- GBP pulls away from 4-month low against USD. Plays from 1.5168 to 1.5268 levels.
- Tesco Korean asset sale positive for GBP.
- USD rises vs JPY & CHF as stocks stabilise.
- USD/JPY plays 118.66-119.59. USD/CHF rises 0.9740 from 0.9709.
- EUR/USD steady in quiet holiday trade. Trading in between 1.1122/77 range.
- SNB FX reserves at 531.820bln end July vs previous 516.037bln end June.
- China CSI300 closes down 3.4% at 3,250.49 points.
- SSEC closes down 2.5% at 3,080.42 points.
- China FX reserves shrink by $93.9bln in Aug, largest mthly amount on record.
- China offshore Yuan 1,200 pips weaker than onshore Yuan, widest spread since September 2011.
- Germany July Industrial output 0.7% m/m vs previous -0.9% revised. 1.0% expected.
- Euro zone September SENTIX index 13.6 vs previous 18.4. 16.1 expected.
- Norway July Manufacturing output -1.6% m/m. -0.9% expected.
- BOJ officials don’t have full confidence in growth of economy.
- (1030 ET/1430 GMT) Turkish Treasury Department to release its cash balances for Aug, the balance stood at $-23.76 bln in July.
- (1901 ET/2301 GMT) The British Retail Consortium releases the results of its survey of the growth in nominal sales.
Key Events Ahead
- US Labour Day holiday, markets closed.
- (12:30 ET/1630 GMT) Buba VP Buch speech at Muenster conference.
FX Recap
USD: The dollar climbed against the Japanese yen and Swiss franc on Monday as European and Japanese stock markets started the week with gains and which underpinned risk sentiment. It rose 0.3 pct against the yen at 119.30, moving away from the day’s low of 118.66 and taking back some of Friday’s 1 percent tumble. Against the Swiss franc, it was up 0.2 percent at 0.9728.EUR/USD is supported above 1.1100 levels and currently trading at 1.1164 levels. It has made intraday high at 1.1177 and low at 1.1121 levels. The euro managed to recover after Chinese stocks finished lower, easing a bit the renewed risk sentiment and diminishing bids for the USD. On the macro front, industrial output in Germany posted 0.7% growth in July, but missed the estimates of 0.9% growth. Moreover, Euro zone Sentix investor confidence released with negative numbers at 13.6 % vs previous 18.4%. Trading is expected to be in a narrow range as the European calendar is almost empty while the US is closed for Labour Day. Initial support is seen around at 1.1015 and resistance at 1.1363 levels. Option expiries are at 1.1050 (477M), 1.1075 (602M), 1.1100 (1.3BLN), 1.1130 (600M).USD/JPY is supported above 119.00 levels and posted a high of 119.58 levels. It has made intraday low at 118.79 and currently trading at 119.35 levels. The Japanese yen traded down against its US counterpart on Monday, with safe-haven bids ditched for the more risky dollar after Chinese equity markets opened the day in positive territory. Recent market volatility in China has made Chinese markets the pace setter for global equities in recent weeks, with ongoing concerns about the health of the world’s second-biggest economy creating instability elsewhere. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.GBP/USD is supported below $1.5200 levels. It made an intraday high at 1.5278 and low at 1.5171 levels. Pair is currently trading at 1.5263 levels. Sterling entered the week with mild gains after it fell to a four-month low on Friday, while a tight session is expected today due to a lack of fundamentals and the US Labour Day holiday which will see markets closed. Although the pound added modest gains at the opening bell on Monday, sterling remained in a bear market for the third week running. The Pair keeps its upbeat momentum intact as markets continue to lock-in gains on their GBP shorts after the recent UK data-led slump with the attention shifting towards UK fundamentals to be reported in the week ahead. Initial support is seen at 1.5185 and resistance is seen around 1.5436 levels.NZDUSD is supported below 0.6300 levels and trading at 0.6260 levels and made intraday low at 0.6257 and high at 0.6300 levels. The Kiwi extends its downward spiral from Friday after the NZD/USD pair was badly hit on the back of US jobs data release. Although payrolls disappointed markets, the rest of the data were digested as favourable for the odds of an earlier rate hike by the Fed. The Kiwi fell further into losses this session, as markets continue to digest the recent economic news on both sides of the Atlantic while awaiting the crucial China trade data and the CPI report which may lead another bumpy week ahead. 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 below 0.7000 levels and trading at 0.6935 levels. It has made intraday high at 0.6949 levels and low at 0.6911 levels. The Australian dollar was off to a solid start on Monday, with help from signs that Australian’s construction sector expanded at the fastest pace in almost a year last month. The AiG Construction Index indicated on Monday that Australia’s construction sector expanded for the first time since March in August, with the index rising from 47.1 in July to 53.8 last month, the highest reading since September 2014. Initial support is seen at 0.6908 and resistance at 0.7122 levels.
Equities Recap
European stocks were up, which were led by a rise in mining and commodities giant Glencore, U.S. markets closed for Labor Day, a drop in China after markets there reopened after a four-day break dragged down Asian bourses.The FTSEuroFirst index of leading 300 shares rose 1 percent at 1,407 points and Britain’s mining-heavy FTSE 100 index was up 1.3 percent at 6,119 points in early trades. Germany’s DAX was up 1.2 percent at 10,161 points and France’s CAC 40 was also higher 1.2 percent at 4,580 points.U.S. markets closed for Labor Day and trading was lighter than usual.Asia’s MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.7 percent. Shanghai shares initially climbed as much as 1.8 percent following remarks over the weekend by regulators aimed at calming the market, but reversed course and ended down 2.5 percent.
Commodities Recap
Oil fell on Monday as Chinese equities weakened, with a firmer dollar and global oversupply fears weighing on prices. Brent crude for October was down 60 cents at $49.01 a barrel as of 0855 GMT. U.S. crude for October also known as West Texas Intermediate (WTI), was down 45 cents at $45.60.Gold prices edged back towards their lowest since mid-August on Monday after U.S. payrolls data failed to provide clarity on the timing of a Federal Reserve rate hike, and as the dollar steadied against a currency basket. Spot gold was down 0.2 percent at $1,120.56 an ounce at 0931 GMT, while U.S. gold futures for December delivery were down $1.30 an ounce at $1,120.10.
Treasuries Recap
US 10-year Treasury yield ended at 2.13 percent on Friday , the lower end of its range over the last two weeks.Core European government bonds were slightly weaker on Monday, with the 10-year German yield up a basis point at 0.68 percent and the 30-year yield up 3 basis points at 1.40 percent.UK Gilts started at the settlement of 118.31. Sellers have since won the early exchanges as the eurozone saw some underlying weakness from data and equity strength.JGB prices closed mostly same from last Friday’s afternoon close. JGB yields moved in a very narrow range of 0.5bp or less across the curve, as many domestic real money accounts did not take large risks due to volatile Tokyo stocks. The 5-yr to 6-yr zone saw relatively good two-way flow, as several commercial banks tried to sell the current 5-yr JGBs (#124 due June 2020) to shift into the new one in Thursday’s monthly JPY2.5tn 5-yr JGBs auction.New Zealand government bonds edged up, nudging yields on most bonds 1 basis point lower.Australian government bond futures dropped, with three-year bond contract off 3 ticks at 98.230. The 10-year contract was down 1.5 ticks to 97.
The material has been provided by InstaForex Company – www.instaforex.com