Market Roundup
- USD/JPY off Thursday 121.40 top but holds firmer levels. Plays in between 120.65/121.32 levels.
- EUR/USD range In between 1.1233/1.1310. Thursday’s low at 1.1203.
- DXY steadies, up 3% from Monday’s 7month 92.621 low.
- GBP rises after UK date points to robust investment, exports.
- GBP/USD up to 1.5442 from 1.5339 then down to new lows at 1.5364.
- DAX down 1% to 10196 but off day’s lows.
- SSEC gained 4.9 percent to 3,232.35 points. For week lost 7.9%.
- China PBOC says it conducts 16bln Yuan in s/t liquidity operations.
- UK Q2 GDP 2nd reading, unchanged from 0.7/2.6% q/q & y/y returns.
- UK Q2 business investment stronger q/q at 2.9% vs 2.0% previous.
- Annual investment at 5% down on Q1’s 5.7%, 4.0% expected.
- Euro zone August Economic sentiment 104.2 vs previous 104.0. 103.8 expected.
- Euro zone August Consumer confidence final -6.9 vs previous -7.2 revised. -6.9 expected.
- Switzerland real GDP growth for Q1 revised to 1.2% y/y from previous reported 1/1% y/y.
- Swedish July Retail Sales +5.9% y/y vs 5.4% forecast.
- Japan Aso- Not considering stimulus spending after stock selloff.
Economic Data Ahead
- (0800 ET/1200 GMT) Brazil GDP Data.
- (0830 ET/1230 GMT) US July personal income, +0.4% m/m eyed; last +0.4%.
- (0830 ET/1230 GMT) US July personal consumption, +0.4% m/m sa eyed; last +0.2% sa, unchanged nsa.
- (0830 ET/1230 GMT) US July PCE price index; last +0.2% m/m, +0.3% y/y.
- (0830 ET/1230 GMT) US July core, +0.1% m/m eyed; last +0.1% m/m, +1.3% y/y.
- (0830 ET/1230 GMT) US July goods trade balance advance; last US$62.26 bln deficit.
- (0830 ET/1230 GMT) Canada’s Producer Price index.
- (0900 ET/1300 GMT) Mexico’s jobless rate is expected to have risen to 4.71% in July from 4.41 pct in June.
- (0930 ET/1330 GMT) Brazil’s central bank releases its monthly report on the federal budget.
- (1000 ET/1400 GMT) US August UOM sentiment index final, 93.0 eyed; prelim 92.9.
- (1300 ET/1700 GMT) US July Dallas Fed PCE; last +2.1% AR.
Key Events Ahead
- N/A Jackson Hole Economic Policy Symposium continues.
- (0945 ET/1345 GMT) Fed Trade operation 15-yr Fannie Mae/Freddie Mac (max $600 mn).
- (1145 ET/1545 GMT) Fed Trade operation 30-yr Ginnie Mae (max $950 mn).
FX Recap
USD: The dollar was steady against a basket of major currencies on Friday as financial markets settled down, capping off a tumultuous week when the greenback hit seven-month lows against the euro and the yen. The dollar index was at 95.654, off a one-week high of 96.031 set on Thursday.EURUSD is currently supported below 1.1300 levels and trading at 1.1282 levels. It made intraday high at 1.1310 and low at 1.1232 levels. The shared currency on Friday pared some of the significant losses from the previous session when the US dollar rallied on the back of strong fundamentals. The US economy expanded at an annualized 3.7% in the second quarter, much better than the previous estimates of just 2.3% growth and also beating estimates of a 3.1% rise. The Greek economy unexpectedly escaped technical recession during the second quarter of the year, final GDP data for the second quarter showed on Friday as falling business morale, staggering unemployment, deep deflation and political uncertainty were expected to take a toll on the troubled country’s economy. The US session will be in focus today with the Jackson Hole Symposium continuing, while on the macro front investors will eye personal income data and the University of Michigan confidence survey. Initial support is seen around 1.1210 levels and resistance at 1.1425 levels. Option expiries are at 1.1150 (418M), 1.1300 (510M), 1.1355 (1.1BLN).USDJPY is supported below 121.00 levels. It made intraday high at 121.31 and low at 120.65 levels. It is currently trading around 120.81 levels. The Bank of Japan’s preferred inflation gauge didn’t increase for the first time in more than two years last month, putting greater pressure on the central bank to stem a decline in price pressures by expanding its monetary easing program. The National core CPI was flat in July after rising 0.2% year-on-year in June, according to the Statistics Bureau, while the more timely Tokyo CPI measure fell 0.1% year-on-year in August, the same pace as July. Initial support is seen at 118.23 and resistance at 122.01 levels. Option expiries are at 121.00 (787M), 121.50 (360M), 122.00-15 (723M).GBPUSD is supported around 1.5400 levels. It made intraday high at 1.5442 and low at 1.5364 levels. It is currently trading at 1.5390 levels. Sterling inched higher 0.2 pct against the dollar on 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. It was trading at $1.5427 after the data, from $1.5400 beforehand. Against the euro, it trimmed gains at 73.22 pence per euro, having traded at 73.33 beforehand. 