Posted at 17 September 2019 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index edged lower as the yield on the benchmark 10-year Treasury yield edged plunged 2 basis points to 1.824 percent, ahead of the Federal Open Market Committee's two-day meeting starting later in the day. The greenback against a basket of currencies traded 0.05 percent down at 98.60, having touched a low of 97.86 on Friday, its lowest since August 26.
EUR/USD: The euro surged, reversing some of its previous session losses after data showed German investor sentiment improved more than expected in September, however, the upside appears limited as the ZEW institute warned that the outlook for the German economy remained negative amid trade disputes and Brexit uncertainty. The European currency traded 0.2 percent up at 1.1022, having touched a high of 1.1084 on Thursday, its highest since August 29. Immediate resistance is located at 1.1050 (21-DMA), a break above targets 1.1116 (August 27 High). On the downside, support is seen at 1.0963 (August 30 High), a break below could drag it below 1.0925 (September 3 High).
USD/JPY: The dollar rallied to a 1-1/2 month peak as risk sentiment improved after U.S. President Donald Trump stated that he did not want to go to war, and the U.S. was still investigating if Iran was responsible for the Saudi attacks. Investors now await the Federal Reserve's policy meeting decision on Wednesday, where it is expected to cut interest rates by 0.25 percentage point. The major was trading up at 108.15, having hit a high of 108.37 earlier, its highest since August 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. capacity utilization, industrial production and NAHB housing market index. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.99 (July 10 High). On the downside, support is seen at 107.29 (10-DMA), a break below could take it lower at 106.71 (21-DMA).
GBP/USD: Sterling plunged towards the 1.2400 handle amid persisting uncertainty over the chances of British Prime Minister Boris Johnson securing a new Brexit deal. PM Johnson stuck to his pledge to take Britain out of the European Union by October 31, vowing not to seek an extension to the deadline. The major traded 0.2 percent down at 1.2406, having hit a high of 1.2504 on Friday, it’s highest since July 25. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2481 (July 23 High), a break above could take it near 1.2522 (July 24 High). On the downside, support is seen at 1.2322 (10-DMA), a break below targets 1.2251 (21-DMA). Against the euro, the pound was trading 0.4 percent down at 88.86 pence, having hit a high of 88.48 earlier, it’s highest since June 6.
USD/CHF: The Swiss franc slumped to a 1-1/2 month low ahead of the U.S. Federal Reserve’s two-day monetary policy meeting, where it is widely expected to cut interest rates. The major trades 0.2 percent up at 0.9943, having touched a high of 0.9955 earlier, it’s highest since August 1. On the higher side, near-term resistance is around 0.9975 (August 1 High) and any break above will take the pair to next level till 0.9999 (June 17 High). The near-term support is around 0.9889 (10-DMA), and any close below that level will drag it till 0.9813 (August 22 Low).
Equities Recap
European shares tumbled as investors turned cautious after the attacks on Saudi Arabian oil facilities over the weekend heightened political tensions.
The pan-European STOXX 600 index plunged 0.2 percent at 388.60 points, while the FTSEurofirst 300 declined 0.2 percent to 1,526.98 points.
Britain's FTSE 100 trades 0.2 percent up at 7,332.77 points, while mid-cap FTSE 250 fell 0.2 to 20,016.05 points.
Germany's DAX eased 0.2 percent at 12,353.91 points; France's CAC 40 trades 0.05 percent lower at 5,602.21 points.
Commodities Recap
Crude oil prices declined following the threat of a military response to attacks on Saudi Arabian crude oil facilities that halved the kingdom’s output. International benchmark Brent crude was trading 0.4 percent lower at $67.76 per barrel by 1030 GMT, having hit a high of $69.64 on Monday, its highest since May 30. U.S. West Texas Intermediate was trading 0.1 percent down at $61.80 a barrel, after rising as high as $63.33 on Monday, its highest since May 21.
Gold prices traded flat as investors adopted a wait-and-see approach ahead of the U.S. Federal Reserve’s two-day monetary policy meeting. Spot gold held firm at $1,493.05 an ounce by 1032 GMT, having touched a low of $1,483.22 last week, its lowest since August 13. U.S. gold futures were down 0.3 percent at $1,507.
Treasuries Recap
The U.S. Treasuries gained during the afternoon session ahead of the Federal Reserve’s monetary policy meeting, scheduled to be held on September 18 by 18:00GMT, where it is widely expected to cut interest rates by 25bp, although prospects for more easing further out are less clear. The yield on the benchmark 10-year Treasury yield edged plunged 2 basis points to 1.824 percent, the super-long 30-year bond yield suffered 1-1/2 basis points to 2.295 percent and the yield on the short-term 2-year too plummeted nearly 2 basis points to 1.747 percent.
The United Kingdom’s gilts rose during European trading hours, ahead of the country’s consumer price inflation (CPI) data for the month of August, scheduled to be released on September 18 by 08:30GMT and the Bank of England’s (BoE) monetary policy meeting, due to be held on the following day for further direction in the debt market. The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 0.685 percent, the 30-year yield suffered 2-1/2 basis points to 1.110 percent and the yield on the short-term 2-year remained flat at 0.516 percent.
The German bunds remained mixed during European trading session after the country’s ZEW economic sentiment improved, albeit still in contraction while investors keep a close eye on the eurozone’s consumer price inflation (CPI) for the month of August, scheduled to be released on September 18, for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, hovered around -0.476 percent, the yield on 30-year note edged tad down at 0.057 percent and the yield on short-term 2-year edged 1 basis point to -0.701 percent.
The Japanese government bonds closed nearly flat ahead of the Federal Reserve and Bank of Japan’s (BoJ) monetary policy meetings, scheduled for later this week amid an otherwise muted trading session that witnessed data of little economic significance. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, edged tad up to -0.152 percent, the yield on the long-term 30-year hovered around 0.346 percent and the yield on short-term 2-year also gained slightly to -0.240 percent.
The Australian government bonds jumped during Asian trading session after the release of the Reserve Bank of Australia’s (RBA) September monetary policy meeting minutes, while investors keep a close eye on the country’s employment report for the month of August, scheduled to be released today by 01:30GMT for further direction in the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 6 basis points to 1.135 percent, the yield on the long-term 30-year bond also slumped nearly 6 basis points to 1.715 percent and the yield on short-term 2-year suffered nearly 4 basis points to 0.887 percent.