Market Roundup
- USD/JPY -0.52%, EUR/USD +0.16%, GBP/USD -0.23%
- DXY -0.03%, DAX -1.4%, Brent +1.45%, Iron +0.12%
- Germany Sept IFO Bus Climate 109.5 vs revised 106.3 previous, 106.4 expected
- Germany Sept IFO Curr Conditions 114.7 vs revised 112.9 previous, 113.00 expected
- Germany Sept IFO Expectations 104.5 vs 100.1 previous, 100.2 expected
- UK Aug BBA Mtg Approvals 36.997k vs 37.662k previous
- Italy Jul Retail Sales -0.2% y/y vs +0.8% previous
- BoJ Kuroda – deepening negative rates, lowering l/t rate main easing means
- BoJ official- BoJ not sending message that it has done enough
- BoJ’s Kuroda- G7, G20 countries should work together for FX stability
- Kuroda – closely watching how FX moves affect Japan’s economy
- BoJ’s new framework faces test as market to scrutinize bond ops
- Japan has most to lose from global trade backlash
- Asia cull makes Goldman Sachs look rattled
- CFTC IMM CTA data - Specs cut USD longs for the second week
Economic Data Ahead
- (1000 ET/1400 GMT) The U.S. new single-family home sales are likely to decline 8.8 percent to a seasonally adjusted annual rate of 600,000 units in August, slumping from a 9-year high level recorded in the previous month.
- (1030 ET/1430 GMT) Federal Reserve Bank of Dallas releases its Manufacturing Business Index for the month of September. The index posted a decline of 6.2 in the prior month.
- (1950 ET/2350 GMT) Bank of Japan publishes the minutes of its latest monetary policy meeting.
Key Events Ahead
- (0930 ET/1330 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari gives welcome remarks before the Fourth Ending Too Big to Fail Symposium in Minneapolis.
- (1105 ET/1505 GMT) European Central Bank President Mario Draghi's speech.
- (1145 ET/1545 GMT) Federal Reserve Board Governor Daniel Tarullo speaks on "Next Steps in the Evolution of Stress Testing" before the Yale School of Management Leaders Forum, in New Haven, Connecticut.
- (1145 ET/1545 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac max $2.550 bln
- (1200 ET/1600 GMT) European Central Bank governing council Ewald Nowotny's speech.
- (1330 ET/1730 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated Q&A before the Independent Bankers Association of Texas Annual Convention in San Antonio.
- (1900 ET/2300 GMT) Bank of Canada Governor Stephen Poloz will give a speech at Western Washington University on the topic of cross-border trade integration between Canada and the United States.
FX Beat
DXY: The dollar slumped against the euro and the yen as markets nervously await the first U.S. presidential debate due later. The dollar index against a basket of currencies declined 0.2 percent at 95.47, hovering towards a low of 95.05 hit last week.
EUR/USD: The euro advanced extending gains for the fourth consecutive session after German IFO survey came in better-than-expected. Germany's IFO expectations for September rose to 104.5, surpassing consensus of 100.2 and 100.1. While current assessment and business climate stood at 114.7 and 109.5, respectively. The major trades 0.24 percent higher at 1.1249, hovering towards a 1-week high of 1.1257 hit last week. On the lower side, support stands at 1.1192 (55- day EMA)/1.1150 (200- day MA)/1.1120 (Sep 21st low). The major resistance is around 1.12800 (trend line joining 1.16163 and 1.13663) and break above targets 1.13660. The minor resistance is around 1.1245 (daily Kijun-Sen).
USD/JPY: The Japanese yen rallied against the dollar after comments from BoJ Governor Kuroda suggested that the central bank could deepen negative rates, or do more QE in order to get inflation back on the rise. Cautious tone ahead of the first U.S. presidential debate triggered risk-off market sentiment, sending investors towards the safe-haven yen. The major trades 0.5 percent lower at 100.44, drifting closer to a 4-week low of 100.09 hit last week. Markets now await Bank of Japan's latest monetary policy meeting minutes for further cues on the monetary outlook. The short term trend is slightly bearish as long as resistance 102 holds. The major resistance is around 102 and break above targets 102.80/103.40. On the lower side, major support is around 100 and any break below will drag the pair till 98.80.
GBP/USD: Sterling continues to weaken as renewed worries over Britain's exit from the European Union forced investors to sell the currency. On Friday, the major fell more than 1 percent to a 5-week low of 1.2915, its lowest since August 16. Data released earlier showed UK's BBA’s Mortgage Approvals for August came in at 36.997K, against projections of 37.200K and previous month 37.672K, which added to GBP downfall. Sterling trades 0.15 percent lower at 1.2940, having touched an early low of 1.2916. On the higher side, major resistance is around 1.3000 (5- day MA) and any break above will take the pair to next level till 1.3053 (7- day EMA)/ 1.3106 (10- day MA). In the daily chart, it is trading well below 10-day MA and 5-day MA. The support stands at 1.2900 and any violation below will drag it down till 1.2865/ 1.2820.Against the euro, the pound tumbled 0.4 percent to 86.93 pence, having hit fresh 5-week low of 86.99 pence earlier in the session.
