Market Roundup
- Australia PM Turnbull clings to power, offers fresh leadership vote
- Australia bans China's Huawei from mobile network build over security fears
- U.S., China impose further tariffs, escalating trade war
- Fed officials suggest rates likely to rise soon, worry about trade war
- Trump, White House deny wrongdoing after Cohen plea deal
- U.S. Democrats seek to make Republican scandals an election issue
- Turkey accuses U.S. of waging 'economic war' in pastor dispute
- Trump says wants Pompeo to 'closely study' S. African land seizures, farm killings
- Britain to set out advice on how to prepare for a 'no deal' Brexit
- Japan Aug Nikkei Mfg PMI Flash, 52.5, 52.3 prev
- Japan 18 Aug, w/e Foreign Bond Investment, -1,929.4 bln, 123.9 bln prev
- Japan 18 Aug, w/e Foreign Invest JP Stock, -510.6 bln, -107.1 bln prev
Economic Data Ahead
- (0330 ET/0730 GMT) Germany Aug Markit Comp Flash PMI, 55.2 f'cast, 55.0 prev
- (0400 ET/0800 GMT) EZ Aug Markit Comp Flash PMI, 54.5 f'cast, 54.3 prev
- (0400 ET/0800 GMT) EZ Aug Markit Mfg Flash PMI, 55.0 f'cast, 55.1 prev
- (0400 ET/0800 GMT) EZ Aug Markit Serv Flash PMI, 54.4 f'cast, 54.2 prev
- (0600 ET/1000 GMT) Great Britian Aug CBI Distributive Trades, 13 f'cast, 20 prev
- (1000 ET/1400 GMT) EZ Aug Consumer Confid. Flash, -0.70 f'cast, -0.60 prev
Key Events Ahead
- (0500 ET/0900 GMT) Bundesbank president Weidmann speaks in Berlin
FX Beat
DXY: The dollar index rebounded from near 2-week lows after the minutes showed the Federal Reserve officials discussed hiking interest rates soon to counter U.S. economic strength. The greenback against a basket of currencies trades 0.3 percent up at 95.33, having touched a low of 94.93 the day before, its lowest since August 2. FxWirePro's Hourly Dollar Strength Index stood at -58.36 (Bearish) by 0500 GMT.
EUR/USD: The euro eased after rising to a 2-week peak in the previous session, as the greenback surged following the Federal Reserve’s minutes released yesterday that showed the policymakers are on course to continue gradually raising interest rates. The Fed has hiked interest rates twice this year and is widely expected to tighten policy again next month after keeping rates unchanged at its last meeting. The European currency traded 0.4 percent down at 1.1554, having touched a high of 1.1622 on Wednesday, its highest since August 8. FxWirePro's Hourly Euro Strength Index stood at 116.24 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on series of data from Eurozone economies, ahead of U.S. new home sales, unemployment benefit claims, housing price index and prelim Markti PMI's. Immediate resistance is located at 1.1628 (August 8 High), a break above targets 1.1667 (August 2 High). On the downside, support is seen at 1.1492 (5-DMA), a break below could drag it till 1.1450 (10-DMA).
USD/JPY: The dollar surged to a 6-day against the Japanese yen after minutes of the Federal Reserve's latest policy meeting suggested the U.S. central bank is poised to further raise interest rates this year. Investors now await the U.S. New homes Sales data after the FOMC minutes revealed that members are concerned about the housing market. The major was trading 0.3 percent up at 110.91, having hit a high of 110.91 earlier, its highest since August 17. FxWirePro's Hourly Yen Strength Index stood at -105.46 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. new home sales, unemployment benefit claims, housing price index and prelim Markit PMI's. Immediate resistance is located at 110.80 (61.8% retracement of 111.43 and 109.77), a break above targets 111.08 (78.6% retracement). On the downside, support is seen at 110.45 (5-DMA), a break below could take it lower 109.68 (June 27 Low).
