Market Roundup
- USD/JPY +0.25%, EUR/USD +0.05%, GBP/USD -0.25%
- EUR/GBP dropped to 0.8589 early Europe but finds fresh bids
- DXY +0.06%, DAX +0.8%, Brent +0.5%, Iron +1.72%
- Germany leading econ inst revise up German 2016 GDP 1.9% vs 1.6% previous
- SABMiller shareholders back brewer's takeover by rival Anheuser-Busch InBev
- Germany Govt preparing rescue plan for Deutsche Bk – Die Zeit
- Germany Finance ministry says Die Zeit Deutsche Bk rescue report false
- S&P UK/EZ to avoid Brexit induced recession but growth to slow
- Norgesbank Gov- aims for ccy weakness but has no target
- Germany Oct GfK Consumer Sentiment 10.0 vs 10.2 previous, 10.2 expected
- Switzerland Aug UBS Consumption Indicator 1.53 vs revised 1.45 previous
- Sweden Sept Consumer Confidence 100.4 vs revised 94.6 previous, 95.1 expected
- Sweden Sept Mfg Confidence 101.0 vs revised 97.8
- Japan PM Abe – Government will work with BoJ to defeat deflation
- US TsySec Lew – No Fed surprises for emerging markets
- BoE Gov Carney – UK economy performing as expected
- Carney - Business inv/real estate market softening, will adjust to Brexit – Herald Scotland
- ECB/Ireland CB Lane – Up to supervisors to mitigate risks of low rates
Economic Data Ahead
- (0830 ET/1230 GMT) The U.S. durable goods orders are expected to have fallen 1.4 percent in August after rising 4.4 percent in July, while non-defense capital goods orders excluding aircraft are likely to have declined 0.2 percent after gaining 1.5 percent the prior month.
- (1030 ET/1430 GMT) The Energy Information Administration (EIA) reports it’s Crude Oil Stocks for the week ending September 23.
- (1950 ET/2350 GMT) Japan's Ministry of Finance will report foreign stock investment for the week ending September 16.
- (1950 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic bonds for the week ending September 16.
- (1950 ET/2350 GMT) Japan's Ministry of Economy, Trade and Industry will release retail trade data for the month of August. The indicator posted am annualized decline of 0.2 percent in the prior month.
Key Events Ahead
- (0930 ET/1330 GMT) European Central Bank President Mario Draghi's speech.
- (0845 ET/1245 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a fireside chat moderated by Harry Melander, president of the Minnesota Building and Construction Trades Council and board member of the Federal Reserve Bank of Minneapolis.
- (1000 ET/1400 GMT) Federal Reserve Chair Janet Yellen will give semi-annual testimony on the "Federal Reserve's Supervision and Regulation of the Financial System" before the House Financial Services Committee.
- (1015 ET/1415 GMT) St. Louis Federal Reserve Bank President James Bullard gives welcome remarks before the Community Banking in the 21st Century Conference hosted by the Federal Reserve Bank of St. Louis.
- (1330 ET/1730 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on economic conditions and monetary policy before the Community Banking in the 21st Century Conference hosted by the Federal Reserve Bank of St. Louis.
- (1635 ET/2035 GMT) Cleveland Federal Reserve President Loretta Mester speaks on the economic outlook and monetary policy in Cleveland, Ohio.
- (1915 ET/2315 GMT) Kansas City Fed President Esther George speaks at a dinner at 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 as investors shifted focus towards the Federal Reserve chair Janet Yellen's semi-annual testimony before a Congressional committee. The dollar index against a basket of currencies trades 0.1 percent up at 95.55, having touched a 1-week high of 95.71 earlier in the session.
EUR/USD: The euro recovered after declining to a 1-week low below the 1.1200 handle. The major came under intense selling pressure as markets raised concerns over the health of the European financial system. However, it trimmed losses after European Central Bank President Mario Draghi reiterated the need for structural reforms in order to stimulate growth in the Eurozone at the ECB's first annual research conference. The European currency trades up at 1.1211, having touched an early low of 1.1181, its weakest since Sept. 21. The ECB chief is also due to speak in front of the German Parliament later in the day. The pair is facing strong resistance around 1.1280 (trend line joining 1.16163 and 1.13660) and any slight bullishness can be seen only above that level. It has broken major support at 1.1194 (55- day EMA) and short-term weakness can be seen below 1.1120 level.
USD/JPY: The dollar rose as broad based recovery in European equity markets strengthened investor risk appetite. However, the gains were limited as investors seem to have ruled out the likelihood of a Fed rate hike in November. The major trades 0.3 percent higher at 100.71, after hitting a 1-month low of 100.085 yen in the previous session. The pair has benefited from the prevalent risk-on sentiment, as markets await Fed Chair Yellen’s testimony before the House Financial Services Committee. 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 traded above the 1.3000 handle, after Bank of England Governor Mark Carney gave positive comments on the long-term prospects of the UK economy. The central bank's governor stated that the British economy was performing as the Bank had anticipated when it launched stimulus measures in August to reduce the Brexit impact. Sterling trades flat at 1.3021, attempting to sustain gains above the 1.3000 level. On the higher side, major resistance is around 1.3050 (10- day MA) and any break above will take the pair to next level till 1.307 (10- day MA). The support stands 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 lower at 86.27 pence, having touched an intraday high of 85.89 pence.
