Posted at 01 October 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index surged to an over 2-year peak as upbeat economic data from the U.S. led markets to scale back expectations the Federal Reserve will cut interest rates in coming months. Investors now await the Institute for Supply Management’s measure of U.S. manufacturing activity, which is expected to show a return to expansion in September. The greenback against a basket of currencies traded 0.1 percent up at 99.47, having touched a high of 99.59 earlier, its highest since May 2017.
EUR/USD: The euro slumped to a near 2-1/2 year low after data showed Eurozone inflation slowed further year-on-year in September because of cheaper energy. However, the major attempted a minor recover as the core measure excluding such volatile components surged. The bloc's consumer prices rose 0.2 percent month-on-month in September for a 0.9 percent year-on-year gain, slowing from 1.0 percent in August, while core inflation indicated price growth accelerated to 1.2 percent in September from 1.1 percent in August. The European currency traded 0.1percent up at 1.0905, having touched a low of 1.0879 earlier, its lowest since May 2017. Immediate resistance is located at 1.0933 (23.6% retracement of 1.1109 and 1.0879), a break above targets 1.0966 (38.2% retracement). On the downside, support is seen at 1.0865, a break below could drag it below 1.0830.
USD/JPY: The dollar rallied to a near 2-week peak as fears over an escalation in U.S.-China trade war eased after trade adviser Peter Navarro dismissed reports the White House could seek to force Chinese companies to delist from U.S. exchanges. The major was trading 0.2 percent up at 108.26, having hit a high of 108.46 earlier, its highest since September 19. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. construction spending, manufacturing PMI from both Markit and ISM and Fed officials' speeches. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.95. On the downside, support is seen at 107.82 (10-DMA), a break below could take it near at 107.42 (September 26 Low).
GBP/USD: Sterling rebounded from a 3-week low after a survey showed some British manufacturers resumed stockpiling in September as they geared up for the latest Brexit deadline due on October 31. Moreover, Prime Minister Boris Johnson's comments, citing that Britain will shortly present the European Union with proposals for an amended Brexit agreement further supported the British pound. The major traded 0.2 percent up at 1.2305, having hit a low of 1.2260 earlier, it’s lowest since September 19. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2343 (5-DMA), a break above could take it near 1.2409 (10-DMA). On the downside, support is seen at 1.2233 (September 9 Low), a break below targets 1.2210 (September 5 Low). Against the euro, the pound was trading flat at 88.58 pence, having hit a low of 89.04 the day before, it’s lowest since Sept. 13.
USD/CHF: The Swiss franc slumped to a 4-month trough, weighed down by easing U.S.-China trade war concerns and renewed evidence of strength in the U.S. economy. The major trades 0.3 percent up at 0.9974, having touched a high of 1.0016 earlier, it’s highest since June 3. On the higher side, near-term resistance is around 1.0042 and any break above will take the pair to next level till 1.0084. The near-term support is around 0.9925 (September 18 Low), and any close below that level will drag it till0.9890 (September 23 Low).
Equities Recap
European shares plunged as weak factory activity data from across the eurozone stoked fears of an economic slowdown.
The pan-European STOXX 600 index slumped 0.3 percent at 392.03 points, while the FTSEurofirst 300 eased 0.3 percent to 1,541.62 points.
Britain's FTSE 100 trades 0.4 percent down at 7,382.37 points, while mid-cap FTSE 250 rose 0.2 to 19,969.67 points.
Germany's DAX fell 0.2 percent at 12,410.99 points; France's CAC 40 trades 0.2 percent lower at 5,666.10 points.
Commodities Recap
Crude oil prices bounced back on reports that output from the world’s largest oil producers fell during the third quarter, although a resumption in Saudi supply and demand concerns limited gains. International benchmark Brent crude was trading 0.8 percent up at $59.81 per barrel by 1022 GMT, having hit a low of $59.17 the day before, its lowest since September 12. U.S. West Texas Intermediate was trading 0.8 percent higher at $54.62 a barrel, after falling as low as $53.95 on Monday, its lowest since September 13.
Gold prices plunged to a near 2-month low, weighed down by a stronger dollar and hopes of progress in the U.S.-China trade talks. Spot gold was trading 0.8 percent lower at $1,468.90 per ounce by 1024 GMT, having touched a low of $1,458.97 earlier in the session, its lowest since August 6. U.S. gold futures were 0.4 percent lower at $1,467.20 per ounce.
Treasuries Recap
The U.S. Treasuries plummeted ahead of the country’s ISM manufacturing PMI for the month of September, scheduled to be released today by 14:00GMT and few speeches by members of the Federal Open Market Committee (FOMC), namely, Clarida, Bullard and Bowman, all due to be delivered later through the day for detailed insight into the bond market. The yield on the benchmark 10-year Treasury yield jumped 6 basis points to 1.734 percent, the super-long 30-year bond yield also surged 6 basis points to 2.181 percent and the yield on the short-term 2-year traded 4 basis points higher at 1.664 percent.
The United Kingdom’s gilts slumped during European trading hours after the country’s manufacturing PMI for the month of September, inched a step closer to the 50-point mark, also beating investors’ expectations, as markets still eye Britain’s construction and services PMI for the similar period, due on October 2 and 3 for further direction in the debt market. The yield on the benchmark 10-year gilts, jumped 6 basis points to 0.548 percent, the 30-year yield surged 6-1/2 basis points to 1.038 percent and the yield on the short-term 2-year gained nearly 4 basis points to 0.407 percent.
The German bunds plunged during European trading session after the country’s manufacturing PMI for the month of September exceeded market expectations, while investors still eye the European Central Bank President (ECB) Mario Draghi’s speech, scheduled to be delivered later today for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, jumped nearly 5 basis points to -0.523 percent, the yield on 30-year note surged nearly 6 basis points to -0.040 percent while the yield on short-term 2-year traded tad up at -0.746 percent.
The Australian government bonds remained nearly flat during Asian session of the second trading day of the week after the Reserve Bank of Australia (RBA) slashed its benchmark cash rate by 25 basis points to 0.75 percent at its latest monetary policy meeting, held early today, while investors still eye the country’s trade balance and retail sales data for the month of August, scheduled for release by end of this week for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 0.979 percent, the yield on the long-term 30-year bond also traded flat at 1.592 percent and the yield on short-term 2-year remained tad higher at 0.699 percent.