low of 1.1190 in the previous session after concerns surrounding Deutsche Bank caused general unease over Europe's banking sector . However, the pair rebounded to close above the 1.1200 handle. The European currency trades flat at 1.1209, attempting to sustain gains above the 1.1200. Markets eagerly await U.S. durable goods orders release, ahead of ECB President Dragi's speech and Fed Yellen's testimony. Immediate resistance is located at 1.1240 (Sept 23 High), break above could take it till 1.1280/ 1.1300. On the downside, support is seen at 1.1191 (Previous Session Low), break below could drag it till 1.1155.
USD/JPY: The dollar gained, extending its recovery from the previous session as overall positive markets sentiment weighed on the safe-haven yen. On Tuesday, the major touched a high of 100.98 from a 1-month low of 100.08, after BoJ July meeting minutes showed concerns about the failure to achieve the desired range of inflation target and economic growth. The Japanese yen trades 0.2 percent lower at 100.65, pulling way from a high of 100.08, it’s highest since August 26. Investor’s attention now shifts towards U.S. durable goods and Fed Chair Yellen’s testimony on supervision and regulation before the Committee on Financial Services. Immediate resistance is located at 101.00, break above targets 101.30/ 101.87 (20-DMA). On the downside, support is seen at 100.08 (Previous Session Low), break below could take it lower 100.00.
GBP/USD: Sterling eased as triggering Article 50 in early 2017 will cost Britain to lose access to Europe's single market and raise stringent barriers on immigration and trade. The major slumped to a 6-week low of 1.2914 last week, however, it has managed to regain some ground to trade above the 1.3000 handle. The pair trades flat at 1.3002, attempting o sustain gains above the 1.3000 level. In absence of relevant data from the UK, markets will continue to track broader market sentiment ahead of U.S. economic data and Fed Yellen's testimony followed by Fed official speeches. Immediate resistance is located at 1.3050, break above could take it near 1.3120. On the downside, support is seen at 1.2945, break below targets 1.2910. Against the euro, the pound trades 0.1 percent lower at 86.20 pence, after recovering from a low of 87.16 pence touched on Monday.
AUD/USD: The Australian dollar rose, extending gains for the third consecutive session, as global risk sentiment strengthened. However, gains in major remained capped as the first U.S. election debate and upbeat U.S. data supported the American dollar against its major peers. The Aussie trades 0.1 percent higher at 0.7675, hovering near 3-week high of 0.7695 struck in the previous session. The movement in the pair will be driven by overall market sentiment ahead of the U.S. durable goods data and Yellen’s speech. Immediate support is seen at 0.7648 (5-DMA), break below could drag it till 0.7602. On the upside, resistance is located at 0.7700), break above targets 0.7730/ 0.7760.
NZD/USD: The New Zealand dollar declined, reversing most of its previous session gains. The major failed to sustain the bullish momentum and halted its 2-day rally amid persistent weakness in oil prices and a stronger U.S. dollar. The Kiwi trades 0.2 percent lower at 0.7283, hovering just above a 1-month low of 0.7220 hit earlier this week. The pair will continue to track sentiments surrounding oil prices, ahead of U.S. macro fundamental data, Yellen’s testimony and weekly crude stockpiles report. Immediate resistance is located at 0.7313 (20-DMA), break above targets 0.7350/ 0.7370 (2-weeks High). On the downside, support is seen at 0.7254 (Sept 19 Low), break below could drag it till 0.7200.
Equities Recap
Asian shares traded in the negative territory as investors raised concerns over European banking sector and lower crude oil prices dampened investors' appetite for riskier assets.
MSCI's broadest index of Asia-Pacific shares outside Japan erased earlier modest gains and was down 0.1 percent.
Tokyo's Nikkei rose 0.84 percent at 16,683.93 points, Australia's S&P/ASX 200 index fell 0.4 percent at 5,409.90 points
Shanghai composite index declined 0.21 percent at 2,992.37 points, while CSI300 index was trading 0.12 percent lower at 3,237.19 points.
Hong Kong’s Hang Seng was trading 0.60 percent down at 23,431.10 points and South Korea's KOSPI shed 0.48 percent at 2,052.93 points.
Commodities Recap
Crude oil prices tumbled, extending previous session's 3 percent fall after Iran disapproved an offer from Saudi Arabia to hold its oil output in exchange for Riyadh cutting supply. International benchmark Brent crude was trading 0.2 percent lower at $46.12 per barrel at 0353 GMT, hovering towards a 1-week low of $45.62 hit on Tuesday. U.S. West Texas Intermediate crude declined 0.67 percent at $44.63 a barrel, having touched a low of $44.16 in the previous session, its lowest since September 20.
Gold was little changed, after declining nearly 1 percent in the previous session , as the dollar index firmed following the first U.S. presidential debate. Spot gold was flat at $1,325.40 an ounce by 0359 GMT, while U.S. gold futures eased 0.1 percent to $1,329.30 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5650 percent higher by 0.009 bps, while 5-year was 0.008 bps up at 1.1314 percent.
The Australian government bonds were pushed modestly higher, alongside weakness in the equity market during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.003 percent, the yield on long-term 15-year note also dipped nearly 1 basis point to 2.369 percent and the yield on short-term 2-year slid 2-1/2 basis points to 1.587 percent.
New Zealand's 10-year bond yields relapsed towards two percent mark as investors speculated that the Reserve Bank of New Zealand 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 2.335 percent, the yield on 7-year note ended 1 basis point lower at 2.090 percent and the yield on short-term 2-year note also slid 1 basis point to 1.920 percent.
Canadian government bond prices were higher across a flatter yield curve, with the 2-year up 0.5 Canadian cent to yield 0.497 percent and the benchmark 10-year rising 28 Canadian cents to yield 0.965 percent. The 10-year yield touched its lowest since Aug. 11 at 0.944 percent in the previous day.