USD/CHF: The Swiss franc edged down, extending losses for the second consecutive session as investors rushed towards riskier assets amid risk on market profile. The greenback trades up at 0.9709, having touched an early high of 0.9736. Data released earlier showed Switzerland's UBS consumption indicator rose 1.53 in August against revised 1.45 in the previous month. On the higher side, any break above 0.9735 will take the pair 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 extended its bullish momentum for the third straight day, as investors' sentiment strengthened. However, the major trimmed gains as markets turned cautious ahead of Fed Chair Janet Yellen's testimony amid volatile oil prices. The Aussie trades flat at 0.7664, after rising to a high of 0.7687 earlier in the session. On the higher side, any break above 0.770 will take the pair till 0.7735/ 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 slumped, erasing all of its gains made in the previous two sessions. The major came under renewed selling pressure as the greenback strengthened on the back of upbeat consumer confidence index and hawkish Federal Reserve Vice Chairman Stanley Fischer's comments. Investor’s expectations of further interest rate cut by RBNZ at its November meeting and weak oil prices also undermined the bid tone around the Kiwi. The pair trades 0.8 percent lower at 0.7240, hovering towards a 1-month low of 0.7220 hit on Monday. Immediate resistance is located at 0.7311 (20-DMA), break above targets 0.7350/ 0.7370 (2-weeks High). On the downside, support is seen at 0.7220, break below could drag it till 0.7200.
Equities Recap
European shares rose as Deutsche Bank stocks retreated from all-time lows hit in the previous session, while investors await Federal Reserve Chair Janet Yellen's testimony before a Congressional committee, European Central Bank President Mario Draghi speech and oil producers meeting in Algiers.
The pan-European STOXX 600 index increased 0.47 percent at 341.80 points, while the FTSEurofirst 300 index added 0.45 percent at 1,345.13 points.
Britain's FTSE 100 trades 0.67 percent higher at 6,853.34 points, while mid-cap FTSE 250 gained 0.79 percent at 17,767.25 points.
Germany's DAX rose 0.81 percent at 10,442.31 points; France's CAC 40 trades 0.68 percent higher at 4,428.51 points.
MSCI's broadest index of Asia-Pacific shares outside Japan traded in a volatile trade and last stood less than 0.1 percent higher on the day.
Tokyo's Nikkei declined 1.31 percent at 16,465.40 points, Australia's S&P/ASX 200 index fell 0.06 percent at 5,408.90 points and South Korea's KOSPI shed 0.47 percent at 2,053.06 points.
Shanghai composite index declined 0.3 percent at 2,987.86 points, while CSI300 index also fell 0.6 percent at 3,230.89 points. Hong Kong's Hang Seng index added 0.2 percent at 23,619.65 points.
Commodities Recap
Crude oil prices edged up, pulling away from a 1-week low of $45.62 hit in the previous session, after industry report showed an unexpected draw in U.S. crude stocks, however, growing worries over disagreement among producers to restrain output capped gains. International benchmark Brent crude was trading 0.2 percent higher at $46.31 per barrel at 0916 GMT, having touched a low of $45.62 hit on Tuesday, its lowest since Sept. 20. U.S. West Texas Intermediate crude declined 0.16 percent at $44.86 a barrel, after climbing as high as $45.09 in earlier trading.
Gold prices declined, hitting a 1-week low, after recording its biggest single-day loss in nearly a month on Tuesday, as the dollar strengthened on the view that Democrat Hillary Clinton had won the first U.S. presidential debate against Republican rival Donald Trump. Spot gold fell 0.1 percent to $1,324.88 an ounce by 0922 GMT, having touched a low of $1,322.29, its lowest since Sept. 21. U.S. gold futures eased 0.2 percent to $1,327.40 an ounce.
Treasuries Recap
The US Treasuries witnessed downward pressure across the curve ahead of the seven-year note auction and Federal Reserve policymakers’ speech. The yield on the benchmark 10-year Treasury note rose 2-1/2 basis points to 1.581 percent, the yield on 5-year bond jumped 2 basis points to 1.143 percent and the yield on short-term 2-year note climbed 1-1/2 basis points to 0.758 percent.
The UK gilts 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 gilts hovered around 0.68 percent mark, the super-long 40-year bond yield remained steady at 1.264 percent and the yield on short-term 2-year bond stood flat at 0.088 percent.
The German bunds traded nearly flat as investors await the short-term two-year schatz auction. The yield on the benchmark 10-year bond hovered around -0.137 percent, the yield on long-term 30-year note remained steady at 0.423 percent and the yield on short-term 2-year bond rose 1/2 basis point to -0.693 percent.
The Japanese government bonds traded modestly firmer as investors await a series of key economic data, followed by the Bank of Japan’s Governor Haruhiko Kuroda speech. The benchmark 10-year bond yield fell 1 basis point to -0.083 percent, the yield on long-term 30-year note dipped 2-1/2 basis points to 0.484 percent and the yield on short-term 2-year note slid more than 1-1/2 basis points to -0.286 percent.
New Zealand’s 10-year bond yields relapsed towards two percent mark 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 2.335 percent, the yield on 7-year note ended 1 basis point lower at 2.090 percent and the yield on short-term 2-year note also slid 1 basis point to 1.920 percent.
The Australian government bonds were pushed modestly higher, alongside weakness in the equity market during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.003 percent, the yield on long-term 15-year note also dipped nearly 1 basis point to 2.369 percent and the yield on short-term 2-year slid 2-1/2 basis points to 1.587 percent.
