- Euro looking resilient ahead of ECB chief’s testimony.
- GBP struggles, hits 2 week low vs USD on risk aversion.
- AUD slides after China PMI data. Trading from 0.7019 to 0.7088 levels.
- DAX up 1%, FTSE +1.3%, CAC +1.0% but Greece down 1%.
- SSEC closes down 2.2% at 3115.89 points.
- Oil bid, Brent 0.6% ahead and light crude up 0.7%.
- Euro zone September Markit manufacturing flash PMI 52.0 vs previous 52.3. 52.0 expected.
- EZ September Markit Services flash PMI 54.0 vs previous 54.4. 54.2 expected.
- France September Markit manufacturing flash PMI 50.4 vs previous 48.3. 48.5 expected.
- Germany September Markit manufacturing flash PMI 52.5 vs previous 53.3. 52.8 expected.
- China Sept flash factory PMI hits 6-1/2-year low.
- Swiss econ min says SNB working to weaken franc.
- Swiss government backs SNB campaign to weaken franc.
- (0830 ET/1230 GMT) Canada retail Sales, consensus 0.5, Previous 0.6.
- (0900 ET/1300 GMT) Mexico Retail Sales.
- (0900 ET/1300 GMT) South Africa Repo rate Decision.
- (0900 ET/1300 GMT) Brazil Current account balance.
- (0945 ET/1345 GMT) US manufacturing PMI Data, consensus 53.3, previous 53.0.
- (1030 ET/1430 GMT) EIA Crude oil stock change.
Key Events Ahead
- (0900 ET/1300 GMT) ECB President Mario Draghi Quarterly Hearing in Brussels.
- (0900 ET/1300 GMT) SNB will release qtr bulletin.
- (1200 ET/1600 GMT) BOE MPC member Broadbent speech.
- (1230 ET/1630 GMT) FRB Atlanta’s Lockhart speaks at Rotary Club function; Columbus, GA.
FX Recap
EURUSD: Pair recovered near the daily lows around 1.1105, pushing the pair back to trade around 1.1141 levels even though stock markets remain on a strong footing. The French manufacturing PMI for September increased to 50.4 from 48.3 in August, while the services PMI improved to 51.2. Meanwhile, the German manufacturing PMI ticked lower to 52.5 from 53.3 previously and the services gauge decelerated from 54.9 to 54.3, Markit advised on Wednesday. Looking ahead, the North American session is also expected to emerge eventful as the ECB President Mario Draghi will testify at a quarterly hearing before the Committee on Economic and Monetary Affairs of the European Parliament. He is likely to start pondering the bank’s next moves following the Fed decision as he speaks to lawmakers in the European parliament on Wednesday. It made intraday high at 1.1161 and low at 1.1105. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1000 (682M), 1.1100 (365M), 1.1150 (236M), 1.1190 (244M), 1.1225 (228M), 1.1260 (223M).USDJPY: The Japanese yen consolidated on the downside shortly after the European opening bell on Wednesday as US dollar bulls took control. Earlier in the session, the yen was buoyed by disappointing Chinese manufacturing data which showed contraction to six-and-a-half years lows in September, raising fears over external Chinese demand. On the US calendar, the US flash manufacturing PMI is due to be published while Federal Open Market Committee member and Atlanta Fed President Dennis Lockhart will give a speech. Pair made intraday high at 120.32 and low at 119.62 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 119.00 (700M), 122.00 (650M).GBPUSD: Sterling hit a 2-week low against the dollar and retreating further from a one-month high against the euro, hit by a short risk aversion that swept global markets and supported safe-haven currencies. Sterling fell 0.2 pct against the dollar to trade at $1.5330, having hit a low of $1.5299 early in the European session. It was also down against the safe-haven yen at 184.35. The euro was up 0.2 percent at 72.58 pence, recovering from a one-month low of 71.97 struck on Tuesday. Sterling remained under pressure from a stronger dollar for the fourth consecutive day on Wednesday, with the UK and US economic calendars offering little in the way of inspiration. Hence, the cable currency pair is likely to follow market sentiment. