Posted at 04 September 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index plunged as disappointing factory data forced markets to price in a 25 basis point interest rate cut at the U.S. Federal Reserve’s meeting later this month. The greenback against a basket of currencies traded 0.3 percent down at 98.62, having touched a high of 99.37 on Tuesday, its highest since May 2017.
EUR/USD: The euro rose, extending previous session rebound after members of Italy’s anti-establishment 5-Star Movement overwhelmingly backed a proposed coalition with the Democratic Party, paving the way for a new government to take office. The European currency traded 0.3 percent up at 1.1008, having touched a low of 1.0925 on Tuesday, its lowest since May 2017. Immediate resistance is located at 1.1044 (50% retracement of 1.1163 and 1.0925), a break above targets 1.1072 (61.80% retracement). On the downside, support is seen at 1.0930, a break below could drag it below 1.0870.
USD/JPY: The dollar rose, reversing most of its previous session losses as investor risk sentiment improved after data showed activity in China’s services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in over a year. The major was trading 0.3 percent up at 106.20, having hit a low of 104.44 last week, its lowest since November 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. trade balance and speeches by Fed officials. Immediate resistance is located at 106.73 (August 23 High), a break above targets 107.09 (August 6 High). On the downside, support is seen at 105.65 (August 28 Low), a break below could take it lower at 105.26 (August 9 Low).
GBP/USD: Sterling rallied after the British lawmakers defeated Boris Johnson in parliament late on Tuesday in an attempt to prevent him from taking Britain out of the European Union without a transition agreement, prompting the prime minister to announce that he would immediately push for a snap election. The major traded 0.9 percent up at 1.2219, having hit a low of 1.1958 on Tuesday, it’s lowest since October 2016. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2234 (78.6% retracement of 1.2309 and 1.1958), a break above could take it near 1.2309. On the downside, support is seen at 1.2014 (August 12 Low), a break below targets 1.1986 (Jan. 16 2017 Low). Against the euro, the pound was trading 0.5 percent up at 90.30 pence, having hit a low of 91.48 on Tuesday, it’s lowest since August 22.
USD/CHF: The Swiss franc rose, extending previous session gains as the greenback slumped across the board. The major trades 0.2 percent down at 0.9845, having touched a high of 0.9929 on Tuesday, it’s highest since August 1. On the higher side, near-term resistance is around 0.9949 (July 31 High) and any break above will take the pair to next level till 0.9975 (August 1 High). The near-term support is around 0.9834 (10-DMA), and any close below that level will drag it till 0.9814 (August 2 Low).
Equities Recap
European shares rallied to 1-month highs, as political developments in Italy and Britain eased investors’ tensions.
The pan-European STOXX 600 index rallied 0.9 percent at 383.07 points, while the FTSEurofirst 300 surged 0.9 percent to 1,507.41 points.
Britain's FTSE 100 trades 0.4 percent up at 7,297.93 points, while mid-cap FTSE 250 gained 0.7 to 19,597.02 points.
Germany's DAX rose 1.0 percent at 12,030.46 points; France's CAC 40 trades 1.1 percent higher at 5,524.36 points.
Commodities Recap
Crude oil prices surged, boosted by a wider market pickup on positive news from China’s services sector, after three days of losses on fears about a weakening global economy. International benchmark Brent crude was trading 1.3 percent higher at $58.92 per barrel by 1139 GMT, having hit a low of $57.21 on Tuesday, its lowest since August 9. U.S. West Texas Intermediate was trading 1.5 percent up at $54.69 a barrel, after falling as low as $52.82 on Tuesday, its lowest since August 9.
Gold prices declined as investors booked profits after a 1 percent jump in the previous session and as political risks in Europe and Asia receded, although concerns over the global economy and the U.S.-China trade war kept the metal close to a 6-year peak. Spot gold fell 0.9 percent to $1,534.24 per ounce by 1141 GMT, having touched a high of $1,550.00 earlier, its highest since August 29. U.S. gold futures were down 0.7 percent at $1,545.70.
Treasuries Recap
The Italian bond yields fell to fresh lows after members of Italy’s anti-establishment 5-Star Movement backed a proposed coalition with the centre-left Democratic Party. Italy’s 10-year bond yield fell 4 basis points to a fresh record low of 0.82 percent, while five-year bond yields hovered closer to 0 percent. Italy’s 10-year bond yield gap over German Bund yields tightened to around 149 bps, its narrowest in more than a year.
The Japanese government bond prices climbed, with the benchmark 10-year yield touching a level just shy of an all-time low hit in 2016. Prices of benchmark 10-year JGB futures rose as much as 0.16 point to 155.38, hitting a record high. The 10-year JGB yield fell half a basis point to minus 0.285 percent, hovering around a record low of minus 0.30 percent hit in 2016. The 20-year JGB yield stood flat at 0.035 percent, the 30-year yield was unchanged at 0.115 percent, while the 40-year yield dropped half a basis point to 0.125 percent.