Market Roundup
- USD/JPY +0.15%, EUR/USD -0.22%, GBP/USD -0.25%
- DXY +0.22%, DAX -0.3%, Brent -0.12%, Gold -0.09%
- Merkel-Brexit negotiations won’t be easy
- Merkel- balanced budget not a fetishit is a necessity
- BoJ Gov Kuroda: Don't expect JGB supply to run out for QE
- Kuroda: BoJ QE will not lead to hyperinflation
- Blackrock’s Thiel-On current data BoE could pause monetary easing
- Germany Aug Ind. Orders +1.0% vs revised 0.3% previous, 0.2% expected
- Switzerland Sept CPI +0.1% m/m, -0.2% y/y vs -0.1% previous, +0.2/0.0% expected
- IMF – Global debt tops $152 trln, urges some to spend more – Reuters
- Joseph Stiglitz – Italy, others to leave EZ in coming years – Die Welt
- Australia Aug trade deficit A$2.01 bln, A$2.3 bln eyed
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 3,000 to a seasonally adjusted 267,000 for the week ended Sept 30 while continuing claims for the week ended Sept 16 stood at 2.062 m.
- (0830 ET/1230 GMT) The Statistics Canada is likely to report that building permits have increased by 3.0 percent in August from a 0.8 percent rise in July.
- N/A China releases Foreign Exchange Reserves report for the month of September.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending Sept 30.
- (1930 ET/ 2330 GMT) The Australian Industry Group (AiG) releases its Performance of Construction Index for the month of September. The index stood at 46.6 in the month of August.
Key Events Ahead
- (0745 ET/1145 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.775 bln
- (0830 ET/1230 GMT) U.S. Treasury Secretary Jack Lew will discuss the U.S. agenda for the upcoming International Monetary Fund and World Bank fall meetings at the Peterson Institute for International Economics.
- (1400 ET/1800 GMT) Atlanta Federal Reserve bank board president holds a public webcast to discuss how the bank will pick its next president.
- (1135 ET/1535 GMT) Bank of Canada Senior Deputy Governor Carolyn Wilkins will give a speech in Trois-Rivieres, Quebec.
FX Beat
DXY: The dollar gained versus the euro and the yen as recent upbeat U.S. economic data boosted expectations of Fed interest rate hike this year. The greenback against a basket of currencies trades 0.2 percent up at 96.38, hovering towards a high of 96.44 hit on Tuesday, its highest since August 9.
EUR/USD: The euro fell below the 1.1200 handle as the greenback gained across the broad after strong U.S ISM services figures bolstered expectations of imminent Fed interest rate hike. However, the downside was limited as the major found support from better-than-expected German factory orders data s.a in August, which rose 1.0 percent versus consensus of 0.2 percent and previous 0.3 percent. The European currency trades 0.1 percent down at 1.1186, having touched an intra-day high of 1.1212. The pair is facing resistance around trend line at 1.12510 and any violation above will directly take it till 1.1280/1.13270/1.13660. On the lower side, 1.1180 (100- day MA) will be acting as immediate support and any break below will drag it down till 1.1160 (200- day MA)/1.1120.
USD/JPY: The dollar rose against the Japanese yen, extending this week's 4-week highs as investors anticipate the Federal Reserve to hike U.S. interest rates in December. The pair trades 0.2 percent up at 103.67, having touched a high of 103.74, its highest since September 6. The major resistance is around 103.75 (100- day EMA) and break above targets 104.35 (Sep 2nd high)/105. On the lower side, major support is around 102.25 (daily Kijun-Sen) and any break below 102.25 will drag the pair till 101.95 (55- day EMA)/101.
GBP/USD: Sterling hovered just above its 31-year low as growing concerns of Brexit undermined the market sentiment. Britain' Prime Minister Theresa May gave a warning of the negative side effects of ultra-low interest rates and money-printing, strengthening views that the BoE policymakers are likely reaching a limit to monetary stimulus. Sterling was trading 0.2 percent lower at 1.2716, within the sight of a 31-year low of 1.2685 hit in the previous session. On the lower side, major support is around 1.2680 and any break below will drag the pair to next level till 1.2630/1.2600. The intraday resistance is around 1.2760 (3- day EMA) and any break above targets 1.2800/1.2863 (7- day EMA) in the short term. Against the euro, the pound trades 0.1 percent lower at 87.96, having touched a 5-year low of 88.42 pence on Wednesday.
USD/CHF: The Swiss franc declined, reversing most of its previous session gains as the greenback strengthened on rising expectations of U.S. interest rate hike this year. The dollar trades 0.4 percent up at 0.9783, hovering towards a high of 0.9828, its highest since September 1st. Data released earlier showed Switzerland's consumer price index in September edged up 0.1 percent, against estimates of 0.2 percent, but better than previous -0.1 percent. On the higher side, any close above 0.9800 (200- MA) will take the pair till 0.9890. The short term weakness can be seen only below 0.9730 and any break below targets 0.9680/0.9630.
