Market Roundup
- USD/JPY +0.04%, EUR/USD -0.06%, GBP/USD -0.16%
- DXY +0.01%, DAX -1.0%, Brent -1.5%, Iron -1.7%
- Germany Aug Import prices y/y -2.6% y/y vs -3.8% previous, -2.4% expected
- EZ Aug M3 5.1% y/y vs 4.8% previous, 4.9% expected
- UK Sept CBI Dist Trades vs 9 previous, 7 expected
- Post debate odds- Paddy Power 4/9 Clinton, 23/10 Trump 8/15-17/10 24 hrs ago
- Deutsche Bank crisis could take down Merkel – Telegraph
- Turkey Dep. PM will not meet year-end growth target
- Iran won’t freeze production until it reaches 4m/bpd-Oil Minister
- Iran Oil Min- This week not time for OPEC decision-making
- BoC’s Poloz – Increased trade-econ global integration challenge for CBs
- Poloz – Growth/infl.tgts affected, lessens impact of domestic rate/FX fluctuations
- ECB Lane – Current interest rate policies working but still long way to go
- Lane - to achieve inflation target, eyeing Japanese efforts closely
- Japan looks abroad, cautiously, for labor shortage solution – Nikkei
- Japan to push exports of energy-saving tech- Nikkei
- BoJ July 28-29 Policy mins – Debate on uncertainties in hitting inflation target
Economic Data Ahead
- (0900 ET/1300 GMT) The S&P/Case-Shiller is expected to report that U.S. composite home price index of 20 metropolitan areas remained unchanged at 5.1 percent in July on an annualized basis.
- (0945 ET/1345 GMT) Financial firm Markit Economics releases preliminary U.S. service PMI for the month of September. The index posted a final reading of 51.0 in the previous month.
- (0945 ET/1345 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of September. The index posted a final reading of 51.5 in the prior month.
- (1000 ET/1400 GMT) The Conference Board is likely to report that U.S. consumer confidence index declined to 99.0 in September from a reading of 101.1 recorded in August.
- (1000 ET/1400 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for September. The index was at -1 in the previous month.
- (1630 ET/2030 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (1115 ET/1515 GMT) Federal Reserve Vice Chair Stanley Fischer speaks on "Why Study Economics?" before the Howard University Economic Convocation in Washington, D.C.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae/Freddie Mac max $550 mln
- (1430 ET/1830 GMT) FedTrade operation 30-year Ginnie Mae max $1.550 bln
FX Beat
DXY: Trading around the dollar remained muted as markets digested U.S. presidential debate led wave of optimism. The dollar index against a basket of currencies traded 0.1 percent up at 95.41, recovering from an early low of 95.24.
EUR/USD: The euro edged down, as concerns over Deutsche Bank weighed down European equity markets. However, the downside was limited as Eurozone M3 money supply figures came in better-than-expected for the month of August. Eurozone's money supply 3-months through August rose 5.0 percent, while on an annualized basis it increased 5.1 percent surpassing estimates of 4.9 percent and previous 4.8 percent. The major trades lower at 1.1244, hovering just below more than 1-week high of 1.1279 touched on Monday. The major resistance is around 1.12930 (trend line joining 1.16163 and 1.13663) and break above targets 1.13660.The minor resistance is around 1.1245 (daily Kijun-Sen). On the lower side, support stands at 1.1194 (55- day EMA)/1.1149 (200- day MA)/1.1120 (Sep 21st low). The short-term weakness below 1.1120 level.
USD/JPY: The dollar trimmed gains as the Japanese yen benefited from the prevalent risk-off market sentiment. The major initially rose to a high of 100.98 after Bank of Japan board members in July meeting showed serious concerns about the failure to reach the desired inflation target and economic growth. The pair trades flat at 100.38, within the sight of an early low of 100.08, its lowest level since late August. 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 100 will drag the pair till 98.80.
GBP/USD: Sterling continued to remain under pressure as markets worry that Brexit will lose Britain's access to Europe's single market and raise stringent barriers to immigration and trade. Brexit worries are been renewed with the parliament back from its summer recess, dampening the sentiment around the currency. Data released earlier showed UK's CBI distributive trade coming in at -8, against forecast of 7 and previous 9, adding to the downward pressure around the major. Sterling trades 0.2 percent down at 1.2945, hovering above 6-week low of 1.2916 hit on Monday. On the higher side, major resistance is around 1.3004 (5- day MA) and any break above will take it to next level till 1.3035 (7- day EMA)/ 1.307 (10- 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 trades 0.1 percent lower at 86.82 pence, having dropped to a low of 87.16 pence on Tuesday, it’s weakest since August 16.
