Market Roundup
- EUR/NOK falls to 9.00 from 9.1145 Wed and 9.2410 week ago
- USD/JPY +0.70%, EUR/USD -0.01%, GBP/USD -0.23%
- DXY +0.17%, DAX +0.65%, Brent -0.75%, Iron +1.35%
- NOK/SEK backs away from a 1.0675 15-mth high
- OPEC Wed move triggers strong NOK demand: EUR/NOK hits 9.00
- SAR taken to 3.7565 vs USD and 1-year fwds pushed out to 625 bps
- U.S Congress rejection of Obama veto: Saudi Sept 11 bill now law hits Saudi markets
- Fed’s Harker- Normalising of monetary policy a good thing for business investment
- Harker – Moving slowly but surely towards 2.0% infl. target
- Commerzbank To cover restructuring will cease dividends for time being
- Japan Aug retail sales -2.1% y/y, -1.8% eyed, negative growth since Feb
- Japan Honda sets monthly production records worldwide – JCN
- RBNZ – Housing poses financial stability risk, NZD high
- BoJ’s Kuroda will adj policy when necessary, may expand monetary base
Economic Data Ahead
- (0830 ET/1230 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 8,000 to a seasonally adjusted 260,000 for the week ended Sept 23 while continuing claims for the week ended Sept 16 is expected to rise to 2.130 m from previous 2.1113 m.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that gross domestic product increased at a 1.3 percent annual rate in the second quarter after a slow 1.1 percent pace in the first quarter.
- (0830 ET/1230 GMT) The United States releases goods trade balance data for the month of August. The economy posted a trade deficit of $59 billion in the previous month.
- (0830 ET/1230 GMT) The U.S. Commerce Department releases the personal consumption expenditures figures for the first quarter. The indicator came in at 2 percent in the prior quarter, while the core PCE was at 1.8 percent in the same quarter.
- (1000 ET/1400 GMT) The National Association of Realtors is expected to report that U.S. pending home sales remained unchanged in August after rising 1.3 percent in July.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending Sept 23.
- (1400 ET/1800 GMT) Mexico's central bank meets to decide its interest rate and may deliver another half-percentage point hike to 4.75 percent.
- (1845 ET/2245 GMT) The Statistics New Zealand releases building permits s.a data for the month of August. The index posted a decline of 10.5 percent in July.
- (1905 ET/2305 GMT) The GfK Group will release Britain's consumer confidence index for the month of September. The index is expected to decline 5 after slumping 7 in August.
- (1930 ET/2330 GMT) Japan's Statistics Bureau will release its National Consumer Price Index for the month of August. The index posted an annualized decline of 0.4 percent in the previous month.
- (1930 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 3.0 percent for the month of August.
- (1950 ET/2350 GMT) Bank of Japan Summary of Opinions.
- (1930 ET/2330 GMT) Japan's overall household spending is expected to decline 0.4 percent in August after tumbling 0.5 percent in the month of July.
- (1950 ET/2350 GMT) Japan's preliminary Industrial Production is expected to have edged up 0.5 percent in August, after decreasing 0.4 percent in July.
Key Events Ahead
- (0820 ET/1220 GMT) Federal Reserve Bank of Atlanta President Dennis Lockhart speaks before the 2016 Future of Florida Forum, in Orlando, Florida.
- (1000 ET/1400 GMT) Federal Reserve Board Governor Jerome Powell speaks before the "Community Banking in the 21st Century" conference hosted by the Federal Reserve Bank of St. Louis, in St. Louis, Missouri.
- (1400 ET/1800 GMT) Minneapolis Fed President Neel Kashkari will speak about the economy and bank regulation in a Town Hall in Rapid City, South Dakota.
- (1600 ET/2000 GMT) Federal Reserve Chair Janet Yellen's speech.
- (1615 ET/2015 GMT) Federal Reserve Bank of Kansas City President Esther George speaks on "Opportunities and Challenges for the Banking Industry and the Federal Reserve" before the "Banking and the Economy: A Forum for Minority Bankers" conference hosted by the Federal Reserve Bank of Kansas City.
