Market Briefs
- USD/JPY plays 118.45/119.83. 120.40 was Tuesday’s recovery high.
- EUR/USD offered through Europe. From 1.1561 to 1.1450.
- Dollar trims gains as Chinese, European stocks sell off.
- ECB’s Praet says global economic risks, commodity prices raise downside risk to inflation.
- China Cabinet to lower export, import fees.
- Japan PM Adviser Hamada: USD/JPY at y116-y118 not a big risk to Abenomics.
- Hamada: Oil price drop a ‘blessing’ for Japan, not a problem for BOJ.
- SSEC fell to 8 month low, dropping for 5th straight trading session. Closes down 1.3% at 2,927.29 points.
- GBP rose vs EUR, some viewing GBP as a safe haven. EUR/GBP plays 0.7304/62.
- UK Aug CBI distributive trades +24 vs prev 21, 18 expected.
- Swiss Jul UBS consumption indicator 1.64 vs prev 1.61 revised.
Economic Data Ahead (ET/GMT)
- (0830 ET/1230 GMT) Durable Goods Orders (Jul), market expectation -0.5% m/m, previous +3.4% m/m.
- (0830 ET/1230 GMT) Ex-Transport Durable Goods Orders (Jul), market expectation +0.4% m/m, previous +0.6% m/m.
- (0830 ET/1230 GMT) Core Capital Goods Orders (Jul), market expectation +0.4% m/m, previous +0.7% m/m.
- (1030 ET/1430 GMT) EIA Weekly Petroleum Statistics.
- N/A Revised U.S. Building Permits (Jul) prev 1.119 mn SAAR, -16.3% m/m.
Key Events, Other Releases Ahead (ET/GMT)
- (1000 ET/1400 GMT) FRB New York’s Dudley speaks on the regional economic outlook; NY.
- (1145 ET/1545 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $475 mn).
- (1430 ET/1830 GMT) FedTrade operation 30-year Ginnie Mae (max $1.075 bn).
- (1900 ET/2300 GMT) BoJ Governor Kuroda speaks at the Japan Society; NY.
FX BeatUSD: The dollar eased against the safe-haven yen and euro on Wednesday, as Chinese and European stock markets lost ground despite PBoC’s easing measures, with most investors worrying over the outlook for the global economy.EUR/USD: The euro briefly turned higher on the day, rising to $1.1515 in London trade, it has been underpinned after the current market turmoil prompted an unwinding of carry trades. The pair has recovered till 1.1558 after making a low of 1.1395 yesterday. The overall trend is still bearish as long as short term resistance 1.1620 holds. On the lower side major support is around 1.1395 (Yesterday’s Low) and any break below targets 1.1340/1.1300. The pair’s further bullishness is seen only above 1.1712 (24th Aug high).USD/JPY: The dollar was trading at 119.35 yen, having traded at 119.83 yen in early European deals. Tonight’s capital flows data should show ongoing demand for foreign equities, which will keep JPY under downward pressure for several quarters yet. The pair has made a high of 120.38 yesterday and retreated till 118.43 today in Asian session. The overall trend is bullish as long as support 118 holds. Any further weakness can be seen only below 118 level and any break below 118 will drag the pair further down till 117/116 in short term. GBP/USD: Sterling inched higher against the euro on Wednesday, with some investors viewing Britain’s currency as a safer haven given the country’s relatively limited trade exposure to China. Sterling was 0.2 percent higher against the euro at 73.24 pence per euro, having hit a three-month low of 74.21 on Monday when it lost more than 2 percent, its biggest fall since 2009. Against the dollar, sterling was flat at $1.5678 while against its trade-weighted currency basket it was slightly lower at 92.8. The pair has retreated after yesterday’s brief rise to 1.5818 and is currently trading at 1.5650. The major support is around 1.5600 and any break below confirms further weakness , decline till 1.5530 is possible. Bearish invalidation happens if it closes only above 1.5800.AUD/USD: The Australian dollar was held hostage on Wednesday to developments in China in another choppy trading session, with sentiment remaining brittle amid concerns over the Asian