- Japan PM Abe wins second consecutive term, no challenger at party leadership vote, to keep priority on economy in next three-year term.
- Economy Min Amari - Wants companies to channel record high earnings into CAPEX, Q2 GDP little changed excluding inventories, China adjustments will have some impact on Japan.
- Japan Q2 GDP revised -0.3% q/q, -1.2% AR, -0.4%/-1.8% eyed, prelim -0.4%/-1.6%, CAPEX rev -0.9% q/q, -0.8% eyed, prelim -0.1%, private consumption -0.7%, prelim -0.8%, external demand contribution -0.3%, domestic zero, prelim -0.1%.
- Japan July current account balance trln surplus, trln eyed, narrowing trade deficit and rising income from overseas investments cited.
- MoF August flow data - Japanese buy net trln foreign stocks, trln bonds (US Tsys favored), Y235.0 bln bills; foreign investors sell net trln Japanese stocks, buy trln bonds, sell trln bills.
- Japan August outstanding bank loans trln, +2.7% y/y, July +2.6%, June +2.5%, loans by major banks up.
- China August trade surplus bln, exports -6.1% y/y, imports -14.3%; $60.24 bln surplus, exports -5.5%, imports -13.8%, $48.2 bln/-6%/-8.2% eyed.
- Moody's - Lowers Asia growth forecasts on slowing exports, subdued demand.
- Australia August NAB business conditions index +11, confidence +1, July +6, +4.
- NZ primed for aggressive rate cuts as inflation and economy fade.
- Stats NZ revise quarterly, annual inflation figures, Q1 +0.3% AR, Q2 +0.4%.
- NZ Q2 manufacturing sales -0.2% q/q, Q1 -0.3%.
- SF Fed Williams sees rate hike this year if risks dissipate.
- UK August BRC like-for-like retail sales -1.0% y/y, total sales +0.1% y/y, both lowest since April, July +1.2%, +2.2%.
- Germany July trade balance decrease to 22.8 bln Euro (forecast 22.3 bln Euro) vs previous 24.0 bln Euro.
- Switzerland unadjusted jobless rate at 3.2 pct in August vs 3.1 pct in July.
- Switzerland adjusted jobless rate at 3.3 pct in August vs 3.3 pct in July.
- (0245 ET/0645 GMT) France July trade balance, E 3.1 bln deficit eyed; last E 2.7 bln deficit.
- (0245 ET/0645 GMT) France July budget balance; last E58.5 bln deficit.
- (0500 ET/0900 GMT) EZ Q2 GDP - revised, +0.3% q/q, +1.2% y/y eyed; prelim +0.3%, +1.2%.
- (0600 ET/1000 GMT) US August NFIB business optimism index; last 95.4.
- (1000 ET/1400 GMT) US September employment trends index; last 127.9.
- (1500 ET/1900 GMT) US July consumer credit, $18.5 bln eyed; last $20.74 bln.
Key Events Ahead
- N/A ESM E2.5 bln 3-month bill auction.
- (0400 ET/0800 GMT) Netherlands E0.5-1.5 bln 2.75% 2047 DSL auction.
- (0530 ET/0930 GMT) Germany E1 bln 0.5% 2030 linker Bund, UK GBP2 bln 3.5% 2045 Gilt auctions.
- (0530 ET/0930 GMT) ECB 7-day refinance at fixed 0.05%, E70 bln allotment eyed, last bln.
- (1030 ET/1430 GMT) UK ChancExch Osborne parliamentary testimony.
- (1715 ET/2115 GMT) Minny Fed Kocherlakota speaks at Evanston central bankers workshop.
FX Recap
EUR/USD is supported above 1.1200 levels and currently trading at 1.1211 levels. It has made intraday high at 1.1223 and low at 1.1153 levels. The safe-haven status of the shared currency received fresh momentum as risk-off sentiment gripped in Asia following the release of China's August trade data, driving EUR/USD to fresh session highs beyond 1.1200 levels. There is limited macro data to be published in the session ahead; markets will continue to digest the China news, also tracking the moves in the European indices, which is expected to influence the funding currency in the euro. Initial support is seen around at 1.1015 and resistance at 1.1363 levels.
