Market Roundup
- BoJ to explore delving deeper into negative rates, mull making negative rates centerpiece of future easing - Nikkei.
- Japan PM Abe – Economy escaping deflation, BoJ policy spreading to real economy, downside risks to global economic outlook rising – Reuters.
- Most Japanese regional banks will lose money on lending in '25 – Nikkei.
- Japan Aug Tokyo area apartment sales -24.7% y/y, contracts sub-70% at 66.6%.
- Japan logs biggest jump in medical costs in five years – Nikkei.
- China CB working on Shanghai-London stock connect – Securities Times.
- Australia 30-year bond debut seen drawing solid demand – Reuters.
- Australia Sept Westpac/MI consumer confidence index +0.3% to 101.4, +8% y/y.
- New Zealand Q2 c/a deficit NZ$945 mln, year-to-June deficit NZ$7.38 bln, NZ$400 mln and NZ$6.74 bln forecast, deficit -2.9% of GDP, -2.7% forecast
- New Zealand Aug REINZ median house prices -2% m/m, +6% y/y, sales -0.2% m/m.
Economic Data Ahead
- (0330 ET/0730 GMT) Sweden Q2 GDP – revised; prelim +0.3% q/q, +3.1% y/y.
- (0400 ET/0800 GMT) Italy Aug CPI - final, +0.2% m/m, -0.1% y/y forecast; flash +0.2%, -0.1%.
- (0400 ET/0800 GMT) Italy Aug HICP – final, unch m/m, unch y/y forecast; flash unch, unch.
- (0430 ET/0830 GMT) Great Britain Aug claimant count, +1.8k forecast; last -8.6k.
- (0430 ET/0830 GMT) Great Britain Jul ILO unemployment, 4.9% forecast; last 4.9%.
- (0430 ET/0830 GMT) Great Britain Jul average weekly earnings – 3-mo avge, +2.1% y/y forecast; last +2.4%.
- (0430 ET/0830 GMT) Great Britain Jul - ex-bonus, +2.2% y/y forecast; last +2.3%.
- (0500 ET/0900 GMT) Eurozone Jul industrial output, -0.9% m/m, -0.7% y/y forecast; last +0.6%, +0.4%.
- (0500 ET/0900 GMT) Switzerland Sep ZEW investor sentiment index; last -2.8.
- (0830 ET/1230 GMT) United States Aug import/export prices, -0.1/+0.1% m/m forecast; last +0.1%, +0.2%.
Key Events Ahead
- N/A India-US Economic Summit in New Delhi (till tom).
- N/A Vienna central bankers meeting (final day), various speakers-attendees.
- N/A Norway NOK2 bln 1.5% 2026 NST478 bond auction.
- (0300 ET/0700 GMT) EC Pres Juncker annual parliamentary address in Strasbourg.
- (0500 ET/0900 GMT) Greece E1 bln 13-week treasury bill auction.
- (0530 ET/0930 GMT) Germany E1 bln 2.5% 2044 Bund auction.
- (0530 ET/0930 GMT) UK DMO GBP800 mln 0.125% 2046 index-linked Gilt auction.
- (0530 ET/0930 GMT) Portugal E0.75-1.0 bln 4.95% and 4.1% 2023 and 2037 bond auctions.
- (0550 ET/0950 GMT) RBA AsstGov Debelle speaks at London Trade Tech FX Europe conference.
- (0615 ET/1015 GMT) BoC DepGov Wilkins speaks at London OMFIF event.
FX Beat
DXY: The dollar index, against a basket of currencies edged down to 95.54, after rising to a 1-week high of 95.67 in the previous session.
EUR/USD: The euro gained, reversing some of previous session losses, as the dollar buying stalled across the board. On Tuesday, the major declined to a low of 1.1203 after ZEW Survey showed Eurozone's economic sentiment weakened for the month of September. The European currency trades 0.1 percent higher at 1.1226, after having bottomed out just ahead of 1.1200 levels in the last U.S. session. Investor’s attention will remain on Eurozone's industrial production, ahead of U.S. import and export price index for further cues on the pair. Immediate resistance is located at 1.1250, break above could take it till 1.1330. On the lower side, support is seen at 1.1200, break below could drag it near 1.1158.
USD/JPY: The dollar rallied after a report that the Bank of Japan is considering further monetary easing measures, including deepening interest rates further into the negative territory, weighed on the yen broadly. However, the major trimmed gains and slipped below 103 handle, despite a recovery in the US treasury yields, as uncertainty over world's major central banks’ policy action continues to dampen investors’ sentiment. Data released earlier showed Japan's industrial production for the month of July slumping to 0.4 percent, while on an annualized basis it posted a decline of 4.2 percent. The major trades 0.4 percent higher at 102.98, after rising to a 1-week high of 103.19 earlier in the session. The pair will be driven by overall market sentiment ahead of U.S. import/export price index. Immediate resistance is located at 103.50, break above targets 104.00. On the downside, support is seen at 102.42 (Session Low), break below could take it near 102.00.
