Market Roundup
- Japan MoF Asakawa – G20 debated global risks, impact of ultra-easy monetary policy, agreed on risks, need to do more – Reuters.
- BoJ Gov Kuroda calls for quick solution to EZ banking woes, BoJ policy has not reached its limits – Reuters.
- Japan Aug total cash earnings -0.1% y/y, first drop in three months, real wages +0.5% but overtime -1.9%, special pay incl bonuses -7.7%.
- BFCM prices Y121.2 bln three-tranche samurai via Daiwa, Mizuho, Nomura – IFR.
- China Sept FX reserves fall more than forecast to $3.166 trln, down most in four Months, end-Aug $3.185 trln.
- IMF – US rate hike could disrupt Asian capital flows, China should be able to manage yuan transition – Reuters.
- Foreign CB US debt holdings +$8.954 bln to $3.152 trln Oct 5 week, Treasury Holdings +$8.427 bln to $2.831 trln, agencies +$579 mln to $260.757 bln.
- NY Fed – Swaps with foreign CBs $7.003 bln Oct 5 week, ECB $6.348 bln, BoJ $655 mln.
- Lipper – US-based stock funds post $9.1 bln outflows in latest week.
- Hammond and BoE Carney quell talk of monetary policy split – Financial Times.
- France Pres Hollande – EU must be tough after UK opts for hard Brexit – FT.
- ECB ChiefEcon Praet – ECB committed to keeping policy ultra-easy – Reuters.
- UK hiring steady in September but temp pay growth slows - REC.
- Reuters poll – AUD, NZD forecasts turn less bearish as yield appeal grows.
- Australia to sell first 30.5 year bond next week via ANZ, Citi, CBA et al.
- Australia Sept PCI +4.8 points to 51.4, back in expansion.
- Australia lifts iron ore price forecast 10% on China demand - Reuters.
Economic Data Ahead
- (0245 ET/0645 GMT) France Aug industrial output, +0.7% m/m forecast; last -0.6%.
- (0245 ET/0645 GMT) France Aug c/a, trade, budget balances; last E2.6, E4.5, 80.85 bln deficits.
- (0300 ET/0700 GMT) Spain Aug industrial output, +0.9% y/y forecast; last +0.3%.
- (0430 ET/0830 GMT) Great Britain Aug industrial output, +0.1% m/m, +1.3% y/y forecast; last +0.1%, +2.1%.
- (0430 ET/0830 GMT) Great Britain Aug mfg output, +0.5% m/m, +0.9% y/y forecast; last -0.9%, +0.8%.
- (0430 ET/0830 GMT) Great Britain Aug trade bal, GBP11.3 bln deficit forecast; last GBP11.76 bln deficit.
- (0430 ET/0830 GMT) Great Britain Aug - non-EU, GBP 3.7 bln deficit forecast; last GBP 4.19 bln deficit.
- (0830 ET/1230 GMT) United States Sep non-farm payrolls, +175k forecast; last +151k.
- (0830 ET/1230 GMT) United States Sep unemployment, 4.9% forecast; last 4.9%, participation 62.8%.
- (0830 ET/1230 GMT) United States Sep average workweek, 34.4 hrs forecast; last 34.3 hrs.
- (0830 ET/1230 GMT) United States Sep average earnings, +0.2% m/m forecast; last +0.1%.
- (1000 ET/1400 GMT) United States Aug wholesale inventories, -0.1% m/m forecast; last -0.1%.
- (1000 ET/1400 GMT) United States Aug wholesale sales, +0.2% m/m forecast; last -0.4%.
- (1500 ET/1900 GMT) United States Aug consumer credit, $16.5 bln forecast; last $17.71 bln.
Key Events Ahead
- China markets closed all week/to re-open Monday.
- (0600 ET/1000 GMT) UK DMO GBP0.5/1.0/3.0 bln 1/3/6-month treasury bill auctions.
- N/A IMF/World Bank annual meetings (till Oct 9)/20:00 US TsySec Lew presser.
- N/A IIF meeting in Washington, DC, various speakers incl FOMC Fischer.
- (1030 ET/1430 GMT) BoC business outlook survey.
- (1245 ET/1645 GMT) Cleveland Fed Mester speaks at NY ShadowOMC luncheon.
- (1540 ET/1940 GMT) SF Fed VP Daly speaks in Phoenix, AZ.
FX Beat
DXY: The dollar nudged down from a 1-month high versus the yen, but was higher against the euro as investors eagerly await non-farm payroll data for insights on the strength of U.S. labor market. The greenback against a basket of currencies trades 0.3 percent up at 96.24, having touched a 2-month high of 97.14 earlier in the session.
EUR/USD: The euro declined, extending previous session losses, as the bid tone around the dollar strengthened on expectations of stronger-than-expected non-farm payrolls figures. The NFP report for the month of September is likely to show that U.S. economy added 172,000 jobs as compared to previous 151K job additions in August. Upbeat employment report could influence the Federal Reserve to hike U.S. interest rate this year. The European currency trades 0.3 percent lower at 1.1116, having touched a 2-month low of 1.1110, earlier in the session, Markets eye U.S. jobs report and wage growth numbers, in absence of relevant data from the Eurozone. Immediate resistance is located at 1.1165, break above could take it till 1.1151 (5-DMA). On the downside, support is seen at 1.1100, break below could drag it till 1.1070.
