Market Roundup
USD/JPY +0.3%, GBP/USD -0.5%, EUR/USD -0.25%
DXY +0.31%, DAX flat, Brent -0.5%, Iron +4.3%, Gold -0.05%
Norway SWF says Stg crash was a “correct move” reflects expectations
SA- Formal summons issued for Finmin Gordhan 702 radio
USD/ZAR rallies 2.5% to 14.30 on Gordhan news
BoE’s Saunders-UK infl. highly sensitive to swings in exch rate
Fed’s Evans (non-voter in 2016) sees benefits to overshooting 2% inflation
RBNZ says further easing will be required, knocking NZD/USD lower overnight
Germany Oct ZEW Econ Sent. 6.2 vs 0.5 previous, 4.3 expected
Germany Oct ZEW Curr Cond. 59.5 vs 55.1 previous, 55.5 expected
UK Sept BRC R.Sales +0.4% y/y, total sales +1.3%, Aug +0.9/-0.3%
UK BRC average total sales over past 12-mos +0.9%, slowest since ‘95
Sweden Sept Core CPI +1.2% vs 1.4% previous, 1.5% expected
Australia Sept NAB business conditions index +8, confidence +6, Aug +7, +6
Global investment flows neutering national monetary policy
Economic Data Ahead
(1000 ET/1400 GMT) The Fed reports its labor market conditions index (LCMI) for the month of September. The index posted a decline of 0.7 in the prior month.
(1930 ET/2330 GMT) The Faculty of Economics and Commerce Melbourne Institute will release Australia's Westpac consumer confidence for the month of October, The index rose 0.3 percent in September.
(1950 ET/2350 GMT) Japan's machinery orders are likely to have slumped 5.5 percent in August, after rising 4.9 percent in the previous month. However, on annualized basis, it is expected to rise 6.5 percent from 5.2 percent in July.
Key Events Ahead
(1100 ET/1500 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a town hall discussion on ending Too-Big-to-Fail, the role of the Federal Reserve, the Troubled Asset Relief Program and other topics, in Arden Hill, Minnesota.
(1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae(max $1.725 bln.
FX Beat
DXY: The dollar gained as growing expectations of a Fed rate hike by 2016 pushed U.S. treasury yields up to their highest since early June. The dollar index against a basket of currencies trades 0.5 percent higher at 97.43, having hit an early 11-week high of 97.48.
EUR/USD: The euro declined to a fresh 1-month low, despite stronger-than-expected ZEW Survey figures in both the euro zone and Germany for the month of September. Eurozone’s economic sentiment rose to 12.3, beating consensus of 6.3 and previous 5.4, while German current situation and economic sentiment increased 59.5 and 6.2, respectively. The major weakened as the greenback boosted across the board on growing Fed rate hike speculation. The pair trades 0.5 percent lower at 1.1076, having touched a low of 1.1073, it lowest since August 9. Any break above trendline resistance of 1.1250 will take it to next level till 1.1300/1.13660 in the short term. On the lower side, any break below 1.11000 (trend line joining 1.0510 and 1.09115) will drag it to lower level till 1.1000/1.0950/1.0910 in the short term.
USD/JPY: The dollar rose above the 104.00 handle, supported by rising treasury yields amid a better risk market profile. However, the major failed to sustain gains above the same level, as dovish comments by Chicago Fed president Evans halted greenback’s rally against most of its peers. The Japanese yen trades 0.2 percent lower at 103.81, just below a 4-week low of 104.16 hit last week. The major resistance is around 104.35 (Sept 2 high) and a break above targets 105. On the lower side, major support is around 102.20 (daily Kijun-Sen) and any break below 102.20 will drag the pair till 101.66 (10- day MA)/101.
GBP/USD: Sterling fell back below the 1.2300 handle, as growing Brexit concerns weighed heavily on markets sentiment. The major attempted a minor recovery earlier, however, it was short-lived as the U.S. dollar remained on the rise across the board. Sterling trades 0.8 percent lower at 1.2249, attempting to sustain gains above the 1.2200 handle. On the lower side, major support is around 1.1990 and any break below will drag the pair to next level till 1.1690. The intraday resistance is around 1.2513 (100- H MA) and any break above targets 1.2703 (200- H MA) in the short term. Against the euro, the pound was trading 0.4 percent lower at 90.43 pence.