USD/CHF: The Swiss franc climbed, however, trimmed gains as investors' turned away from safe-haven assets after Hillary Clinton's win at the first U.S. presidential debate against her opponent Donald Trump, led to a fresh bout of risk-on trade in financial markets. The dollar trades flat at 0.9688, pulling away from a low of 0.9661 hit earlier in the session. On the higher side, any break above 0.9740 will take it 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 rallied, but failed to take out the 0.7700 handle as risk appetite weakened amid renewed weakness in the European stocks and oil prices. The Aussie trades 0.4 percent up at 0.7668, having touched a high of 0.7695 earlier in the day. On the higher side, any break above 0.7700 will take it till 0.7735/0.7760/0.7800. 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 rose above the 0.7300 handle, extending its recovery momentum for the second consecutive day. The major benefited from the prevalent risk-on sentiment triggered by Hillary Clinton's win at the first US presidential debate against her Republican opponent, Donald Trump. However, gains were limited as markets expect further RBNZ easing at its meeting in November. The Kiwi trades 0.4 percent up at 0.7301, having touched an intraday high of 0.7330. Immediate resistance is located at 0.7330, break above targets 0.7370 (2-weeks High). On the downside, support is seen at 0.7254 (Sept 19 Low), break below could drag it near 0.7200.
Equities Recap
European shares edged down in a volatile trade, as investors perceived Democrat Hillary Clinton to be the winner of the first U.S. presidential debate.
The pan-European STOXX 600 index decreased 0.33 percent at 338.87 points, while the FTSEurofirst 300 index shed 0.35 percent at 1,333.58 points.
Britain's FTSE 100 trades 0.26 percent down at 6,801.05 points, while mid-cap FTSE 250 dropped 0.86 percent at 17,571.77 points.
Germany's DAX fell 0.90 percent at 10,301.46 points; France's CAC 40 trades 0.46 percent lower at 4,387.65 points.
MSCI's broadest index of Asia-Pacific shares outside Japan reversed early losses to rise 0.6 percent.
Tokyo's Nikkei rose 0.84 percent at 16,683.93 points, Australia's S&P/ASX 200 index fell 0.4 percent at 5,409.90 points and South Korea's KOSPI added 0.77 percent at 2,062.82 points.
Shanghai composite index rose 0.6 percent at 2,998.17 points, while CSI300 index also gained 0.6 percent at 3,240.75 points. Hong Kong's Hang Seng index rallied 1.1 percent at 23,571.90 points.
Commodities Recap
Crude oil prices declined, as investors booked profits after prices advanced more than 3 percent in the previous session. The OPEC and oil producers led by Russia are meeting informally in Algeria to discussion options on cutting or freeze oil output in an effort to support price stability. International benchmark Brent crude was trading 1.07 percent lower at $46.41 per barrel at 1142 GMT, after rising 3.2 percent in the previous session. U.S. West Texas Intermediate crude fell 1.10 percent at $45.09 a barrel, having gained 3.3 percent on Monday.
Gold nudged lower as investors rushed towards riskier assets, buoyed by a view that Democratic presidential candidate Hillary Clinton did better than rival Donald Trump in the first U.S. presidential debate. Spot gold was down 0.1 percent at $1,335.96 an ounce by 0950 GMT, halting it’s a 6-day winning streak. U.S. gold futures eased 0.3 percent to $1,340.20 an ounce.
Treasuries Recap
The US Treasuries saw mixed performance during a relatively quiet session light on significant economic data. The yield on the benchmark 10-year Treasury note fell 1 basis point to 1.577 percent, the yield on 5-year bond remained steady at 1.125 percent and the yield on short-term 2-year note stood flat at 0.758 percent.
The UK gilts strengthened as investors preferred safe-haven assets after oil prices slipped on fading optimism for an output-limiting deal during an oil producers’ meeting in Algeria. The yield on the benchmark 10-year gilts fell 3 basis points to 0.680 percent, the super-long 30-year bond yield dipped 2-1/2 basis points to 1.373 percent and the yield on short-term 2-year bond slid 1 basis point to 0.80 percent.
The German bunds gained as investors poured into safe-haven instruments amid losses in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond fell 2-1/2 basis points to -0.131 percent, the yield on long-term 30-year note dipped 2-1/2 basis points to 0.431 percent and the yield on short-term 2-year bond slid 2 basis points to -0.697 percent.
The Japanese government bonds gained after the Bank of Japan board members in July meeting showed serious concerns about the failure to achieve the desired range of inflation and economic growth. The benchmark 10-year bond yield fell 1-1/2 basis points to -0.069 percent and the yield on short-term 2-year note dipped 2 basis points to -0.244 percent.
The New Zealand government bonds closed mixed as investors remained anxious about the result of the first US Presidential debate between Democrat Hillary Clinton and Republican Donald Trump. The yield on the benchmark 10-year bond fell 1 basis point to 2.365 percent, the yield on 7-year note ended flat at 2.110 percent and the yield on short-term 2-year note rose 2 basis points to 1.910 percent.
The Australian government bonds traded narrowly mixed, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.012 percent, the yield on long-term 15-year note remained steady at 2.377 percent and the yield on short-term 2-year rise 1/2 basis point to 1.614 percent.
