Market Roundup
- USA Today - Do not vote for “demagogue” Trump.
- FOMC Chair Yellen – Fed purchases of stocks, corporate bonds could help in a downturn, especially if Fed reached limits in buying Treasuries – Reuters.
- Ex-US TsySec Summers – BoJ commitment to overshoot 2% inflation target step in right direction, commitment to yield curve target constructive, negative interest rates alone not enough to fire up inflation expectations – Reuters.
- BoJ Gov Kuroda seeks inspiration from “Anne of Green Gables”, Summers says can’t take MoF background out of Kuroda – Nikkei.
- BoJ Policy Board Sept 21 meeting minutes – Lack of long-term relationship between monetary base inflation expectations, short-run relationship however via FX rates, structural problems as much as QQE behind reduced lending margins, financial system sound despite, need to boost private consumption, some board members had doubts on policy overhaul (usual dissenters) –Reuters.
- Reuters poll – Japan fund managers up stock holdings in September to 37.4%, bond exposure trimmed to 57.2%, August 36.4%, 58.3%.
- Japan Aug industrial output +1.5% m/m, +0.5% forecast, Sept forecast at +2.2%, Oct +1.2%, prev Sept estimate -0.7%, CabOffice ups assessment of output.
- Japan Aug unemployment 3.1%, jobs-applicants ratio 1.37, both unch from July, 3.0% and 1.37 forecast.
- Japan Aug core CPI -0.5% y/y, Tokyo Sept core -0.5% y/y, -0.4% forecast for both, Aug core-core CPI (excluding food/energy) +0.2% y/y.
- Japan Aug household spending -3.7% m/m, -4.6% y/y, -1.0%/-2.5% forecast, weak.
- China Sept Caixin mfg PMI 50.1, as forecast, Aug 50.0, orders edge up.
- China’s property bubble and rising risks of more curbs.
- Foreign CB US debt holdings -$6.762 bln to $3.143 trln Sept 28 week, Treasury holdings -$5.661 bln to $2.823 trln, agencies -$1.391 bln to $260.178 bln.
- NY Fed – Swaps with foreign CBs $291mln Sept 28 wk, ECB $290mln, BoJ $1 mln.
- Lipper – US high-yield bond funds attract most cash since mid-July.
- ECB Lautenschlaeger – No reason for more stimulus, must craft exit - BZ.
- UK Sept GfK consumer confidence index up to -1, Aug -7, -5 forecast.
- Australia Aug private-sector credit +0.4% m/m, +5.8% y/y, housing +0.5%, +6.5%.
- New Zealand Sept ANZ biz confidence 27.9%, own activity 42.4%, July 15.5%, 33.7%
- New Zealand Aug new dwelling consents -1.0% m/m, July -8.1%.
Economic Data Ahead
- (0245 ET/0645 GMT) France Sep HICP – flash, +0.5% y/y forecast; last +0.4%.
- (0245 ET/0645 GMT) Aug producer prices; last unch m/m.
- (0245 ET/0645 GMT) Aug consumer spending, +0.5% m/m forecast; last -0.2%.
- (0300 ET/0700 GMT) Switzerland Sep KoF indicator, 100.8 forecast; last 99.8.
- (0300 ET/0700 GMT) Spain Jul current account balance; last E2 bln surplus.
- (0400 ET/0800 GMT) Norway Sep unemployment, 2.9% nsa, 101.28k forecast; last 3.1%, 100.85k.
- (0400 ET/0800 GMT) Italy Aug unemployment, 11.4% forecast; last 11.4%.
- (0430 ET/0830 GMT) Great Britain Q2 GDP, +0.6% q/q, +2.2% y/y forecast; prelim +0.6%, +2.2%.
- (0430 ET/0830 GMT) Great Britain Q2 c/a balance, GBP30.5 bln deficit forecast; last GBP32.59 bln deficit.
- (0500 ET/0900 GMT) Eurozone Sep inflation - flash, +0.4% y/y forecast; last +0.2%.
- (0500 ET/0900 GMT) Eurozone Sep – ex-food/energy, +0.9% y/y forecast; last +0.8%.