USD/CHF: The Swiss franc extended losses as the dollar rallied on increasing Federal rate hike expectations. The major trades 0.5 percent higher at 0.9876, hitting fresh 1-month high at 0.9877. The pair has closed well above 200- day MA, hence slight jump till 0.9880 is possible. On the higher side, any close above 0.9792 (200-day MA) will take the pair till 0.9840/0.9880. The short-term weakness can be seen only below 0.9730 and any break below targets 0.9680/0.9630.
AUD/USD: The Australian dollar came under fresh selling pressure as rising US treasury yield across the curve and falling oil prices weakened the bid tone around the Aussie. The major trades 0.8 percent lower at 0.7540, hovering towards a 3-week low of 0.7530. On the higher side, major resistance is around 0.7633 (10- day MA) and any break above will take the pair till 0.7680/0.7730. The major support is around 0.7550 (90- day EMA) and a break below will drag it till 0.7530/0.7480.
NZD/USD: The New Zealand dollar slumped by more than 1 percent after Assistant Governor of the Reserve Bank of New Zealand John McDermott warned that further policy easing would be required to push inflation higher. The economy's annual inflation rate was 0.4 percent in the second quarter; well under the RBNZ's target range of 1- 3 percent. The Kiwi trades 1.0 percent lower at 0.7060, having touched a 2-1/2 low of 0.7058 earlier in the session. Immediate resistance is located at 0.7150, break above targets 0.7180/ 0.7200. On the downside, support is seen at 0.7050, a break below could drag it till 0.7000.
Equities Recap
European shares edged down, as oil prices eased back from a 1-year high while sterling continued to slump on Brexit concerns.
The pan-European STOXX 600 index decreased 0.04 percent at 341.84 points, while the FTSEurofirst 300 index also shed 0.07 percent at 1,349.39 points.
Britain's FTSE 100 trades 0.14 percent up at 7,107.11 points, while mid-cap FTSE 250 advanced 0.39 percent at 18,047.69 points.
Germany's DAX edged up 0.07 percent at 10,630.98 points; France's CAC 40 trades 0.17 percent higher at 4,504.85 points.
MSCI's broadest index of Asia-Pacific shares outside Japan ended down 1.1 percent.
Tokyo's Nikkei gained 0.98 percent at 17,024.76 points, Australia's S&P/ASX 200 index added 0.11 percent at 5,481.60 points and South Korea's KOSPI shed 1.21 percent at 2,031.93 points.
Shanghai composite index rose 0.6 percent at 3,065.25 points, while CSI300 index climbed 0.4 percent at 3,306.25 points. Hong Kong’s Hang Seng was slumped 1.3 percent down at 23,549.52 points.
Commodities Recap
Crude oil prices declined, pulling back from 1-year highs, weighed down by concern that a production cut might not be sufficient to reduce a 2-year old global surplus of crude oil. International benchmark Brent crude was trading 0.3 percent down at $52.71 per barrel at 0959 GMT, having touched a 1-year high of $53.71 on Monday. U.S. West Texas Intermediate crude declined 0.2 percent at $51.02 a barrel, but within the sight of a 4-month high of 51.57 hit in the previous session.
Gold prices tumbled, reversing most of its previous session gains, as the U.S. dollar strengthened on growing expectations of U.S. interest rate hike in December. Spot gold fell 0.2 percent to $1,256.39 an ounce by 1003 GMT, hovering towards a 4-month low of $1,241.30 hit on Friday. U.S. gold futures fell 0.2 percent to $1,258.40 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.7691 percent higher by 0.033 bps, while 5-year was 0.034 bps up at 1.3042 percent.
The Japanese government bond prices ended the day slightly lower across the curve in very quiet trading, with yields up by 1bp to 2.5bp from last Friday's afternoon close.
The Australian government bond futures were weak, with the 3-year bond contract down 4 ticks at 98.34, while the 10-year contract fell 6 ticks to 97.785.
The New Zealand government bonds rallied, sending yields about 2 ticks lower at the long end of the curve.
The material has been provided by InstaForex Company - www.instaforex.com