Market Roundup
- EUR/USD -0.64%, USD/JPY 0.12%, GBP/USD -0.07%, EUR/GBP -0.54%
- DXY 0.45%, DAX 0.24%, FTSE -0.11%, Brent 0.93%, Gold -0.21%
- Japan PM Abe to dissolve lower house of Parliament Sept 28
- ECB's Vasiliauskas wants end-date for bond buys but debate open: MNI
- Bank of England asks banks to hold more capital on consumer loan risks
- Bank of France raises 2017 French economic growth forecast to 1.7 pct
- EU states agree to end excessive deficit procedure for Greece
- Germany Sep Ifo Business Climate 115.2 vs 115.9, 116 forecast 115.9 revised
- Germany Sep Ifo Current Conditions 123.6 vs 124.6, 124.8 forecast revised 124.7
- Germany Sep Ifo Expectations 107.4 vs 107.9, forecast 107.9, revised 107.8
- BOJ's Kuroda says limits to how deeply rates can go negative
- Japan PM Abe plans to compile Y2 tln stimulus package - Yomiuri
- Japan Sept mfg PMI – flash 52.6, best since May, Aug final 52.2
- Japan pace of new orders and new export orders up, output in Q4 likely very good
- China says growth of key debt ratio clearly slowing, stabilising
Economic Data Ahead
- (0830 ET/1230 GMT) The Federal Reserve Bank of Chicago will release its Chicago Fed National Activity Index (CFNAI) for the month of August. The index stood at -0.01 in the prior month.
- (1030 ET/1430 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of September. The index posted a rise of 17.0 percent in the previous month.
- (1745 ET/2145 GMT) The Statistics New Zealand releases its trade balance data for the month of August. The economy posted an annual trade deficit of $3.21 billion in July
- (1950 ET/2350 GMT) Bank of Japan publishes the minutes of its latest monetary policy meeting.
Key Events Ahead
- (0830 ET/1230 GMT) Federal Reserve Bank of New York President William Dudley speaks on "Workforce Development" at Onondaga Community College in Syracuse, N.Y.
- (1000 ET/1400 GMT) European Central Bank (ECB) President Mario Draghi's Speech.
- (1240 ET/1640 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on the economy before the Economic Club of Grand Rapids in Michigan.
- (1730 ET/2230 GMT) Minneapolis Federal Reserve Bank President Neel Kashkari speaks at Eye of the Hawk Town Hall Event in Grand Forks city, North Dakota.
FX Beat
DXY: The dollar advanced against most of its major peers as investors awaited New York Fed President William Dudley, Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari's speeches for further clues on the timing of next interest rate hike. The greenback against a basket of currencies traded 0.4 percent up at 92.54, having touched a high of 92.70 on Wednesday, its highest since Sept. 5. FxWirePro's Hourly Dollar Strength Index stood at 141.85 (Highly Bullish) by 1000 GMT.
EUR/USD: The euro slumped below the 1.1900 handle after the German IFO disappointed market expectations for the current month. German business expectations came in at 107.4 against expectations of 107.9, current assessment at 123.6 versus 124.8 forecasted and business climate at 115.2 below estimate of116.0. The European currency traded 0.6 percent down at 1.1882, having touched a low of 1.1861 on Wednesday, its lowest since Sept. 14. FxWirePro's Hourly Euro Strength Index stood at -102.22 (Highly Bearish) by 1000 GMT. The pair hits intraday low of 1.1880 and any break below 1.18230 will drag the pair down till 1.1760 (55- day EMA)/1.1700. On the higher side, near term resistance is around 1.19500 and any break above will take it till 1.2000/1.2030/1.20925.
USD/JPY: The dollar trimmed session gains as investors remained cautious ahead of speeches by Fed officials, which could provide further insights on the strength of the economy and timing of the next interest rate hike. The major was trading 0.05 percent up at 112.04, having hit a high of 112.71 last week, its highest since Jul. 17. FxWirePro's Hourly Yen Strength Index stood at 78.61 (Slightly Bullish) by 1000 GMT. On the lower side, any close below 111.86 (233- day MA) confirms minor weakness, a decline till 111.13 (100- day MA)/110 likely. Any break above 113 confirms minor bullishness, a jump till 114/114.50.
GBP/USD: Sterling consolidated near the 1.3500 handle, after a speech by Prime Minister Theresa May failed to offer the kind of detail investors had been expecting to remove political uncertainty. The release of BoE's Financial Policy Committee statement did little to provide any clues as investors attention remained on the developments out of the fourth round of Brexit talks. Sterling traded flat at 1.3484, having hit a low of 1.3450 on Friday, its lowest since Sept. 15. FxWirePro's Hourly Sterling Strength Index stood at 73.18 (Bullish) by 1000 GMT. The pair on the higher side is facing major resistance around 1.3660 and any break above will take the pair to next level to 1.3700/1.3800 level. The near term psychological support is around 1.3450 and any break below will drag it down till 1.3400. Against the euro, the pound was trading 0.5 percent up at 88.09 pence, having hit a high of 87.74 pence earlier in the month, its highest since Jul. 17.
