Market Roundup
- USD/JPY +0.11%, EUR/USD +0.07%, GBP/USD +0.17%
- DXY -0.09%, DAX +0.4%, Brent +0.17%, Iron -0.4%
- UK Aug Claimant Count +2.4k vs revised -3.6k previous, 1.8k expected
- UK Jul ILO Jobless rate 4.9% vs 4.9% previous, 4.9% expected
- UK Jul Avg Earnings +2.1% vs 2.3% previous, 2.1% expected
- Switzerland Sept ZEW Inv. Sentiment +2.7 vs -2.8 previous
- EZ Jul Ind. Prod. -1.1% vs revised+0.8% previous, -0.9% expected
- BoJ to explore delving deeper into neg rates
- BoJ mull making neg rates centre piece of future easing – Nikkei
- BOJ to highlight merits of target JGB yields up to 10 yrs - sources
- Japan PM Abe – Econ escaping deflation
- Abe BoJ policy spreading to real economy
- Most Japanese reg bks will lose money on lending in '25 – Nikkei
- China CB working on Shanghai-London stock connect – Securities Times
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. Labor Department publishes import and export prices for the month of August. The import prices are likely to edge down 0.1 percent after gaining 0.1 percent in July, while exports are expected to rise 0.1 percent after increasing 0.2 percent in the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending September 9.
- (1830 ET/2230 GMT) The Business New Zealand will release its PMI index for the month of August. The index stood at 55.8 in the month of July.
- (1745 ET/2145 GMT) Statistics New Zealand will release second quarter Gross Domestic Product figures.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending September 9.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending September 9.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac max $2.550 bln.
- (1430 ET/1830 GMT) FedTrade operation 30-yr Ginnie Mae max $1.550 bln.
FX Beat
DXY: The dollar index, against a basket of currencies edged down to 95.52, having touched a 1-week high of 95.67 in the previous session.
EUR/USD: The euro gained despite Eurozone posting worse-than-expected industrial production figures. The major rose to an early high of 1.1241, however, trimmed gains after data showed Eurozone's industrial production declined 1.1 percent in July versus expectations of 0.9 drop and previous 0.8 percent gain. The European currency trades 0.1 percent up at 1.1225, recovering slightly from session's low of 1.1212. On the higher side, any break above 1.12780 will take the pair till 1.1300/ 1.13270/ 1.1360. The major support is around 1.1189 (55- day EMA) and any break below targets 1.1138 (200- day MA)/1.1100. Overall trend reversal is only above 1.1360.
USD/JPY: The Japanese yen slumped to a 1-week low against the dollar after a report indicated that the Bank of Japan is considering further monetary easing steps. However, it trimmed losses as investors remain uncertain if the central bank will lower its key interest rate further into negative territory. The major trades 0.1 percent up at 102.70, having touched an early high of 103.35, it’s highest since September 6. The short term trend is slightly bearish as long as resistance 104.80 holds. The major resistance is around 103.40 and break above targets 103.80/104.60. On the lower side, major support is around 101.80 and any break below 101.80 will drag the pair till 101.20/100.55/100.
GBP/USD: Sterling rose above the 1.3200 handle, supported by upbeat labor market data indicating that the Britain's economy stood strong to June's Brexit vote fallout. The jobless rate in the three months to July stood at 4.9 percent, unchanged from the three months to June while average earnings including bonus rose by 2.3 percent, beating expectations of 2.1 percent. Sterling trades 0.1 percent up at 1.3205, having touched an intra-day high of 1.3227 following the data release. The pair should break above 1.3350 for further bullishness. Any break above 1.3350 will take the pair to next level till 1.3400/1.3480. Any close above 1.3480 confirms major bullishness. On the lower side, any break below 1.3235 will drag it down till 1.3160/1.3100. Against the euro, the pound was trading flat at 85.02 pence, having hit a 2-week low of 85.33 pence in the previous session.
USD/CHF: The Swiss franc edged up after Zew Survey showed Switzerland's consumer expectations strengthening in the month of September. The indicator rose to 2.7 percent, after posting a slump of 2.8 percent in the previous month. The dollar trades lower at 0.9755, pulling away from a 1-week high of 0.9789 hit earlier in the session. On the higher side, any break above 0.9808 will take the pair till 0.9845/0.9880. Any break below 0.9700 will take it to next level till 0.9670. The short-term weakness can be seen only below 0.9630.
AUD/USD: The Australian dollar's recovery mode ran out of steam, failing to take out the 0.7500 handle as the greenback continued to gain on growing expectations that the Federal Reserve would eventually hike interest rates in 2016. The Aussie trades 0.2 percent up at 0.7476, hovering away from a 1-1/2 month low of 0.7442 hit in the previous session. Investor’s eye U.S. import/export prices and Australia's employment report for further cues on the major. On the higher side, any break above 0.7500 will take the pair till 0.7560/0.7600. The major support is around 0.7440 and break below will drag it till 0.7390 (200- day MA).