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.NZDUSD: Pair dips nearly 50 pips after the disappointing China data to a session low of $0.6256. Towards the end of Asian trading session the kiwi was seen 0.35% lower at $0.6266. Pair is supported below $0.6300 levels. Pair is currently trading at 0.6288 levels. It made intraday high at 0.6301 and low at 0.6255 levels. Both antipodean currencies suffered a significant knee-jerk reaction to the downside on Wednesday, after China’s factory gauge hit a six-and-a-half-year low. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUDUSD: The Australian dollar dropped 0.7 pct to $0.7038, pulling further away from a near 4-week high of $0.7280 set on Friday. The Australian dollar fell back towards $0.70 against the US dollar on Wednesday after a manufacturing index from Australia’s biggest trading partner China came in weaker than expected. Further signs that the world’s second-biggest economy is losing momentum emerged on Wednesday, pushing the Australian dollar lower on fears that Australia’s economy will suffer as a result. The Caixin-Markit China Manufacturing Purchasing Managers’ Index (PMI) fell to a preliminary 47.0 in September from 47.3 last month, where a reading below 50 indicates a contraction in activity, while a figure above 50 signals expansion. The AUD/USD pair tumbled 0.86% to $0.7020 on Wednesday afternoon in Sydney, from $0.7090 at the close of trade in New York on Tuesday just hours earlier, and traded down from $0.7075 before the manufacturing release. Initial support is seen at 0.6908 and resistance at 0.7245 levels.
Equities Recap
After China’s manufacturing sector figures showed the biggest contraction, global shares were down on intensified fears that a slowdown in the world’s second-largest economy will spread more widely.FTSEuroFirst index of leading 300 European shares, Germany’s DAX and France’s CAC 40 all rose a third of one pct, and Britain’s FTSE 100 climbed up two thirds of one pct.MSCI’s broadest index of Asia-Pacific shares outside Japan declined by 2.3 pct, this was its biggest daily loss since Aug. 24. The MSCI world index was also collapsed by 0.2 pct, marking the fourth consecutive daily loss. China’s CSI300 Index ended down 2.3 pct at 3,263.03 points.
Commodities Recap
Brent crude oil moved up towards $50 a barrel, as a drawdown in U.S. crude oil stocks outweighed the negative impact of weak economic manufacturing data from China. Benchmark Brent was 55 cents higher per barrel at $49.63 by 0920 GMT. U.S. light crude was 50 cents up at $46.86.Gold was steady, following two days of losses, as weak Chinese factory data soured investor appetite for risk. Spot Gold climbed 0.2 pct to $1,126.70 an ounce, after losing 1.3 pct over the past two days on renewed expectations that the US Fed will hike interest rates for the first time in nearly a decade by the end of the year.
Treasuries Recap
The benchmark 2-year U.S. Treasury yield dropped to 0.68 pct, nearing a 2-week low, but the yield on 10-year U.S. bond was 2 bps up to 2.15 pct.UK Gilts started marginally weaker than yesterday’s settlement price and continued to trade lower after European equities recover post Tuesday’s sell off. Dec Gilts were trading 118.71 (-23 ticks) and were in line with Bunds. The 10yr Gilt/Bund spread was comfortably within its 112bp-134bp trading range at 119bp.There was little change in the 02s/10s Gilt curve at 118.50bp whereas the 10s/30s curve was 1bp flatter.
German 10-year Bund yields were a tick higher at 0.62 pct, having fallen to 0.59 percent at the open, matching the one-month low hit on Tuesday.
New Zealand government bonds rose with yields 6 bps lower at the longer end of the curve. Australian government bond futures were moving up, with the 3-year bond contract was 3 ticks high at 98.120. The 10-year contract was 7 ticks higher to 97.2850, which led to a bullish flattening of the curve.
The material has been provided by InstaForex Company – www.instaforex.com