- (0500 ET/0900 GMT) Eurozone Aug unemployment, 10.0% forecast; last 10.1%.
- (0500 ET/0900 GMT) Italy Sep CPI - flash, -0.3% m/m, +0.1% y/y forecast; last +0.2%, -0.1%.
- (0500 ET/0900 GMT) Italy Sep HICP – flash, +2.0% m/m, +0.1% y/y forecast; last -0.1%, -0.1%.
- (0600 ET/1000 GMT) Italy Aug producer prices; last +0.5% m/m, -3.0% y/y.
- (0830 ET/1230 GMT) United States Aug personal income, +0.2% m/m forecast; last +0.4%.
- (0830 ET/1230 GMT) United States Aug personal consumption, +0.1% m/m forecast; last +0.3%.
- (0830 ET/1230 GMT) United States Aug core PCE price index, +0.2% m/m forecast; last +0.1% m/m, +1.6% y/y.
- (0945 ET/1345 GMT) United States Sep Chicago PMI, 52.0 forecast; last 51.5.
- (1000 ET/1400 GMT) United States Sep U.Mich sentiment index – final, 90.0 forecast; prelim 89.8.
- (1300 ET/1700 GMT) United States Aug Dallas Fed PCE; last +0.8%.
Key Events Ahead
- N/A Riksbank executive board meeting, Buba Buch speaks in Ljubljana.
- (0400 ET/0800 GMT) Norway October CB currency operations, September NOK900 mln sales/day.
- (0600 ET/1000 GMT) UK DMO GBP0.5/1.5/3.0 bln 1/3/6-month treasury bill auctions.
- (1300 ET/1700 GMT) Dallas Fed Kaplan speaks at Dallas conference.
FX Beat
DXY: The dollar gained after U.S. growth rate was revised higher for the second quarter. The dollar index against a basket of currencies traded up at 95.53, having touched a 1-week peak of 95.74 hit on Wednesday.
EUR/USD: The euro edged down as the greenback gained across the broad after U.S. economy's growth rate was revised higher for the second quarter and following hawkish comments from Fed’s Lockhart. The bid tone around the major also weakened after Bloomberg reported that Deutsche Bank clients had withdrawn some excess cash held at the lender. The European currency trades lower at 1.1218, and was on track for a 0.1 percent decline for the month, but up 1 percent for the quarter. In absence of relevant data from the Eurozone, markets attention will remain on U.S. Personal Consumption Expenditure figures for further cues on the pair. Immediate resistance is located at 1.1249 (Previous Session High), break above could take it till 1.1279/ 1.1300. On the downside, support is seen at 1.1200, break below could drag it till 1.1181 (Sept 28 Low).
USD/JPY: The dollar advanced, extending gains for the fourth consecutive session, after U.S. GDP and unemployment benefit claim data suggested that the economy is still growing strong. However, the upside is likely to remain capped as weaker oil prices undermined investor risk appetite. Data released overnight showed Japan's unemployment rate in August edging up to 3.1 percent from previous 3.0 percent, while industrial production gained 1.5 percent against estimates of 0.5 percent and previous -0.4 percent. The major trades 0.2 percent up at 101.29, having touched a near 1-week high of 101.77 earlier in the session. Investors will track overall market sentiment ahead of fresh batch of U.S. economic releases due later in the day. Immediate resistance is located at 101.80, break above targets 102.40/ 102.70. On the downside, support is seen at 100.73 (5-DMA), break below could take it near 100.25.
GBP/USD: Sterling hovers below the 1.3000 handle, weighed down by growing expectations that the Bank of England might further ease monetary policy in the near term. The major gained some momentum after data released by Gfk overnight showed UK's consumer confidence for September at -1, beating estimates of -5 and previous -7. Sterling trades flat at 1.2967, recovering from an early low of 1.2945. Investors' will closely watch Britain's gross domestic product, current account and business investment data for further cues on the pair. Immediate resistance is located at 1.3002 (10-DMA), break above could take it near 1.3045. On the downside, support is seen at 1.2914 (5-week low) , break below targets 1.2900. Against the euro, the pound trades down at 86.52 pence, having touched a high of 85.93 in the previous session.