USD/CHF: The Swiss franc eased against the dollar as the greenback rose ahead of Fed officials' speeches later in the day. The major trades 0.4 percent up at 0.9734, having touched a high of 0.9747 last week, it’s highest since Aug. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -14.71 (Neutral) by 1000 GMT. The short term trend is still bullish as long as support 0.9630 (55- day EMA) holds and any break below will drag the pair down till 0.9580/0.9525/0.9500. The near term resistance is around 0.97730 and any convincing break above will take it to next level till 0.9808/0.9866.
AUD/USD: The Australian dollar edged up, extending previous session gains on the back of improving sentiment around the commodity bloc. The Aussie trades 0.05 percent up 0.7959, having hit a low of 0.7908 in the prior session, it’s lowest since Aug. 31. FxWirePro's Hourly Aussie Strength Index stood at -90.88 (Slightly Bearish) by 1000 GMT. On the lower side, near term support is around 0.7896 (55- day EMA) and any close below will drag the pair till 0.7850/0.7800. The near term resistance is around 0.8000 and any break above targets 0.8065/0.8125.
Equities Recap
European shares rose, while the euro declined after the German Chancellor Angela Merkel won a fourth term but faced a fractured parliament as support for the far-right surged.
The pan-European STOXX 600 index climbed 0.1 percent to 383.64 points, while the FTSEurofirst 300 index rallied 0.1 percent to 1,507.46 points.
Britain's FTSE 100 trades 0.2 percent down at 7,293.83 points, while mid-cap FTSE 250 gained 0.2 percent to 19,549.60 points.
Germany's DAX rose 0.1 percent at 12,605.72 points; France's CAC 40 trades 0.3 percent lower at 5,266.94 points.
Commodities Recap
Crude oil prices rose, to multi-month highs as major producers meeting in Vienna said the market was well on its way towards rebalancing. International benchmark Brent crude was trading 0.95 percent up at $57.31 per barrel by 1009 GMT, having hit a high of $57.32 earlier, its strongest since Feb. 2. U.S. West Texas Intermediate was trading up at $50.62 a barrel, after rising as high as $51.09 last week, its highest since May. 25.
Gold prices declined and were hovering near 1-month lows hit last week, as the U.S. dollar gained, while the concerns over the Korean peninsula eased. Spot gold was down 0.1 percent at $1,295.60 per ounce as of 1013 GMT, not far from last week's near one-month low of $1,288.01. U.S. gold futures for December delivery slipped 0.2 percent to $1,295.00 per ounce.
Treasuries Recap
The U.S. Treasuries surged on global demand for safe-haven instruments gained as investors await the Federal Open Market Committee (FOMC) members Dudley, Evans and Kashkari’s speech, scheduled to be held today by 12:30GMT, 16:40GMT and 22:30GMT respectively. The yield on the benchmark 10-year Treasury nose-dived nearly 3 basis points to 2.24 percent, the super-long 30-year bond yields also suffered by 3 basis points to 2.76 percent and the yield on short-term 2-year note traded nearly 1-1/2 basis points lower at 1.43 percent.
The UK gilts gained as investors wait to watch the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be held on September 28, besides, the Q2 GDp, due on September 29 by 08:30GMT. The yield on the benchmark 10-year gilts, fell nearly 2 basis points to 1.33 percent, the super-long 30-year bond yields slipped 1-1/2 basis points to 1.90 percent and the yield on the short-term 2-year too traded 1-1/2 basis points lower at 0.43 percent.
The German government bunds jumped after investors moved towards safe-haven assets, following the German election results, which overcast a shadow of doubt as Chancellor Angela Merkel failed to secure an outright majority to form a government. Also, the country’s Ifo Business Climate Index for the month of September disappointed markets, coming in at 115.2, vs expectations of 116, from 115.9 in August. Now, investors are looking forward to the ECB President Mario Draghi’s speech, scheduled to be held today by 13:00GMT. The German 10-year bond yields, which moves inversely to its price, slumped nearly 5 basis points to 0.40 percent, the yield on the 30-year note plunged 4-1/2 basis points to 1.18 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at -0.70 percent.
The New Zealand bonds gained at the time of closing after investors poured into safe-haven instruments, following the country’s inconclusive results of its general election held over the weekend. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 3.01 percent, the yield on 7-year note also fell 1/2 basis point to 2.87 percent and the yield on short-term 2-year too ended 1/2 basis point lower at 2.15 percent.
The Japanese government bonds traded flat as investors wait to watch the Bank of Japan’s monetary policy meeting minutes for the month of September, scheduled to be released on September 25 by 23:50GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.02 percent, the yield on long-term 30-year also hovered around 0.82 percent and the yield on short-term 2-year too traded steady at -0.14 percent.
The Australian bonds rallied on the first trading day of the week, tracking strength in the U.S. Treasuries as investors converged towards risk-haven assets, following renewed geopolitical tensions over North Korea and the war of words between US President Donald Trump and the former’s Kim-Jon-Un. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1-1/2 basis points to 2.80 percent, the yield on 15-year note also fell 1-1/2 basis points to 3.09 percent and the yield on short-term 2-year also traded 1 basis point lower at 1.97 percent.