giant’s economy. The Australian dollar was down 0.1 percent at $0.7132, having swung between positive and negative territory. It received a modest boost after data showing domestic construction work rose 1.6 percent in the second quarter, handily beating forecasts of a 1.5 percent fall. The pair recovered till 0.7248 yesterday after making a low of 0.7030 and has not able to hold on higher levels and started to decline from that level. It is currently trading at 0.7140. Short term bullishness can be seen only above 0.7250 and break above targets 0.7300/0.7340. On the lower side minor support is around 0.7090 and break below targets 0.7030/0.7000.USD/CHF has recovered till 0.95048 after making a low of 0.92569. The overall trend is till weak as long as resistance 0.9510 holds. The pair jumped till 0.94533 today morning and is currently trading at 0.9437 level. The minor resistance is around 0.9460 and break above would extend gains till 0.9510/0.9550. On the downside minor support is around 0.9380 and below that level will target 0.9340/0.9300.Equities RecapWorld shares slumped as investors feared fresh rate cuts in China may not be enough to stabilize its slowing economy or halt a stocks collapse that is wreaking havoc in global markets.Europe’s FTSEurofirst 300 extended losses and was down 2.7 pct, UK’s FTSE fell 1 pct, France’s CAC edged lower 1.5 pct and Germany’s DAX dropped 1.7 pct.Japan’s Nikkei closed up 3.20 pct at 18,376.83 points, China’s CSI300 index ended down 0.6 percent, while the Shanghai Composite Index ended off 1.3 percent for fifth straight day in the red.Commodities RecapOil stabilized on Wednesday after PBoC moved to support the country’s economy, but prices stayed near 6-1/2-year lows as a heavy supply glut kept the market outlook bearish. Brent was flat at $43.21 a barrel by 0925 GMT, and U.S. crude rose 5 cents at $39.36 a barrel.Gold dropped as equities bounced back after PBoC eased monetary policy further to support a faltering economy and stock markets that had fueled this week’s global rout. Spot gold fell 0.4 percent at $1,135.26 an ounce by 0609 GMT, on track for a third day of losses. U.S. gold for December delivery dropped 0.3 percent to $1,135.30 an ounce.Treasuries RecapThe yield on benchmark U.S. 10-year Treasuries dropped to 2.0854 percent from 2.091 percent in late U.S. trade. It was close to 2.50 percent barely a month ago.JGB prices finished the day steady to slightly lower, sending yields up 0.5bp in the 10-yr and longer zone. Except for the direct sale of short-term and super-long JGBs to the BoJ, cash activity was limited to transactions among dealers in the 2-yr tenor and the 10-yr tenor ahead of tomorrow’s 2-yr JGB auction and next Tuesday’s 10-yr JGB auction. In the AM session, some players sporadically bought JGBs maturing in 5 1/2 years amid a lack of the BoJ purchase in the zone, sending yields down 0.5bp from yesterday. But other investors and dealers stayed largely sidelined, except for the above-mentioned direct sales of JGBs to the BoJ, according to JGB traders.German 10-year bond yields dropped 5 basis points to back below 0.70 percent, though that was still a way away from Monday’s 0.51 percent lows when the China fears had coursed through markets.UK Gilts opened 8 ticks higher than the settlement of 118.48, as predicted, as concerns with regard to China linger on. Buyers have posed a brief test on 10- year cash yields to support around 1.86%, but thin markets have allowed day traders some latitude with regard to some profit taking.New Zealand government bonds edged up, pushing yields 1.5 basis points lower at the long end of the curve. Australian government bond futures were split, with the 3-year bond contract up 2 ticks at 98.270. The 10-year contract was down half a tick to 97.3700.
The material has been provided by InstaForex Company – www.instaforex.com