GBP/USD: Sterling declined, halting 5-day winning streak on concerns whether British and EU officials will meet an informal October deadline to reach an agreement. The major traded 0.3 percent down at 1.2874, having hit a high of 1.2936 on Wednesday; it’s highest since August 8. FxWirePro's Hourly Sterling Strength Index stood at 50.35 (Bullish) 0500 GMT. Investors’ attention will remain on the UK CBI Distributive Trades Survey, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2977 (61.8% retracement of 1.3173 and 1.2661), a break above could take it near 1.3173 (July 26 High). On the downside, support is seen at 1.2812 (5-DMA), a break below targets 1.2783 (10-DMA). Against the euro, the pound was trading flat at 89.75 pence, having hit a low of 90.05 on Wednesday, it’s lowest since August 9.
AUD/USD: The Australian dollar slumped to a 6-day low amid growing political uncertainty after several senior ministers resigned, raising questions over Prime Minister Malcolm Tunrbull's leadership. The Aussie trades 0.2 percent down at 0.7355, having hit a high of 0.7318 on Tuesday; it’s highest since August 9. FxWirePro's Hourly Aussie Strength Index stood at 103.46 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7256 (August 13 Low), a break below targets 0.7202 (August 15 Low). On the upside, resistance is located at 0.7381 (August 21 High), a break above could take it near 0.7411 (August 3 High).
NZD/USD: The New Zealand dollar edged down after rising to a near 2-week peak the day before as the greenback gained following Federal Reserve's latest policy meeting minutes. The Kiwi trades 0.3 percent down at 0.6675, having touched a high of 0.6720 on Wednesday, its highest level since 9 August. FxWirePro's Hourly Kiwi Strength Index was at 36.52 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6740, a break above could take it near 0.6790. On the downside, support is seen at 0.6649 (5-DMA), a break below could drag it below 0.6579 (August 17 Low).
Equities Recap
Asian shares eased as a new round of U.S. tariffs on $16 billion worth of Chinese imports took effect, while the greenback rebounded on expectations of further U.S. interest rate hikes this year.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.1 percent.
Tokyo's Nikkei surged 0.2 percent to 22,410.82 points, Australia's S&P/ASX 200 index eased 0.3 percent to 6,244.40 points, and South Korea's KOSPI gained 0.4 percent to 2,281.51 points.
Shanghai composite index rose 0.6 percent to 2,730.04 points, while CSI300 index traded 0.6 percent up at 3,327.79 points.
Hong Kong’s Hang Seng traded 0.5 percent lower at 27,799.20 points. Taiwan shares added 0.6 percent to 10,863.13 points.
Commodities Recap
Crude oil prices eased, weighed down by the escalating trade dispute between the United States and China, however, a drop in U.S. commercial crude inventories limited downside. International benchmark Brent crude was trading 0.4 percent down at $74.60 per barrel by 0458 GMT, having hit a high of $74.97 the day before, its highest since July 31. U.S. West Texas Intermediate was trading 0.3 percent lower at $67.88 a barrel, after rising as high as $68.12 on Wednesday, its highest since August 14.
Gold prices declined, after hitting their highest in over a week in the previous session, as worries of another round of U.S. tariffs on China and expectations of higher interest rates boosted the greenback. Spot gold was 0.3 percent down at $1,191.16 an ounce at 0505 GMT, having hit a high of $1201.46 on Wednesday, its highest since August 14. U.S. gold futures were down 0.3 percent at $1,200 an ounce.
Treasuries Recap
The Japanese government bonds remained range-bound during late Asian session ahead of the country’s national consumer price inflation (CPI) data for the month of July, scheduled to be released today by 23:30GMT. However, risk sentiments remain supported in a muted trading that witnessed data of little economic significance. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained flat at 0.093 percent, the yield on the long-term 30-year note hovered around 0.845 percent and the yield on short-term 2-year too traded steady at -0.118 percent.
The Australian bonds gained across the curve after Prime Minister Malcolm Turnbull’s three cabinet members resigned and supported Peter Dutton for the next prime minister and Liberal leader. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.526 percent, the yield on the long-term 30-year bond also dipped 1-1/2 basis points to 3.031 percent and the yield on short-term 2-year slumped 2-1/2 basis points to 1.984 percent.
The Canadian government bond prices were mixed across a flatter yield curve, with the 10-year rising 3 Canadian cents to yield 2.254 percent. The gap between the two-year and 10-year yields shrank by 1.4 basis points to a spread of 14.5 basis points, its narrowest since November 2007.