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 Friday. Investors’ attention will now shift to the US session, as the recent series of upbeat US fundamentals, including better-than-expected US Q2 GDP, added to USD strength in the previous session. The Jackson Hole Symposium will continue for the second day, while on the macro front investors will eye personal income data and the University of Michigan confidence survey. Initial support is seen at 1.5321 and resistance at 1.5592 levels.NZDUSD is supported above 0.6400 levels and trading at 0.6468 levels. It made intraday high at 0.6505 and low at 0.6462 levels. The New Zealand dollar continued to gain on the US dollar on Friday after closing 0.3% higher on Thursday, with commodity-linked currencies outperforming as commodity prices rebounded overnight. Brent crude in particular, surged more than 9% overnight to above $47 per barrel, up from $43 per barrel on Wednesday. WTI futures rose from $39 per barrel to almost $43. Revised US GDP data on Thursday also provided the markets with something to get excited about, with second-quarter growth revised up from 2.3% to 3.7% quarter-on-quarter. Initial support is seen at 1.3187 and resistance at 1.3322 levels. Option expiry is at 0.6500 (250M).AUDUSD is supported above 0.7100 levels and trading around 0.7153 levels. It made intraday high at 0.7205 and low at 0.7153 levels. Oil prices remained fairly volatile on Friday, seesawing from red to green, with the black gold set to see its first week of gains after eight solid weeks of declines. The Australian dollar, which is also closely-linked with commodities, rose 0.31% to $0.7187 at the same time, from $0.7164. Oil prices rose on Friday, adding to hefty gains posted the session before, with both benchmarks heading for a weekly gain after eight straight weeks of declines. Initial support is seen at 0.7040 and resistance is seen around 0.7236 levels. Option expiries are at 0.7200 (673M), 0.7260 (374M).
Equity Roundup
Equities and commodities gave up some of their bounces as investors turned their focus back to central banks’ ability to avert deflation.The pan-European FTSEurofirst 300 index was down 0.5 percent at 0929 GMT, with benchmark indexes in London, Paris and Frankfurt down 0.1 to 0.7 percent.
Tokyo’s Nikkei average unofficially closes up 3.03 pct at 19,136.32, CSI500 futures contracts all rise by 10 pct daily limit, Shanghai Composite Index closes up 4.8 pct at 3,232.35 points.
The MSCI All-Country World index was up 0.3 percent on the day and also on the week.
Commodities Recap
Oil prices steadied on Friday after bouncing back from six-and-a-half-year lows on recovering equities markets, strong U.S. economic growth and news of low crude supplies from Nigeria. Brent was down 40 cents at $47.16 per barrel by 0810 GMT. It settled $4.42 higher at $47.56 on Thursday. U.S. crude was down 30 cents at $42.26 a barrel, after ending up $3.96.Gold edged up on Friday but was still on track to post its biggest weekly drop in five as strong U.S. economic data supported the case for a near-term increase in interest rates. Spot gold rose 0.2 percent to $1,126.86 an ounce by 0946 GMT, but is down 2.6 percent for the week so far. U.S. gold for December delivery edged up 0.3 percent to $1,126.50 an ounce.
Treasuries Recap
U.S. 10-year Treasuries yield stood at 2.181 pct vs U.S. close of 2.166 pct on Thursday.
Long-dated Chinese government bond yields rose at the open on Friday but by late afternoon had mostly stabilized. On the day, Chinese 5-year treasury futures were down 0.9 percent Friday afternoon, while 10-year futures were up 0.04 percent.
JGB prices ended the day steady to slightly higher, sending yields down 1bp from yesterday’s afternoon close in the 20-yr to 30-yr zone. Today, JGBs shrugged off softer US TSY overnight and a continued sharp rebound in Tokyo stocks. Domestic real money accounts refrained from selling JGBs outside of the BoJ’s purchase program.German 10-year yields were flat on the day at 0.73 percent at 0740 GMT, all other euro zone equivalents were also broadly unchanged.
UK Gilts opened 26 ticks higher than the settlement of 116.96, as predicted, after external core markets drew support from a stronger than expected USD 7-year auction. Dec Gilts are slightly lower at 117.38 as the UK GDP data showed an improvement in exports and investment.New Zealand government bonds eased, pushing yield 2 basis point higher along the yield curve. Australian government bond futures dipped, with the 3-year bond contract off 4 ticks at 98.170. The 10-year contract YTCc1 was down 3 ticks to 97.2350.
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