Global Markets:
- Asian stock markets: Nikkei fell 1.07 %, Shanghai Composite fell 0.20% (Closed for Holiday), Hang Seng rose 0.47%, ASX200 rose 0.13%
- Commodities: Gold at $1124.99 (-0.04%), Silver at $14.78(+0.38%), WTI Oil at $46.50(-0.53%), Brent Oil at $50.44 (-0.51 %)
- Rates: US 10 year yield at 2.15% UK 10 year yield at 1.90%, German 10 year yield at 0.72%
News & Data:
- Reminder: Chinese Markets Remain Closed Today for A Public Holiday
- Fed’s Kocherlakota Repeats His View That Fed Shouldn’t Raise Rates in 2015 – 2015 Rate Rise Will Delay Achieving 2% Inflation
- Fed’s Kocherlakota Doesn’t See Risks of Rapid Asset Price Decline; Market Turmoil Hasn’t Changed His Policy Outlook
- Atlanta Fed Q3 GDPNow Forecast Updated +1.5% (Prev +1.3%)
- US ISM Non-Manufacturing Composite 59.0 (Est 58.2, Prev 60.3)
- ECB Draghi: ECB Hasn’t Seen Stability Impact On Recent Market Turmoil; China Prospects Have Weakened
- ECB Draghi: ECB Didn’t Discuss Modifying QE Programme, We’re “Not There Yet” on QE Expansion
- ECB Draghi: Lower Oil Prices Could Be Lower Due to Lower Demand From EMs, As Well As Supply Effects; Oil Price Drop is Positive If There Are No Second Round Effects
- Eurozone ECB Main Refinancing Rate (Sep 3): 0.05% (est 0.05%, prev 0.05%)
- UK Markit Services PMI (Aug): 55.6 (est 57.7, prev 57.4).
Major currencies update: Risk sentiment in global markets remain to be fragile as influential governing bodies such as the IMF, begin to increasingly note the risk sparked by a slowing down China, as well as the emerging market bloc as a whole. The USD/JPY’s relief rally yesterday was stalled at 120.70 in New York trading, of which since has now fallen in the Asian session to a current spot price 119.52, following the Nikkei’s morning decline of a percent. The swing low established 119.20 earlier in the week is eyed as an immediate, key line of support for the pair, while resistance remains at the high of 120.70 yesterday.
The Euro declined off of dovish rhetoric from Draghi, highlighting EM and China weakness, as well as giving clues that QE may be expanded, despite not having been recently discussed. The pair opened the day yesterday 1.1226, and closed over 100 pips lower, having met bids at the 1.1100 figure before Asia opened, where the pair retraced some of its move to a current spot price of 1.1120. Key levels for today are 1.1020 for support, and 1.1150, and 1.1200 for resistance. The Pound has also continued declines, looking to test 1.5200 (June low), with spot currently trading at 1.5240. The Pound’s average daily range is markedly lower than the yen and the euro, of which intraday volatility is still relatively elevated.
Commodity currencies update: The Australian dollar tested the 0.7000 figure on multiple occasions in yesterday’s trading session, under pressure from consecutively, negative economic releases (GDP and Retail Sales off forecasts to the downside) and the overall, fragile, market sentiment. The pair is trading 40 pips lower in the Asian session so far with spot trading at 0.6970. It should be noteworthy that the pair suffering most out of the current market rout (commodity price declines and China-led risk aversion) is the AUDJPY, of which has fallen over 8%, as of August. Despite declines in the AUD/USD, the Kiwi has been bid yesterday, breaking out of the 0.6360-0.6330 range, hitting a high of 0.6400. The NZD/USD has since settled lower from the rally, now currently trading at 0.6370. Currency markets are likely to remain quiet today for the remainder of the Asian session, as participants await the payrolls report, later on today.
Upcoming Events:
- 7:00 BST – German Factory Orders m/m
- 8:15 BST – Switzerland CPI m/m
- ALL DAY – G20 Meetings
- 13:10 BST – FOMC Member Lacker Speech
- 13:30 BST – Canada Employment Change & Unemployment Rate
- 13:30 BST – US Non Farm Payrolls Report & Unemployment Rate
- 15:00 BST – Canada Ivey PMI