AUD/USD: The Australian dollar tumbled to a fresh 2-week low as it failed to benefit from upbeat Australian trade balance data amid broad based U.S. dollar strengthen. The greenback rallied on the back of strong U.S. ISM services PMI for the month of September, which offset ADP-led losses and bolstered speculation of Fed interest rate hike this year. The Aussie trades 0.45 percent lower at 0.7585, having touched a low of 0.7573, its lowest since Sept. 21. On the higher side, major resistance is around 0.7645 and any break above will take the pair till 0.7680/0.7730. The major support is around 0.7585 (daily Kijun-Sen) and break below will drag it till 0.7530.
NZD/USD: The New Zealand dollar slumped, extending losses for fourth straight session, amid broadly stronger greenback. The major came under selling pressure following disappointing GDT Price Index data released on Tuesday, however, the offer tone around the Kiwi intensified after stronger-than-expected US ISM non-manufacturing print increased expectations over the timing of next Fed rate-hike action. The pair trades 0.2 percent lower at 0.7157, having touched fresh 7-week low 0.7146, earlier in the session. Immediate resistance is located at 0.7200, break above targets 0.7220 (5-DMA)/ 0.7250. On the downside, support is seen at 0.7121, break below could drag it till 0.7100.
Equities Recap
European shares rose, while gold hovered near 3-month lows on growing expectations that the U.S. interest rates will rise before the end of the year,
The pan-European STOXX 600 index decreased 0.28 percent at 343.23 points, while the FTSEurofirst 300 index fell 0.35 percent at 1,351.50 points.
Britain's FTSE 100 trades 0.33 percent down at 7,010.01 points, while mid-cap FTSE 250 declined 0.25 percent at 18,155.04 points.
Germany's DAX tumbled 0.3 percent at 10,557.54 points; France's CAC 40 trades 0.34 percent lower at 4,474.56 points.
Chinese banks will be closed in observance of National Day.
Tokyo's Nikkei gained 0.47 percent at 16,899.10 points and Australia's S&P/ASX 200 index climbed 0.51 percent at 5,480.60.
Hong Kong’s Hang Seng rose 0.7 percent at 23,952.50 points and South Korea's KOSPI added 0.6 percent at 2,065.30 points.
Commodities Recap
Crude oil prices rose, extending gains for the seventh consecutive session, strengthened by an unexpectedly large decline in U.S. inventory levels. International benchmark Brent crude was trading 0.6 percent up at $51.88 per barrel at 0950 GMT, hovering towards a 4-month high of $52.07 hit in the previous session. U.S. West Texas Intermediate crude rose 0.2 percent at $49.78 a barrel, having touched a high 49.94 in the prior session, its highest since June 29.
Gold prices was little changed, nut still within the sight of a 3-month low hit in the previous session as the dollar rallied and equities bounced as strong U.S. economic data bolster expectations of a U.S. interest rate hike. Spot gold was trading flat at $1,266.15 an ounce by 1019 GMT, having declined to its lowest since June 24 at $1,262.02. U.S. gold futures fell 0.1 percent to $1,267.10 an ounce.
Treasuries Recap
The U.S. Treasuries continued their march lower, weighed down by considerably stronger than expected ISM non-manufacturing data (largest gain since 1997) that managed outshine weaker than expected results from trade balance data and the ADP employment estimate. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 1.70 percent, the yield on 5-year bond jumped 1 basis point to 1.22 percent and the yield on short-term 2-year note climbed nearly 1 basis point to 0.838 percent.
The UK gilts traded gained as investors remained cautious ahead of the super-long 30-year bond auction. Also, weak crude oil prices encouraged traders for safe-haven buying. The yield on the benchmark 10-year gilts fell 2 basis points to 0.799 percent, the super-long 40-year bond yield dipped nearly 1 basis point to 1.423 percent and the yield on short-term 2-year bond slid 1 basis point to 0.112 percent.
The German bunds traded modestly firmer as crude oil prices fell after investors booked profits from earlier bets. Also, trading volumes remained thin as a week-long holiday break continued in China, the region’s largest oil consumer. The yield on the benchmark 10-year bond fell 1-1/2 basis points to -0.023 percent, the yield on long-term 30-year note dipped ½ basis point to 0.595 percent and the yield on short-term 2-year bond remained steady at -0.67 percent mark.
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 New Zealand government bonds closed narrowly mixed, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on benchmark 10-year bond fell 1 basis point to 2.505 percent, yield on 7-year note rose 2 basis points to 2.245 percent and the yield on short-term 2-year note ended 1-1/2 basis point higher at 1.990 percent.
The Australian government bonds slumped as investors cheered better than expected trade balance data for August. Also, firmer equities continued to pressurize Treasury prices. The yield on the benchmark 10-year Treasury note rose 1 basis points to 2.177 percent, the yield on 15-year note also jumped 1 basis points to 2.541 percent and the yield on short-term 2-year climbed 1/2 basis point to 1.664 percent.
