FX News Today
Asian Market Wrap: 10-year JGB yields fell back -0.2 bp to 0.095%, along the drop of most yields in Asia, after treasuries as well as core European bonds rallied yesterday amid the rise in risk aversion. Asian stocks traded mixed, into the month end, as Trump plans to move ahead with new tariffs on China as soon as next month and has threatened to take the US out of the WTO. Emerging market jitters continue to add risks to the world economy. Treasury yields have come back from lows and are up 0.5 bp at 2.860%, as U.S. stock futures post marginal gains, while most Asian markets are still in negative territory after recovering some of their earlier losses. As of 5:38GMT, Topix and Nikkei have pared most of their earlier losses and were little changed on the day at -0.09% and -0.01% respectively. The Hang Seng was down -0.88% and the Shanghai Comp managed a marginal 0.03% gain. Oil prices are trading relatively unchanged at USD 70.26 per barrel.
FX Update: The Yen posted moderate gains amid a backdrop of soaring risk appetite in global markets and associated concerns about emerging markets. President Trump kept market sentiment on the edge after threatening, during an interview with Bloomberg, to take the US out of the WTO while saying that he was keen to implement the plan to hike tariff rates on a further $200 bln of Chinese goods imports. The MSCI Asia-Pacific (ex Japan) index has showed losses of 0.8%. As far as emerging currencies are concerned, the Indonesian Rupiah fell to a three-year low (nearing the low seen during the 1998 Asian financial crisis) and India’s Rupee dove to a record low. USDJPY ebbed to an eight-day low at 110.88, while most Yen crosses also posted declines. EURUSD and Euro crosses, meanwhile, lifted during the Asian trading session on headlines reporting that ECB member Nowotny said that Italy’s problems shouldn’t delay the central bank from tightening policy. EURUSD jumped from around 1.1665 to an intraday high of 1.1691 on this, before stalling leaving 1.1700 unchallenged. The Canadian Dollar came under pressure after trade talks finished in Washington on Thursday without progress, which disappointed some, though hopes for a handshake deal later today remain high. USDCAD popped back above 1.3000, posting a four-day high at 1.3023.
Charts of the Day
Main Macro Events Today
- European Unemployment Rate- Expectations – The European unemployment rate is expected to marginally decrease to 8.2% in July, compared to 8.3% in June, continuing its slow but steady reduction since mid-2013, signalling further strengthening of the European economy.
- European CPI – Expectations – Consensus forecasts are that both core and overall CPI measures are expected to remain at the same levels as last month.
- Purchasing Managers’ Index – The index is expected to come out at 63, compared to 65.5 in July, which is still considered a bullish sign given that it is greater than 50.
Support and Resistance Levels