USD/JPY is supported above 119.00 levels and posted a high of 119.53 levels. It has made intraday low at 118.85 and currently trading at 119.08 levels. Data from Tokyo on Tuesday showed Japan's current account surplus expanded from ¥558.6 billion in June to ¥1.81 billion in July, which was stronger than the forecast surplus of ¥1.75 trillion. Moreover, Demand for safe-haven currencies increased on Tuesday after Chinese data showed exports continued to decline in August, raising yet more concerns about the health of the world's second largest economy. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.
GBP/USD is supported above $1.5300 levels. It made an intraday high at 1.5323 and low at 1.5268 levels. Pair is currently trading at 1.5317 levels. Sterling rose against most of its major peers and halted a 9-day slump, as hopes of renewed stability on stocks markets in China helped to improve investors' moods ahead of the BoE meeting later this week. Moreover, investors are looking forward to a new monetary policy decision at the upcoming meeting of the Bank of England later this week. Initial support is seen at 1.5185 and resistance is seen around 1.5436 levels.
NZDUSD is supported below 0.6300 levels and trading at 0.6283 levels and made intraday low at 0.6257 and high at 0.6285 levels. The Kiwi also tracks the higher and rebounds from fresh six and a half year lows, still keeping range below 0.63 handle as markets remain cautious ahead of Chinese CPI and RBNZ cash rate statement due later this week for further direction. Moreover, Thursday's, RBNZ cash rate statement may also be closely watched as markets widely anticipate a rate cut in order to counter the effects of the recent China fears. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUD/USD is supported below 0.7000 levels and trading at 0.6955 levels. It has made intraday high at 0.6970 levels and low at 0.6923 levels. The Australian dollar shot higher against the greenback on Tuesday after a business survey revealed a sharp rise in conditions last month in Australia. However, some economists see further downside for the currency as fears over China persist. National Australia Bank's (NAB) Business Conditions Index surged from 6 in July to 11 last month, the strongest reading since October, where a reading above zero signals an improvement in conditions. Initial support is seen at 0.6908 and resistance at 0.7122 levels.
Equity Recap
Japan's benchmark Nikkei 225 index slipped 0.19% lower to 17,827.28 points within the first hour of trade, while Tokyo's broader Topix gauge was flat at 1,446.07 points.
Hong Kong's benchmark Hang Seng index advanced 0.32% to 20,649.09 points at the opening bell, but mainland China's benchmark Shanghai Composite tumbled 1.03% to 3,048.58 points at the same time.
Korea's benchmark Kospi index was little down at 1,882.04 points this morning in Seoul.
The benchmark Australian S&P/ASX 200 index rallied 0.95% to 5,078.20 points in Sydney, with a string of oil and gas stocks leading the pack after oil futures started Tuesday on a strong note.
New Zealand's benchmark S&P/NZX 50 index rose 0.67% to 5,610.07 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes up 1.47 pct at 5,104.20 points.
Tokyo's Nikkei average closes down 2.43 pct at 17,427.08.
Treasury Recap
Thailand 30 bln baht, 92-day central bank bond average accepted yield 1.43863 pct.
Thailand 29 bln baht, 182-day central bank bond average accepted yield 1.49271 pct.
Japan 06-month treasury discount bill auction lowest price 100.0010, average price 100.0040, bids accepted at lowest price 38.8938 pct. Japan 30-year JGB auction highest yield 1.4160 pct, bids accepted at highest yield 57.2545 pct, lowest price 99.6500, and coupon 1.40 pct.
10-year US treasury yield at 2.131 percent vs US close of 2.128 percent on Friday.
Commodity Recap
Gold steadied on Tuesday after a four-day losing streak as the dollar eased, but the metal wasn't too far from a 2-1/2-week low as it struggled to find direction amid uncertainty over a looming U.S interest rate hike. Spot gold ticked up 0.2 percent to $1,121.16 an ounce by 0331 GMT. It slid to $1,116.20 on Monday; it's lowest since Aug. 19. U.S. gold was little changed at $1,120.70.
Crude oil futures were trading flat-to-higher on Tuesday, following a huge slump on Monday, with prices now supported by a weakening US dollar. Futures for WTI gained 0.11% to trade at $44.29 per barrel, following an over 3% loss posted on Monday. However, all electronic transactions made on Monday will be booked with Tuesday's prices for settlement purposes due to the Labor Day holiday.