FX Beat
DXY: The dollar gained against the yen, benefiting from the prevalent risk-on market sentiment. The dollar index against a basket of currencies trades up at 95.48, having touched a high of 95.58 earlier in the session.
EUR/USD: The euro edged up but consolidated between a narrow range amid risk on market profile. The major failed to benefit from better than expected Eurozone's economic sentiment which rebounded largely on the back of confidence in industry. The economic sentiment index rose to 104.9 in the month of September from 103.5 in August, beating expectations of no change. The European currency trades up at 1.1223, having touched a 1-week low of 1.1181 in the previous session. The pair takes support near 100 –day MA and slightly jumped from that but it is struggling to close above daily Kijun-Sen. Any break above 1.1240 will take 1.1280. On the lower side, major support is around 1.1150 (200- day MA) and any break below targets 1.1120/1.1045
USD/JPY: The dollar rallied by 1 percent against the safe-haven yen to hit an 8-day high as investors rushed towards riskier assets after OPEC agreed to cut oil output. The yen recovered some ground as markets digested latest comments from BoJ Gov Kuroda, stating that the central bank aimed to achieve inflation at early as possible. However, the downside was capped by persistent risk-on market profile. The major trades 0.8 percent up at 101.48, having hit a high of 101.74. its highest since Sept 21. The pair is facing psychological support at 100 and any further weakness can be only below that level. The major resistance is around 102 (21- day MA) and break above targets 102.80/103.40. On the lower side, major support is around 100 and any break below will drag it till 98.80.
GBP/USD: Sterling tumbled below the 1.3000 handle after rising to a 1-week high as expectations that the Bank of England might further ease monetary policy in coming months weighed down currency. Data released earlier showed that Britain’s consumer credit for August rose to 1.574 billion GBP, surpassing estimates of 1.400 billion GBP. While Mortgage approval declined to 60.058K, against projection of 60.150K. The major rose to a high of 1.3057, however, reversed gains to trade 0.2 percent lower at 1.2990. Investor’s now await UK's GfK consumer confidence index for further momentum on the pair. On the higher side, major resistance is around 1.3080 (daily Tenken-Sen) and any break above will take it to next level till 1.3160. The support is seen at 1.2940 and any violation below will drag it down till 1.2900/1.2865/1.2820. Against the euro, the pound trades 0.2 percent down at 86.33 pence, after rising to an early high of 85.93 pence.
USD/CHF: The Swiss edged up, as investors turned cautious on the view that OPEC members would implement the curbing of output to a range of 32.5-33.0 million barrels a day. The greenback trades lower at 0.9701, pulling away from a 1-week high of 0.9736 touched in the previous session. The pair is facing strong resistance around 10- day MA and any slight bullishness only above that level. On the higher side, any break above 0.9735 will take it till 0.9790/0.9820. The short-term weakness can be seen only below 0.9630 and any break below targets 0.9580/0.9530.
AUD/USD: The Australian dollar touched a 3-week high above the 0.7700 handle, however, it reversed gains as investors questioned whether an OPEC agreement to control oil production would be enough to rebalance an already over-supplied market. The Aussie trades 0.5 percent lower at 0.7655, having struck an early high of 0.7710, it’s highest since Sept 8. On the higher side any break above 0.7730 will take the pair till 0.7760/0.7800. The major support is around 0.76400 and break below will drag it till 0.7580/0.7530/0.7470/ 0.7440.
NZD/USD: The New Zealand dollar tumbled, extending losses for the second straight day as the U.S. dollar recovered across the broad. The major is likely to remain on the downside as markets speculate that RBNZ would further ease its monetary policy at November meeting. The Kiwi trades 0.3 percent down at 0.7258, hovering towards a low of 0.7232 hit in the previous session. Immediate resistance is located at 0.7312 (20-DMA), break above targets 0.7330/ 0.7350. On the downside, support is seen at 0.7223 (Sept 23 Low), break below could drag it till 0.7200.
