Posted at 23 August 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index rallied to a 3-week peak ahead of Powell’s speech at a gathering of central bankers in Jackson Hole, Wyoming. Markets expect the Fed to follow up its first rate cut in a decade with more stimulus at its meeting next month, while some policymakers are not keen. The greenback against a basket of currencies traded 0.2 percent up at 98.41, having touched a high of 98.45 earlier, its highest since August 1.
EUR/USD: The euro slumped to a 3-week low despite hopes that snap elections in Italy can be avoided. On Thursday, President Sergio Mattarella gave Italy’s bickering parties five days to clinch a deal to resolve a political crisis and avoid an election. The European currency traded 0.2 percent down at 1.1056, having touched a low of 1.1051 earlier, its lowest since August 1. Investors’ attention will remain on the U.S. new home sales and series of speeches by Fed officials, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1102 (23.6% retracement of 1.1230 and 1.1060, a break above targets 1.1146 (50.0% retracement). On the downside, support is seen at 1.1045, a break below could drag it below 1.1026 (August 1 Low).4
USD/JPY: The dollar consolidated within narrow ranges as markets await Fed Chairman Powell’s speech at the Jackson Hole seminar due later in the day for clarity on monetary policy after minutes of the U.S. central bank’s July meeting tempered hopes of aggressive rate cuts. The major was trading 0.2 percent up at 106.67, having hit a low of 105.05 last week, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. new home sales and series of speeches by Fed officials. Immediate resistance is located at 106.85 (21-DMA), a break above targets 107.56 (August 2 High). On the downside, support is seen at 105.89 (August 8 Low), a break below could take it lower at 105.29 (Aug. 9 Low).
GBP/USD: Sterling declined, retreating from a 3-1/2 week peak hit in the previous session as investors reassessed whether British Prime Minister Boris Johnson had made any progress in convincing the European Union to renegotiate the Brexit agreement. The major traded 0.3 percent down at 1.2211, having hit a high of 1.2273 on Thursday, it’s highest since July 29. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2331 (61.8% retracement of 1.2522 and 1.2079), a break above could take it near 1.2417 (78.6% retracement). On the downside, support is seen at 1.2156 (21-DMA), a break below targets 1.2108 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 90.54 pence, having hit a high of 90.28 on Thursday, it’s highest since July 29.
USD/CHF: The Swiss franc plunged to a 3-week low as investors looked to a speech by Federal Reserve chair Jerome Powell for clarification on whether the U.S. central bank remains on course to deliver another interest rate cut in next month. The major trades 0.4 percent up at 0.9872, having touched a high of 0.9877 earlier, it’s highest since August 2. On the higher side, near-term resistance is around 0.9908 (78.6% retracement of 0.9975 and 0.9659) and any break above will take the pair to next level till 0.9975 (August 1 High). The near-term support is around 0.9807 (5-DMA), and any close below that level will drag it till 0.9771 (10-DMA).
Equities Recap
European shares rose as investors eye a speech by Federal Reserve Chief Jerome Powell for confirmation the U.S. central bank is still on course to deliver another cut in interest rates next month.
The pan-European STOXX 600 index gained 0.4 percent at 375.92 points, while the FTSEurofirst 300 rallied 0.5 percent to 1,478.45 points.
Britain's FTSE 100 trades 0.7 percent up at 7,183.98 points, while mid-cap FTSE 250 surged 0.9 to 19,386.87 points.
Germany's DAX rose 0.2 percent at 11,766.69 points; France's CAC 40 trades 0.3 percent higher at 5,405.56 points.
Commodities Recap
Crude oil prices eased but were on track for a weekly gain, with attention focused on a speech by U.S. Federal Reserve chief Jerome Powell for news on whether it will cut interest rates for a second time this year. International benchmark Brent crude was trading 0.3 percent higher at $59.60 per barrel by 1106 GMT, having hit a high of $61.40 on Wednesday, its highest since August 14. U.S. West Texas Intermediate was trading flat at $55.33 a barrel, after rising as high as $57.11 on Wednesday, its highest since August 13.
Gold prices declined and were set for its worst week in nearly five months, as lack of clarity from U.S. Federal Reserve on the outlook for interest rate cuts triggered investors to cash in some gains ahead of Jerome Powell’s speech at Jackson Hole. Spot gold was trading 0.2 percent down at $1,494.88 per ounce by 1110 GMT, having touched a low of $1,492.39 on Thursday, its lowest since August 13. The safe-haven metal has lost nearly 1.3 percent so far this week and was on track for its biggest weekly percentage decline since March 29. U.S. gold futures slipped 0.3 percent at $1,504.40 an ounce.
Treasuries Recap
The yield on the U.S. benchmark 10-year Treasury yield has jumped more than 9 basis points from low of 1.55 percent made on Wednesday and is currently trading around 1.640 percent. The 30-year bond yield rose nearly 5 basis points from yesterday's close of 2.11% and hits high 2.13%. Markets eye Jackson hole Fed Chair speech for the further clue of the rate cut. The short-term 2-year traded higher at 1.636 percent.
The yield on the UK benchmark 10-year gilts gained 5 basis points to 0.545% percent, the 30-year yield rose more than 3.5% to 1.12% percent. The yield on the short-term 2-year is trading at 0.520 percent.
The German 10-year bond yield, which moves inversely to its price, has declined slightly after hitting high of -0.605, the yield on the 30-year note has jumped by 4.5 basis points to -0.115% percent and the yield on short-term 2-year traded tad down at –0.870 percent.