Market Roundup
- CFTC IMM CTA data – Specs slash long USD bets to lowest since mid-June, net EUR shorts lowest since July ’14, net JPY shorts lowest since mid-May.
- Investors pull record $29.5 bln from equity funds in China-driven rout.
- World to Fed- We are prepared for US rate hike so don’t delay.
- FOMC Vice Chair Fischer -US inflation to rise, will likely up rates at gradual pace, not clear how Fed hike debate affected China stocks.
- Atlanta Fed Lockhart – Should consider rate hike at any of next 3 meetings.
- BoE Gov Carney – BoE rate stance unchanged by China, sharper relief on policy around turn of year.
- ECB VP Constancio – Bank asset buys helped firm inflation but outside shocks.
- SNB Chair Jordan – Negative Swiss rates to stay for some time, CHF remains clearly overvalued.
- France Econ Min Macron – Proposes new start for Europe, more EZ powers.
- Japan July industrial output -0.6% m/m, +0.1% eyed, slower exports cited, August +2.8% eyed, previous estimated +2.7%, Sept -1.7% eyed.
- China Prem Li – China growing at reasonable pace despite pressures.
- Australia July private-sector credit +0.6% m/m, housing credit +0.6%, June +0.4%, +0.6%., priv-sector credit +5.9% y/y in July.
- Australia Q2 company gross profits -1.9% q/q, -2% eyed, pre-tax -11.3%, business inventories flat, +0.3% eyed, wages/salaries +1.9%.
- Australia August TD/MI inflation +0.1% m/m, +1.7% y/y, trimmed mean unchanged, +1.5%.
- Australia HIA July new home sales -0.4% m/m but still historically high.
- NZ August AZN biz confidence index 29.1%, 6-year low, own activity +12.2%, July -15.3, +19.0, dairy cited, also pessimistic agricultural outlook.
- NZ July new dwelling consents +20.4% m/m, most in 3 yrs, +23.8% y/y.
Economic Data Ahead
- (0300 ET/0700 GMT) Switzerland August KoF indicator, 99.5 eyed; last 99.8.
- (0400 ET/0800 GMT) Italy June retail sales; last -0.1% m/m, +0.3% y/y.
- (0400 ET/0800 GMT) Spain June current account balance; last bln surplus.
- (0400 ET/0800 GMT) Norway July credit indicator, +5.8% y/y eyed; last +5.8%.
- (0500 ET/0900 GMT) Euro zone August inflation – flash, +0.1% y/y eyed; last +0.2%, ex-f/e +0.9%.
- (0500 ET/0900 GMT) Italy August CPI- flash, +0.1% m/m, +0.1% y/y eyed; last -0.1%, +0.2%.
- (0500 ET/0900 GMT) Italy August HICP flash, -0.2% m/m, +0.3% y/y eyed; last -2.0%, +0.3%.
- (0900 ET/1300 GMT) Belgium Q2 GDP – revised; prelim +0.4% q/q.
- (0945 ET/1345 GMT) US August Chicago PMI, 54.7 eyed; last 54.7.
- (1030 ET/1430 GMT) US August Dallas Fed manufacturing business index; last -4.6.
Key Events Ahead
- N/A France E3.4-3.8/1.2-1.6/1.1-1.5 bln 3/4/12-month BTF auctions.
- (0400 ET/0800 GMT) Norges Bank September currency operations, Aug NOK700 mln sales/day.
