Market Roundup
- USD/JPY up at 120.55, well above 7-month low of 116.15 (Monday).
- EUR/USD revises back to 1.1277 from 7 month 1.1717 high earlier this week.
- GBP/USD 3 week low at 1.5459 from 1.5508. 1.5820 Tuesday.
- Dollar index edges up to 95.459 from 94.985. 92.621 Monday low.
- SSEC closed up 5.3% at 3,083.59 points. Biggest 1-day % rise since July 9.
- DAX up 3.17%, regains tech resistance at 10228. 10336 high.
- Brent up 3.9%, October Crude 4.2%, Iron 1.8%.
- UK August Nationwide house price 3.2% y/y vs previous 3.5%. 0.4%/3.1% expected.
- Switzerland Q2 Industrial orders -2.4% vs previous -4.8%.
- Euro zone July Money-M3 annual growth 5.3% vs previous 5.0%. 4.9% expected.
- Euro zone July Money-M3 moving average 5.1% vs previous 5.1%.
- Euro zone July Money-private loans 0.9% vs previous 0.6%. 0.8% expected.
- PBOC said to have intervened in Yuan swap market.
- GPIF’s asset value rises to record on Japan stocks, weak yen.
Economic Data Ahead
- (0830 ET/1230 GMT) US Initial Claims (August 22 week) consensus 274k, previous 277k.
- (0830 ET/1230 GMT) US Continued Claims (August 15 week) consensus 2.250 mn, previous 2.254 mn.
- (0830 ET/1230 GMT) US Real GDP (Q2 second estimate) consensus +3.2% q/q AR, previous +2.3% q/q AR.
- (0830 ET/1230 GMT) US Real Final Sales (Q2 second estimate) consensus +2.9% q/q AR, previous +2.4% q/q AR.
- (0830 ET/1230 GMT) US Real Consumer Spending (Q2 second estimate) previous +2.9% q/q AR.
- (0830 ET/1230 GMT) US Core PCE Deflator (Q2 second estimate) consensus +1.8% q/q AR, previous +1.8% q/q AR.
- (1000 ET/1400 GMT) Pending Home Sales Index (July) consensus 111.4, previous 110.3.
- (1000 ET/1400 GMT) Freddie Mac Weekly Mortgage Rates.
- (1000 ET/1400 GMT) Kansas City Fed Manufacturing Production Index (August) previous -5.
- (1000 ET/1400 GMT) Kansas City Fed Composite Index (Aug) previous -7.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 30-yr Fannie Mae/Freddie Mac (max $2.025 bn).
- N/A Jackson Hole Economic Policy Symposium begins.
FX Recap
EURUSD: Pair is currently supported below 1.1300 levels and trading at 1.1287 levels. It made intraday high at 1.1364 and low at 1.1277 levels. The newly crowned risk currency – the US dollar, is buoyed by the stability in the equity markets in the US and across Europe. The upbeat durable goods report released on Wednesday is also partly responsible for the upbeat tone on the USD. The uptick in the European equities is likely to keep the pressure on the EUR/USD ahead of the US Q2 GDP report. Moreover, ongoing risk sentiment further bolstered by rallying equities in the US, Asia and now Europe have boosted risk sentiment across the board, thereby hitting the safe-haven – euro. Looking ahead, the main currency pair is likely to track USD moves as the New York session holds the much awaited US Q2 GDP figures while the Jackson Hole Symposium will also remain in focus. Initial support is seen around 1.1235 levels and resistance at 1.1425 levels. Option expiries are at 1.1200 (742M), 1.1220-30 (586M), 1.1350 (311M), 1.14 (391M).