GBP/USD: Sterling steadied after tumbling more than 1 percent in the previous session, following downbeat UK inflation figures. On Tuesday, the major hit a 2-week low below the 1.3300 handle, as investors refocused on the risk that Britain's negotiations to leave the European Union could weaken the economy. Sterling trades 0.1 percent up at 1.3201, having touched a low of 1.3166 earlier in the session. Investors now await UK's unemployment and earnings data for further cues on the pair. Immediate resistance is located at 1.3234/ 1.3250, break above could take it near 1.3300. On the downside, support is seen at 1.3150, break below targets 1.3100. Against the euro, the pound was little changed at 85.04 pence, hovering away from a 2-week low of 85.33 pence hit in the previous session.
AUD/USD: The Australian dollar edged up, after declining to a 1-1/2 month low on Tuesday as traders unwound positions in high-yielding and risky assets on growing concerns that the world central banks were reaching the limits of policy stimulus. The major attempted a minor recovery as persisting risk sentiment appears to have improved slightly amid steadying crude oil prices, however, the gains were capped after Westpac consumer sentiment posted a weaker picture of the economy. The Westpac consumer confidence index for the month of September came in at 0.3 percent against previous 2.0 percent. The Aussie trades 0.3 percent higher at 0.7485, pulling away from a low of 0.7442, it’s lowest since July 27. Investor’s eye speech from RBA’s assistant governor Debelle and U.S. import/export prices for further momentum. Immediate support is seen at 0.7450, break below could drag it till 0.7400. On the upside, resistance is located at 0.7500, break above targets 0.7538 (5-DMA).
NZD/USD: The New Zealand dollar gained, reversing some of its overnight losses amid improving market sentiment across the board. The major strengthened as rebounding oil prices and a muted US dollar against its major currencies, boosted the bid tone around the Kiwi. Data released overnight showed New Zealand’s current account deficit expanding to $0.945 billion in the second quarter after posting a surplus of $1.184 billion in the previous quarter. The pair trades 0.2 percent higher at 0.7262, having hit near 2-week lows of 0.7234 in the previous session. Investors focus now shifts towards U.S. data and New Zealand's gross domestic product report due later in the day for fresh cues. Immediate resistance is located at 0.7299 (20-DMA), break above targets 0.7332. On the downside, support is seen at 0.7227, break below could drag it till 0.7200.
Equities Recap
Asian shares tumbled to fresh 6-week lows as markets wary on the diminishing impact of the global major central banks to stimulate growth, amid rising bond yields and soaring volatility.
The MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.2 percent, extending its decline since late last week to 4.2 percent.
Tokyo's Nikkei shed 0.7 pct at 16,614.24 points, Australia's S&P/ASX 200 index rose 0.33 pct at 5,225.10 points and South Korea's KOSPI gained 0.4 percent at 1,999.36 points.
Shanghai composite index slumped 0.6 percent at 3,005.62 points, while CSI300 index was trading 0.6 percent lower at 3,241.90 points.
Hong Kong’s Hang Seng was trading 0.01 percent up at 23,218.43 points. Taiwan shares shed 0.4 percent at 8,902.30 points.
Commodities Recap
Crude oil prices steadied after declining by as much as 3 percent in the previous session, as report from an industry group showed crude build of 1.4 million barrels for the week ended Sept. 9, smaller than the 3.8 million-barrel rise expected. Global benchmark Brent crude oil was trading 0.1 percent up at $47.22 per barrel at 0406 GMT, having dropped to a low of $46.94 from $48.20 on Tuesday. U.S. West Texas Intermediate crude rose 0.3 percent at $45.10 a barrel, pulling away from a low of $44.75 hit in the previous session.
Gold edged up, after slumping to an early near 2-week low, as the dollar strengthened against the yen. Spot gold was up 0.1 percent at $1,319.99 an ounce by 0413 GMT, having touched a low of $1313.19 earlier in the session, its lowest since September 2. U.S. gold futures eased 0.1 percent to $1,321.90 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7324 percent lower by 0.002, while 5-year was at 1.2456 percent down by 0.008 bps.
The Australian government bonds plunged as the United States 10-year Treasury yields broke the 1.70 percent mark on rising risk appetite among investors. The yield on the benchmark 10-year Treasury note rose 5-1/2 basis points to 2.168 percent and the yield on short-term 2-year climbed 2 basis points to 1.617 percent.
The New Zealand government bonds closed lower as investors moved away from the safe-haven buying on expectations of higher second-quarter gross domestic product (GDP). The yield on the benchmark 10-year bond rose 7-1/2 basis points to 2.555 percent, the yield on 7-year note also ended 5-1/2 basis point higher at 2.210 percent and the yield on short-term 2-year note remained steady at 1.96 percent mark.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The 2-year price fell 2.5 Canadian cents to yield 0.599 percent and the benchmark 10-year declined 68 Canadian cents to yield 1.229 percent. The 10-year yield touched its highest since June 23 at 1.250 percent.