NZD/USD: The New Zealand dollar gained as markets ignored downbeat current account report, which showed deficit was slightly wider than expected. The major strengthened largely on the back of higher oil prices and improving risk-on market sentiment. The Kiwi trades 0.4 percent higher at 0.7282, retreating from a 2-week of 0.7234 hit on Tuesday. Immediate resistance is located at 0.7300, break above targets 0.7334 (10-DMA). On the downside, support is seen at 0.7227, break below could drag it till 0.7200.
Equities Recap
European shares gained, while the bond yields rose across the board after European Central Bank Executive Board member Sabine Lautenschlaeger stated that the central bank should refrain from new monetary easing measures.
The pan-European STOXX 600 index increased 0.38 percent at 340.01 points, while the FTSEurofirst 300 index added 0.41 percent at 1,338.40 points.
Britain's FTSE 100 trades 0.7 percent up at 6,713.23 points, while mid-cap FTSE 250 gained 0.42 percent at 17,733.55 points.
Germany's DAX rose 0.3 percent at 10,419.06 points; France's CAC 40 trades 1.01 percent higher at 4,388.64 points.
Tokyo's Nikkei shed 0.69 percent at 16,614.24 points, Australia's S&P/ASX 200 index rose 0.33 percent at 5,225.10 points.
Shanghai composite index and CSI300 index both lost 0.7 percent at 3,002.85 points and 3,238.73 points, respectively. Hong Kong's Hang Seng index edged down 0.1 pct at 23,190.64 points.
Commodities Recap
Crude oil prices gained after tumbling by as much as 3 percent on Wednesday, as data from an industry group showed a rise of 1.4 million barrels in U.S. crude stockpiles last week. Global benchmark Brent crude oil was trading 0.3 percent up at $47.32 per barrel at 1025 GMT, having declined to a low of $46.88 initially in the week. U.S. West Texas Intermediate crude rose 0.5 percent at $45.20 a barrel, pulling away from a low of $44.70, its lowest since September 7.
Gold gained, rebounding from session's lows, as the dollar tumbled on expectations that the U.S. Federal Reserve was unlikely to hike interest rates next week. Spot gold was trading up 0.4 percent at $1,322 an ounce at 1030 GMT, having touched an early low of $1,313.19, its the lowest in more than one week. U.S. gold futures were up 0.1 percent at $1,326.60 an ounce.
Treasuries Recap
The US Treasuries saw downward pressure across the curve during a relatively quiet session light on significant economic data. The United States 10-year Treasury yields broke the 1.70 percent mark, the highest close of yields since June 23 this year and the short-term 2-year yield pushed higher on the session, holding just below 0.80 percent.
The German bunds traded nearly flat Wednesday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year bond hovered around 0.047 percent mark, the yield on long-term 30-year note climbed 1/2 basis point to 0.642 percent and the yield on short-term 2-year bond fell 1/2 basis point -0.635 percent.
The UK gilts traded narrowly mixed as investors await the Bank of England monetary policy decision. The yield on the benchmark 10-year gilts rose nearly 1 basis point to 0.923 percent, the super-long 40-year bond yield jumped 3 basis points to 1.487 percent and the yield on short-term 2-year bond slid 2 basis points to 0.189 percent.
The Japanese bond traded mixed as investors speculate that the Bank of Japan will lower its key interest rate further into negative territory. On the contrary, long-term JGBs slumped as the United States 10-year Treasury yields broke the 1.70 percent mark on rising risk appetite among investors. The benchmark 10-year bond yield rose 1/2 basis point to -0.009 percent, the super-long 30-year JGB yield jumped 7-1/2 basis points to 0.600 percent and the short-term 2-year JGB yield slid 3-1/2 basis points to -0.273 percent.
The New Zealand government bonds closed lower as investors moved away from the safe-haven buying on expectations of higher second-quarter gross domestic product (GDP). The yield on the benchmark 10-year bond rose 7-1/2 basis points to 2.555 percent, the yield on 7-year note also ended 5-1/2 basis point higher at 2.210 percent and the yield on short-term 2-year note remained steady at 1.96 percent mark.
The Australian government bonds plunged as the United States 10-year Treasury yields broke the 1.70 percent mark on rising risk appetite among investors. The yield on the benchmark 10-year Treasury note rose 5-1/2 basis points to 2.168 percent and the yield on short-term 2-year climbed 2 basis points to 1.617 percent.