USDJPY: Pair is supported above 120.00 levels. It made intraday high at 120.54 and low at 119.79 levels. It is currently trading around 120.24 levels. The yen pared losses against the dollar on Thursday as calm returned to currency markets with global stock markets rally, including a 5 percent jump in Shanghai, underpinning risk sentiment and sapping demand for safe haven currencies. The dollar rose 0.3 pct against the yen at 120.24 yen and the euro too rose 0.4 pct at 136.10 yen. Traders will watch today’s US GDP data for the second quarter, which is expected to improve from the 2.3% in the first estimate to 3.2% today. The GDP price index should remain at 2.0%. Initial support is seen at 118.23 and resistance at 122.01 levels. Option expiries are at 117.05 (500M), 120.00 (312M), 122.75 (2.5BLN).GBPUSD: Pair is supported below 1.5500 levels. It made intraday high at 1.5509 and low at 1.5458 levels. It is currently trading nearby day’s low. Sterling was trading at $1.5480; it was 0.2 pct higher against the euro, trading at 73 pence per euro. The pair gave up its struggle to reclaim 1.55 handle and trimmed gains, falling further towards the session lows, as the pound finally surrendered to the strengthening US dollar, riding higher on the back of stabilizing global equities and upbeat US durable goods data released in the US last session. Moreover, Chinese markets bouncing today also bolstered the prevailing risk-sentiment, further increasing the demand for the newly pronounced risk currency – the USD. The US dollar index, a virtual measure of greenback’s strength now trades 0.10% higher at 95.38. Markets now shift focus towards the US data due later today which may have major influence on the cable. US Q2 GDP report will be reported along with weekly jobless claims and pending home sales data. Initial support is seen at 1.5321 and resistance at 1.5592 levels.USDCAD: Pair is supported around 1.3200 levels and trading at 1.3208 levels. It made intraday high at 1.3305 and low at 1.3185 levels. Pair declined in early morning trading Thursday, with the Canadian dollar off its decade lows against the US dollar, supported by a crude oil correction. Whilst there is no key data expected out of Canada today, traders will be watching for the release of further US GDP data later, as well as any comments that may come out of the Jackson Hole conference where global policymakers are meeting. Initial support is seen at 1.3187 and resistance at 1.3322 levels.AUDUSD: Pair is supported above 0.7100 levels and trading around 0.7141 levels. It made intraday high at 0.7170 and low at 0.7099 levels. Oil prices moved higher on Thursday as traders cheered an unexpected drop in US crude inventories, amid hopes for a recovery in demand. As for China, one of the world’s top oil consumers, investors are digesting the recent policy action from the nation’s central bank. On Wednesday the People’s Bank of China (PBoC) said it will inject 140 billion Yuan into the financial system through a short-term liquidity adjustment operation. Initial support is seen at 0.7040 and resistance is seen around 0.7236 levels. Option expiries are at 0.7000 (400M), 0.7050 (300M), 0.7250 (201M), 0.7300-20 (630M).Equities Recap
Stocks rallied around the world on Thursday, following the biggest gains on Wall Street in four years, after a U.S. Fed policymaker said the case for rate hike next month “seems less compelling” than it was a few weeks ago.In early European trading, the FTSEuroFirst index of leading 300 European shares was up 2.5 percent at 1,415 points. Germany’s DAX, France’s CAC 40 and Britain’s FTSE 100 all rose more then 2 percent.China’s SSEC indiex surged 5.3 percent and CSI 300 Index rose 5.9 percent, snapping a five-day losing streak that had wiped off around 20 pct from market value and sent tremors around global financial markets.MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.7 percent, pulling away from a 3-year low reached earlier in the week and chalking up its best day in three years. Tokyo’s Nikkei closed up 1.1 percent.
Commodities Recap
Oil prices jumped more than 4 percent on Thursday after a rally in equity markets and an unexpected fall in U.S. crude inventories, but worries over the health of the Chinese economy and a global oil glut kept the outlook uncertain. Front-month Brent, the global oil benchmark, was up $1.75 at $44.89 a barrel by 0930 GMT. U.S. crude was up $1.60 at $40.20 a barrel.Gold steadied on Thursday after its biggest one-day drop in five weeks, supported by speculation that a U.S. rate hike may take longer than expected but still under pressure from a rebound in stock markets and a firmer dollar. Spot gold was up 0.1 percent at $1,125.95 an ounce at 0930 GMT, while U.S. gold futures for December delivery were up 90 cents an ounce at $1,125.50.
Treasury recap
The yield on 10-year German bonds rose 3 basis points to 0.74 percent. The equivalent U.S. Treasury yield was steady at 2.16 percent, having slumped as low as 1.91 percent on Monday.UK Gilts opened an impressive 47 ticks lower from the settlement of 118.09 as Asian and eurozone equites carried over the recovery noted on Wall Street last night. Sellers respected the psychological resistance of 2.00% on 10-year cash yields posting a high of 1.999%.JGB prices ended the day lower, with the 2s/30s curve steepening by 2bp on the day. JGBs opened softer on higher US TSY yields and stock prices overnight, and then extended their earlier losses into the afternoon close on the back of a rebound in Tokyo and Shanghai stocks.New Zealand government bonds fell, pushing yields as much as 8 basis point higher at the long end of the curve. Improving risk sentiment dented appetite for Australian government bond futures, with the three-year bond contract off 6 ticks at 98.180. The 10-year contract dropped 9 ticks to 97.2300, leading to a bearish steepening of the curve.
The material has been provided by InstaForex Company – www.instaforex.com