Equities Recap
European shares rallied, led higher by oil company shares as an agreement by OPEC members to curb output strengthened market sentiment.
The pan-European STOXX 600 index increased 0.66 percent at 344.81 points, while the FTSEurofirst 300 index added 0.73 percent at 1,358.21 points.
Britain's FTSE 100 trades 1.17 percent higher at 6,929.13 points, while mid-cap FTSE 250 gained 0.55 percent at 17,889.00 points.
Germany's DAX rose 0.69 percent at 10,510.28 points; France's CAC 40 trades 1.23 percent higher at 4,486.18 points.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.7 percent.
Tokyo's Nikkei rose 1.39 percent at 16,693.71 points, Australia's S&P/ASX 200 index advanced 1.04 percent at 5,468.70 points and South Korea's KOSPI added 0.76 percent at 2,068.72 points.
Shanghai composite index rose 0.4 percent at 2,998.48 points, while CSI300 index also gained 0.4 percent at 3,244.39 points. Hong Kong's Hang Seng index added 0.5 percent at 23,739.47 points.
Commodities Recap
Crude oil prices declined as investors remained cautious whether the OPEC agreement to curb oil production would be sufficient to rebalance a heavily oversupplied global market. Global benchmark Brent crude was trading 1.1 percent lower at $48.31 per barrel at 0941 GMT, having touched an early low of $47.97. U.S. West Texas Intermediate crude declined 0.45 percent at $46.94 a barrel, after climbing as high as $47.44 earlier in the session, its highest since Sept. 8.
Gold edged down as the U.S. dollar recovered and global equity markets rallied after oil producers agreed to restrain output. Spot gold was trading flat at $1,321.53 an ounce by 0952 GMT, having declined to a 1-week low of $1317.89, in the previous session. U.S. gold futures were up nearly 0.1 percent at $1,324.30 an ounce.
Treasuries Recap
The US Treasuries saw downward pressure across the curve for two successive days after OPEC agreed at the meeting in Algeria to curb oil output for the first time since 2008. The yield on the benchmark 10-year Treasury note rose 2-1/2 basis points to 1.593 percent, the yield on 5-year bond jumped 1-1/2 basis points to 1.144 percent and the yield on short-term 2-year note climbed 1 basis point to 0.766 percent.
The UK gilts plunged as country’s inflation outlook is expected to revive after a deal by the OPEC to cut production for the first time in nine years, renewing hopes of higher energy costs. The yield on the benchmark 10-year gilts rose 5-1/2 basis points to 0.733 percent, the super-long 40-year bond yield climbed 6 basis points to 1.347 percent and the yield on short-term 2-year bond bounced 1-1/2 basis points to 0.093 percent.
The German bunds slumped as investors moved away from the safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond rose more than 3 basis points to -0.114 percent, the yield on long-term 30-year note jumped 3-1/2 basis points to 0.451 percent and the yield on short-term 2-year bond climbed 1 basis point to -0.686 percent.
The Japanese government bonds traded lower as crude oil futures rose sharply after the OPEC producers' group surprised the market with a deal to slash output. The benchmark 10-year bond yield rose 1-1/2 basis points to -0.074 percent, the yield on long-term 30-year note climbed 1/2 basis point to 0.467 percent and the yield on short-term 2-year note bounced nearly 1 basis point to -0.285 percent.
The New Zealand government bonds closed modestly higher as investors speculated that the Reserve Bank of New Zealand (RBNZ) will lower its key interest rate in its November monetary policy decision. The yield on the benchmark 10-year bond fell 1 basis point to 2.355 percent, the yield on 7-year note ended 1 basis point lower at 2.110 percent and the yield on short-term 2-year note also slid 1 basis point to 1.945 percent.
The Australian government bonds slumped as investors moved away from the safe-haven buying amid gains in riskier assets including equities and crude oil. The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.023 percent, the yield on 12-year note jumped 2-1/2 basis points to 2.181 percent and the yield on short-term 2-year climbed nearly 1 basis point to 1.594 percent.