USD/CHF: The Swiss franc gained, reversing most of its previous session losses, as markets remained cautious ahead of U.S. presidential debate. The greenback trades 0.2 percent lower at 0.9677, hovering towards a 2-week low of 0.9659 hit last week. On the higher side, any break above 0.9745 will take the pair till 0.9800/0.9820.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 retreated after declining earlier in the session, largely supported by upbeat comments from Algeria’s Energy Minister, which boosted oil prices. The Aussie trades flat at 0.7620, attempting to sustain gains above the 0.7600 handle. On the higher side, any break above 0.7680 will take the pair till 0.7700/0.7735. The major support is around 0.7580 and break below will drag it till 0.7530/0.7470/ 0.7440.
NZD/USD: The New Zealand dollar recovered from a fresh 1-month low hit following worse-than-expected trade deficit data release. However, the major rebounded as oil prices steadied ahead of informal OPEC meeting. The recovery appears to be fragile as rising expectations of further RBNZ interest rate cut at its November meeting have weakened the bullish sentiment around the kiwi. Immediate resistance is located at 0.7285 (10-DMA), break above targets 0.7300. On the downside, support is seen at 0.7203 (Session Low), break below could drag it near 0.7164.
Equities Recap
European shares declined, led down by a fall in stocks of major banking and energy companies, while investors await a U.S. presidential debate.
The pan-European STOXX 600 index decreased 1.48 percent at 340.24 points, while the FTSEurofirst 300 index shed 1.51 percent at 1,339.05 points.
Britain's FTSE 100 trades 1.19 percent down at 6,826.87 points, while mid-cap FTSE 250 dropped 1.11 percent at 17,723.52 points.
Germany's DAX fell 1.64 percent at 10,452.38 points; France's CAC 40 trades 1.87 percent lower at 4,404.85 points.
MSCI's broadest index of Asia-Pacific shares outside Japan was down, extending losses to 0.8 percent.
Tokyo's Nikkei lost 1.25 percent at 16,544.56 points, Australia's S&P/ASX 200 index ended flat at 5,431.50 points and South Korea's KOSPI fell 0.34 percent at 2,047.11 points.
Shanghai composite index declined 1.8 percent at 2,980.43 points, while CSI300 index tumbled 1.7 percent at 3,220.28 points. Hong Kong's Hang Seng index shed 1.6 percent at 23,317.92 points.
Commodities Recap
Crude oil prices edged up, before an informal OPEC meeting, where the world's largest producers will discuss ways to limit output and support the market. International benchmark Brent crude was trading 1.35 percent higher at $46.58 per barrel at 1016 GMT, hovering away from a near 1-week low of $45.63 touched on Friday. U.S. West Texas Intermediate crude rose 1.17 percent at $45.07 a barrel, after hitting 2-week high of $46.53 in the previous session.
Gold prices consolidated between a narrow range as the market’s attention shifted towards the outcome of the U.S. presidential debate later in the day. Spot gold was trading flat at $1,336.75 an ounce at 1022 GMT, while U.S. gold futures slid 0.2 percent to $1,339.9 an ounce.
Treasuries Recap
The US Treasuries were pushed modestly higher across the curve as markets await Hillary Clinton and Donald Trump’s first debate of the 2016 presidential election. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 1.601 percent, the yield on 5-year bond dipped 1 basis point to 1.143 percent and the yield on short-term 2-year note slid ½ basis point to 0.750 percent.
The UK gilts strengthened as investors’ focus switched towards the upcoming U.S. presidential election debate which could prove to be a key changer to the result of November's election. The yield on the benchmark 10-year gilts fell 1-1/2 basis points to 0.718 percent, the super-long 40-year bond yield dipped 2-1/2 basis points to 1.316 percent and the yield on short-term 5-year bond slid 1-1/2 basis points to 0.105 percent.
The German bunds gained as investors turned heads from the European Central Bank’s monetary policy to the heating debate between the U.S. presidential candidates. The yield on the benchmark 10-year bond fell 2-1/2 basis points to -0.104 percent, the yield on long-term 30-year note dipped 3 basis points to 0.451 percent and the yield on short-term 2-year bond slid ½ basis point to -0.672 percent.
The Japanese government bonds traded nearly flat Monday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The benchmark 10-year bond yield hovered around -0.053 percent mark, the super-long 30-year note yield rose 1 basis point to 0.488 percent and the yield on short-term 2-year note remained steady at -0.219 percent.
The New Zealand government bonds closed higher as investors poured into safe-haven assets after data showed that the country’s trade deficit widened in August. The yield on the benchmark 10-year bond fell 3-1/2 basis points to 2.375 percent, the yield on 7-year note ended 2-1/2 basis points lower at 2.110 percent and the yield on 5-year note slid 2 basis points to 1.980 percent.
The Australian government bonds gained following the dovish comments from the Reserve Bank of Australia Philip Lowe. The yield on the benchmark 10-year Treasury note fell 2-1/2 basis points to 2.026 percent, the yield on long-term 15-year note also dipped 3 basis points to 2.378 percent and the yield on short-term 2-year slid 1 basis point to 1.610 percent.
