- Japan PM Abe – To lower corporate tax cumulative 3.3% over 2 years, TPP cited for move but feeling recent stock market plunges behind move.
- Japan’s Abe likely to retain key economic cabinet members.
- BOJ Policy Board Shirai – Once CPI trend stabilizes, inflation expectations to rise towards BoJ’s 2% target, important to keep policy accommodative, IOER cut possible but must be debated at length, negative IOER not good for banks.
- Japan August money supply M2 +4.2% y/y, M3 +3.4%, broadest liquidity +4.7%.
- US venture cap fund 500 Startups joins race to finance Japan ventures.
- World Bank chief economist warns Fed to delay rate rise.
- Minny Fed Kocherlakota – Lower real interest rates up risks of financial instability, US could issue more debt to counter.
- KC Fed – Capital inflows from China may be beneficial.
- RBA Deputy Gov Lowe – Australia has to adjust to slower China growth, greater CNY flexibility, Australia economy expanding moderately, lower AUD helping.
- Australia September Westpac/MI consumer confidence index -5.6% to 93.9, Aug +7.8%.
- Australia July unemployment unchanged, 6.3%, employment revised +37.9k, prelim +38.5k.
- Australia July owner housing finance +0.3% m/m, +0.8% eyed, investment +0.5%.
- (0430 ET/0830 GMT) UK July industrial production, +0.1% m/m, +1.4% y/y eyed; last -0.4%, +1.5%.
- (0430 ET/0830 GMT) UK July manufacturing production, +0.2% m/m, +0.5% y/y eyed; last +0.2%, +0.5%.
- (0430 ET/0830 GMT) UK July trade balance, GBP9.5 bln deficit eyed; last bln deficit.
- (0430 ET/0830 GMT) UK July non-EU, GBP1.9 bln deficit eyed; last bln deficit.
- (1000 ET/1400 GMT) US Jul JOLTS job openings, 5.29 mln eyed; last 5.25 mln.
Key Events Ahead
- N/A World Economic Forum in Dalian, China (till September 11).
- N/A Euro Financial Forum at Luxexpo, Luxembourg (till September 11).
- N/A OECD Berlin International Economic Forum on Africa.
- N/A Belgium ’38 bond syndication via HSBC, MS, RBS and SocGen.
- N/A Norway NOK3 bln 3.75% 2021 NST474 bond, Greece E1 bln 13-wk bill auctions.
- (0500 ET/0900 GMT) BoE MPC meeting begins, policy announcement tomorrow.
- (0530 ET/0930 GMT) Germany E4 bln 1.0% 2025 Bund auction.
- (0915 ET/1315 GMT) BOE Habgood parliamentary testimony.
- (1000 ET/1400 GMT) BOC policy announcement, no change in 0.5% o/n rate eyed.
- (1700 ET/2100 GMT) RBNZ policy announcement, 25 bp OCR cut to 2.75% eyed.
FX Recap
EUR/USD is supported below 1.1200 levels and currently trading at 1.1167 levels. It has made intraday high at 1.1216 and low at 1.1161 levels. The euro currency erased its earlier modest gains, trading slightly higher against the buck amid a shortage of influential bullish or bearish incentives. As for US macro news, the Fed’s Labour Market Conditions Index for August hit 2.1 points, topping the expectation of 1.5 and climbing from the revised reading of 1.8 points booked previously. Initial support is seen around at 1.1015 and resistance at 1.1363 levels.USD/JPY is supported above 120.00 levels and posted a high of 120.45 levels. It has made intraday low at 119.80 and currently trading at 120.33 levels. A sharp rebound in investor sentiment has seen the Japanese Yen decline more than 1.2% against the US dollar since the start of the week. The US dollar gained 0.38% on the yen to trade at ¥120.26 on Wednesday morning in Tokyo. Both the Nikkei and Topix indices in Japan were traded more than 4% higher, the biggest gains since October when the Bank of Japan announced additional monetary easing. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.GBP/USD is supported above $1.5300 levels. It made an intraday high at 1.5404 and low at 1.5382 levels. Pair is currently trading at 1.5383 levels. Sterling rose on the improved risk sentiment in global markets and news that a Japanese insurer was buying a British company. Today UK manufacturing Production data as well as trade balance data will provide further direction to the parity. Moreover, investors are looking forward to a new monetary policy decision at the upcoming meeting of the Bank of England later this week. Initial support is seen at 1.5185 and resistance is seen around 1.5436 levels.NZDUSD is supported below 0.6400 levels and trading at 0.6385 levels and made intraday low at 0.6338 and high at 0.6402 levels. The Kiwi also tracks the higher and rebounds from fresh six and a half year lows, still keeping range below 0.64 handle as markets remain cautious ahead of Chinese CPI and RBNZ cash rate statement due later this week for further direction. Moreover, Thursday’s, RBNZ cash rate statement may also be closely watched as markets widely anticipate a rate cut in order to counter the effects of the recent China fears. Initial support is seen at 0.6195 and resistance at 0.6511 levels.AUD/USD is supported above 0.7000 levels and trading at 0.7055 levels. It has made intraday high at 0.7069 levels and low at 0.7013 levels. The Australian dollar sat comfortably above the $0.70 area following a speech from the RBA’s Lowe, although the gains were capped by weak consumer data and a risk-on driven US dollar. Lowe said the exchange rate adjustment has led to improved conditions in a number of sectors, highlighting tourism as one of the key beneficiaries. Today the Westpac-Melbourne Institute Consumer Sentiment Index showed confidence levels slid back to a July low in September, with the gauge tumbling 5.6% to 93.9 points in September from 99.5 in August. Initial support is seen at 0.6908 and resistance at 0.7122 levels.
Equity Recap
Hong Kong’s benchmark Hang Seng index jolted up 1.72% to 21,621.29 points at the opening bell, and mainland China’s benchmark Shanghai Composite grew 0.35% to 3,181.43 points at the same time.Japan’s benchmark Nikkei 225 index rocketed up 4.25% to 18,167.33 points within the first hour of trade, the sharpest gain since the Bank of Japan unexpectedly expanded its monetary easing program in October, while Tokyo’s broader Topix gauge jumped 3.83% to 1,471.00 points.Korea’s benchmark Kospi index jumped 1.73% to 1,911.22 points this morning in Seoul.The benchmark Australian S&P/ASX 200 index rallied 1.35% to 5,184.20 points in Sydney, with resource stocks and financials charging ahead as risk sentiment returned to markets overnight.
New Zealand’s benchmark S&P/NZX 50 index climbed 0.71% to 5,650.42 points this afternoon in Wellington.Australia’s S&P/ASX 200 index closes up 1.85 pct at 5,210.00 points.Tokyo’s Nikkei average closes up 7.71 pct at 18,770.51.
Treasury Recap
Thailand 10 bln baht, 22.27-year government bond average accepted yield 3.7663 pct.German bund futures open 28 ticks lower at 154.48.10-year US treasury yield at 2.204 percent vs US close of 2.193 percent on Tuesday.
Commodity Recap
Oil was trading higher on Wednesday, waiting for the weekly report on US stockpiles that will paint a clearer picture about the supply and demand side of the oil market. Futures for WTI gained 0.48% to trade at $46.16 per barrel, while Brent futures were traded 0.63% up at $49.83 per barrel.Gold prices rebounded on Wednesday, aiming to put an end to four days of losses, as US traders returned from a three-day weekend. Futures for bullion advanced 0.30% to $1,121.30 per troy ounce. The metal had dropped below $1,115 on Monday for the first time since August 18.
The material has been provided by InstaForex Company – www.instaforex.com