FX News Today
Asian Market Wrap: 10-year Treasury yields are down -0.5 bp and pulling back from yesterday’s highs, while 10-year JGBs jumped 1.4 bp to 0.103% in catch up trade, after yesterday’s move higher in US and European Bond markets following strong US data. The stock rally fizzled out during the Asian session, however, as trade and geopolitical jitters continue to cloud over the outlook. Technology shares in particular had benefited from robust data and hopes that Trump will make progress on trade yesterday and the USA500 managed to close above 2,900 for the first time while the NASDAQ hit fresh highs. Asian markets meanwhile are mostly in negative territory with an unexpectedly slump in Australian business investment and weakening confidence in New Zealand backing a more sober assessment.
Most emerging market equity indices are in bear territory and cryptocurrencies declined as China extended its ban to Guangzhou in the ongoing bid to crackdown on digital assets. US stock futures are also in the red while Oil prices are slightly higher and eyeing the USD 70 mark, with the WTI future trading at USD 69.66 per barrel. The calendar is very busy today with preliminary inflation readings from Germany and Spain, as well as the ESI economic sentiment reading, UK lending data, German jobless numbers and the Swiss Kof leading indicator. Brexit developments, and Italian budget progress also remains in focus.
FX Update: The Dollar and Yen have traded firmer against most other currencies as the risk-on sentiment that powered the USA500 and Nasdaq to new record highs waned in Asia. The USDindex is showing a modest rebound from lows, while EURUSD has concurrently tipped back under 1.1700. USDJPY has held in a narrow range below the 4-week high at 111.83 that was printed yesterday as Wall Street romped higher amid hopes that the US and Canada would agree new trading terms by Friday to form a revamped (and possibly renamed NAFTA agreement), though the Yen has during the Tokyo session today posted gains against the Euro and Australian Dollar, and most other currencies, as Chinese stock markets come under pressure and Asian equities more generally struggled. The Shanghai Composite was showing a 0.9% loss as of the early PM session, which dragged the MSCI Asia-Pacific index into the red. Investors are concerned that the US will next month act on its threat to implement tariffs on a further $200 bln worth of Chinese imports. AUDUSD dropped to a 6-day low of 0.7274 on Australian data misses, with Q2 Capex unexpectedly shrinking 2.5% versus the median forecast for 0.6% growth, and July building approvals fell 5.2% m/m, worse than the median for -2.0%. NZDUSD also dove to a 6-day low, at 0.6646, after New Zealand’s August ANZ business survey fell to 10-year low of -50.3.