USD/JPY: The dollar edged down, pulling way from a 4-week high struck in the previous session, as renewed Brexit concerns triggered risk-off sentiment, strengthening the bid tone around safe-haven yen. However, the major recovered after declining to an intra-day low of 103.58, as increased expectations of U.S. interest rate hike supported the greenback. The Japanese yen trades 0.1 percent up at 103.79, but within the sight of a low of 104.15, its lowest since September 2. Markets will continue to track overall risk-off market profile, ahead of the key U.S. payrolls data due later in the day. Immediate resistance is located at 104.32, break above targets 104.80/105.00. On the downside, support is seen at 103.14 (5-DMA), break below could take it near 102.80.
GBP/USD: Sterling slumped almost 10 percent to a 3-decade low as increasing concerns of a "hard" exit by Britain from the European Union, weakened investors sentiment. However, the major recouped some losses after hitting a low of 1.1992 in early Asian trade, its lowest levels since the mid-1980, but was on track for a weekly loss of 4.2 percent. Sterling trades 1.44 percent lower at 1.2432, attempting to sustain gains above the 1.2400 handle. Investors will continue to track broad based markets sentiment ahead of series of U.K economic data. Immediate resistance is located at 1.2672 (5-DMA), break above could take it near 1.2700. On the downside, support is seen at 1.1992 (Session Low), break below targets 1.1900. Against the euro, the pound trades 1.18 percent down at 89.38 pence, having touched a 7-year low of 92.25 earlier in the session.
AUD/USD: The Australian dollar declined, extending losses for the second consecutive session, as upbeat U.S. manufacturing and services PMI figures released earlier this week increased the probability of a better-than-expected non-farm payrolls report. The major slumped to a fresh 2-week low earlier in the session, however, it recovered some ground as it found support from stronger-than-expected Australia's AiG performance of construction index, which rose to 51.4 for the month of September versus 46.6 in the previous month. The Aussie trades 0.1 percent lower at 0.7574, having touched an early low of 0.7561, its lowest since September 21. Investors now await U.S. NFP print for further insight on U.S. labour market. Immediate support is seen at 0.7534, break below could drag it till 0.7525/ 0.7500. On the upside, resistance is located at 0.7600, break above targets 0.7620/0.7650.
NZD/USD: The New Zealand dollar tumbled, hitting fresh 2-month low, as the greenback gained on the back of upbeat U.S. data, bolstering expectations of a Federal Reserve rate hike this year. The major extended its losses for the fourth consecutive session, largely on the back of disappointing GDT auction earlier this week, combined with RBNZ easing speculation and U.S. dollar strength. The Kiwi trades 0.4 percent lower at 0.7133, having touched a low of 0.7125, its weakest since August 9. The movement in the pair will be driven by overall market sentiment, ahead of US non-farm payroll print. Immediate resistance is located at 0.7190 (5-DMA), break above targets 0.7220/ 0.7250. On the downside, support is seen at 0.7110, break below could drag it till 0.7080.
Equities Recap
Asian shares slipped, but traded within the sight of 14-month high touched last month as markets await U.S. non-farm payroll data amid growing Brexit concerns.
MSCI's broadest index of Asia-Pacific shares outside Japan eased around 0.2 percent.
Chinese banks are closed in observance of National Day.
Tokyo's Nikkei dropped 0.23 percent at 16,830.09 points, Australia's S&P/ASX 200 index fell 0.32 percent at 5,465.70 points and South Korea's KOSPI lost 0.45 percent at 2,055.94 points.
Hong Kong’s Hang Seng was trading 0.4 percent down at 23,840.25 points. Taiwan shares shed 0.2 percent at 9,265.81 points.
Commodities Recap
Crude oil prices edged down, halting its 7-day winning streak, but held above $50 per barrel level. International benchmark Brent crude was trading 0.2 percent down at $52.43 per barrel at 0416 GMT, having touched a 4-month high of $52.69 in the previous session. U.S. West Texas Intermediate crude eased 0.3 percent at $50.39 a barrel, after rising as high as 50.60 in the prior session, its highest since June 10.
Gold slumped for the eight consecutive sessions, edging down to a 4-month low and was set for its worst weekly fall in nearly a year on growing expectations of a U.S. rate rise by year end. Spot gold was trading lower at $1,253.68 an ounce by 0421 GMT, having touched a 4-month low of $1,249.70 in the prior session. U.S. gold futures rose 0.5 percent to $1,258.90 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7269 percent lower by 0.015 bps, while 5-year was 0.01 bps down at 1.2714 percent.
The Japanese government bonds traded nearly flat as investors refrained from engaging in bulky trading activity following a day of little significant data. The yield on the benchmark 10-year bonds hovered around -0.056 percent mark, the yield on long-term 40-year note remained steady at 0.58 percent and the yield on short-term 2-year bonds stood flat at -0.27 percent.
The Australian government bonds traded modestly lower as investors remained optimistic about the upcoming United States employment report. he yield on the benchmark 10-year Treasury note rose 1-1/2 basis point to 2.183 percent, the yield on 15-year note jumped 2-1/2 basis points to 2.559 percent and the yield on short-term 2-year climbed 1-1/2 basis points to 1.675 percent.
The New Zealand government bonds traded flat during a relatively quiet Friday session that saw little data of much significance. The yield on benchmark 10-year bond hovered around 2.51 percent mark, yield on 7-year note also remained steady at 2.24 percent and the yield on short-term 2-year note slid 1-1/2 basis points at 1.975 percent.
Canadian government bond prices were lower across the maturity curve. The 2-year fell 1 Canadian cent to yield 0.584 percent, and the benchmark 10-year declined 44 Canadian cents to yield 1.139 percent.