AUD/USD: The Australian dollar declined, extending previous session losses as concerns about Deutsche Bank's health undermined risk appetite globally. The major fell to a 3-day low of 0.7614 after domestic data suggested that private sector credit weakened for the month of July. However, it trimmed losses following the release of a slightly upbeat Chinese report, which showed China's Caixin manufacturing PMI in Sept at 50.1, matching expectations. The Aussie trades 0.1 percent lower at 0.7630, but was still on track for a monthly gain of 1.3 percent, having recouped all of Augusts’ loss. The major will continue to track broader market sentiment, ahead of series of U.S. economic data. Immediate support is seen at 0.7602 (Sept 16 Low), break below could drag it till 0.7583. On the upside, resistance is located at 0.7652 (5-DMA), break above targets 0.7675.
NZD/USD: The New Zealand dollar gained, retreating from a 4-day low hit earlier in the session. The major strengthened largely on the back of New Zealand's upbeat business confidence report and better-than-expected Chinese Caixin manufacturing PMI. However, gains were limited by RBNZ easing concerns. The Kiwi trades 0.3 percent up at 0.7270, having touched a high of 0.7304 on Thursday. The major will be driven by overall market sentiment ahead of US. macro fundamental data sets. Immediate resistance is located at 0.7311 (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
Asian shares declined following overnight losses on the Wall Street, while the dollar advanced after the rate of growth for the U.S. economy was revised higher for the second quarter.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent and was on course for a 0.4 percent fall for the week; however, it is set for a 2.2 percent gain in September.
Tokyo's Nikkei fell 1.46 percent at 16,449.84 points, Australia's S&P/ASX 200 index lost 0.54 percent at 5,441.80 points and South Korea's KOSPI shed 0.93 percent at 2,049.42 points.
Shanghai composite index gained 0.18 percent at 3,003.78 points, while CSI300 index was trading 0.32 percent higher at 3,254.88 points.
Hong Kong’s Hang Seng was trading 1.41 percent down at 23,661.53 points. Taiwan shares declined 1.12 percent at 9,166.85 points.
Commodities Recap
Crude oil prices declined on profit-taking, after gaining 7 percent in the previous two sessions, amid worries that OPEC's plan to curb oil production would be sufficient to rebalance the global crude glut. Global benchmark Brent crude was trading 0.4 percent lower at $49.40 per barrel at 0357 GMT, having touched fresh high of $49.80 in the session, its highest since September 8. U.S. West Texas Intermediate crude declined 0.1 percent at $47.10 a barrel, after gaining 5.3 percent in the previous session.
Gold edged up, as global equity markets tumbled; however, it was on course to end the week down over 1 percent. Spot gold gained 0.2 percent to $1,322.33 an ounce by 0402 GMT, having touched a more than 1-week low of $1315.98 in the previous session. U.S. gold futures were mostly flat at $1,326.40 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.5428 percent lower by 0.013 bps, while 5-year was 0.016 bps down at 1.1008 percent.
The Australian government bonds gained Friday as investors remained cautious ahead of the Reserve Bank of Australia’s monetary policy meeting, which is scheduled to take place on October 4. The yield on the benchmark 10-year Treasury note fell 5 basis points to 1.972 percent, the yield on 15-year note dipped 5-1/2 basis points to 2.314 percent and the yield on short-term 2-year slid nearly 4 basis points to 1.563 percent.
The New Zealand government bonds closed higher Friday 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 7 basis points to 2.295 percent, the yield on 7-year note ended 6 basis points lower at 2.060 percent and the yield on short-term 2-year note slid 4-1/2 basis points to 1.910 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year up 3.5 Canadian cents to yield 0.494 percent and the benchmark 10-year rising 28 Canadian cents to yield 0.951 percent. The 10-year yield fell 2.1 basis points further below its U.S. counterpart, leaving the spread at -60.3 basis points, its widest since March 30.