FX Recap
EURUSD: Pair is currently supported below 1.1300 levels and trading at 1.1249 levels. It made intraday high at 1.1262 and low at 1.1162 levels. Renewed wave of risk-aversion gripped the markets on the first trading day of the week after Chinese equities halted their recovery path and swung back into losses re-fuelling concerns over China’s economy. Retail sales for Germany posted better-than-expected results in the seventh month of 2015, according to the latest report from the German statistical office released on Monday. Retail turnover rose 1.4% in real terms month-on-month in July, up from a 2.3% decline recorded in the previous month, coming in above market expectations of a 1.1% increase. The euro zone will publish its August inflation data estimate on Monday, with inflation expected to register a 0.1% increase y/y. In July, consumer price growth in the euro zone reached a 0.2% annual level. Germany will publish the results of retail sales in July with a 1.3% gain forecast on a monthly basis, following the 2.3% decline in June, and a 1.5% hike annually after advancing 5.1% y/y a month ago. Initial support is seen around 1.1210 levels and resistance at 1.1425 levels.USDJPY: Pair is supported around 121.00 levels. It made intraday high at 121.74 and low at 120.88 levels. It is currently trading around 121.09 levels. The major failed to extend towards 122 handle and slipped to 121 support on a yet-another occasion as the Japanese yen benefitted from renewed round of risk-aversion spread across Asia following weaker Chinese stocks re-igniting China fears. Moreover, the yen rallied against the greenback despite downbeat Japan’s industrial production data released earlier this session. Japan’s industrial output unexpectedly fell in July, sapping a rebound in the economy from a slump last quarter. Output fell 0.6% from June, when it increased 1.1%, compared with the median forecast for a 0.1% gain in Bloomberg survey. Initial support is seen at 118.23 and resistance at 122.01 levels.GBPUSD: Pair is supported above 1.5400 levels. It made intraday high at 1.5436 and low at 1.5380 levels. It is currently trading at 1.5425 levels. Sterling inched higher 0.2 pct against the dollar on last Friday, recovering from the previous day’s 1 1/2-month lows after data showed UK growth was underpinned by robust exports and business investments in Q2. The UK economy grew at the rate of 0.7% between the first and second quarters, and rose 2.6% on a year-on-year basis. This was the tenth consecutive quarter of positive growth, the Office for National Statistics (ONS) informed on last Friday. UK banks will be closed today in observance of the Summer Bank Holiday. Initial support is seen at 1.5321 and resistance at 1.5592 levels.NZDUSD: Pair is supported above 0.6400 levels and trading at 0.6422 levels. It made intraday high at 0.6474 and low at 0.6409 levels. Both WTI and Brent saw their prices dropping on Monday after the rally last week, sparked by a drop in US crude stockpiles and the market calm down in China. The safe-haven currencies such as the yen, euro and the Swiss enjoyed solid gains on risk-off trades while the Antipodeans suffered with the Kiwi losing the most on NZ GDP downward revisions. Initial support is seen at 1.3187 and resistance at 1.3322 levels.AUDUSD: Pair is supported above 0.7100 levels and trading around 0.7153 levels. It made intraday high at 0.7171 and low at 0.7124 levels. The Australian dollar remained bearish on Monday, although it managed to bounce off its intraday lows. The main pressure comes from USD bulls, which is supported by a calmer market environment and the slowly approaching September meeting of the Federal Reserve (Fed). Aussie traders will focus on the Reserve Bank of Australia (RBA) rate decision due on Tuesday, while on Friday in the US the non-farm payrolls for August will come out. Initial support is seen at 0.7040 and resistance is seen around 0.7236 levels.
Equity Recap
Global financial markets looked set for another rough week on Monday, with stocks and commodities falling ahead of data that could give clues on when the U.S. will raise interest rates and surveys which are likely to point to further weakness in China.Shanghai stocks, the epicentre of this month’s whip-saw action, were down more than 3 percent at one point. They have plunged more than 40 percent since mid-June.Japan’s Nikkei and Australia were down 2 percent before paring losses.Australia’s S&P/ASX 200 index closes down 1.24 pct at 5,198.30 points.Tokyo’s Nikkei average closes down 1.28 pct at 18,890.48.
Treasury Recap
China funds raise suggested bond allocation to 14.4 pct from 9.4 pct.BOJ offers to lend Y800 bln of JGBs on spot basis through 9/1 as a secondary source of JGBs.Thailand 15 bln baht, 28-day Treasury bill average accepted yield 1.42502 pct.
10-year US treasury yield at 2.161 percent vs US close of 2.184 percent on Friday.New Zealand government bonds rose, pushing yields one basis point lower along the yield curve.
Australian government bond futures rose, with the three-year bond contract up 2 ticks at 98.200. The 10-year contract also added 2 ticks to 97.2600.
Commodity Recap
Gold struggled to recover from last week’s losses, even in the face of a softer dollar. Spot gold was flat at $1,133.98 an ounce, after dropping more than 2 percent last week in its steepest decline in five weeks. For the month, the metal was up 3.5 percent.
U.S. crude oil prices dipped as their biggest two-day surge in quarter of a century ran its course. U.S. crude was down 1.3 percent at $44.62 a barrel after jumping more than 6 percent on Friday on frenetic short-covering fuelled by violence in Yemen, a storm in the Gulf of Mexico and refinery outages.
The material has been provided by InstaForex Company – www.instaforex.com