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Sunday, September 4, 2016
Market Roundup
Market Roundup
• U.S. nonfarm payrolls miss expectations: +151k vs forecast 180k. • Traders trim bets on Fed rate hike as U.S. job gains slow. • Jobs report gives ammo to Fed skeptics on September rate hike. • Fed's Lacker: Aug payroll report suggests U.S. labor market still tightening. • Goldman Sachs ups probability of Fed rate hike in September to 55%-research note. • Goldman's Hatzius: August payrolls not great but 'just enough'-CNBC • U.S. trade gap -39.47 billion dollar vs forecast -42.7 billion and June's -44.66 billion. • U.S. July factory orders +1.9% vs forecast +2.0%, June -1.8%. • Brazil industrial output 0.1% m/m in July vs forecast -0.2%. • Canada trade deficit shrinks to CAD 2.49 billion in July vs forecast 3.25 billion.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Services Index Aug 53.9 -previous • 1:30 Australia Business Inventories* Q2 forecast 0.40% 0.40% - previous • 1:30 Australia Gross Company Profits Q2 forecast 2.00% -4.70% - previous • 1:30 Australia Company Profits Pre-Tax Q2 -15.10% - previous • 1:30 Australia ANZ Newspaper Job Ads Aug -12.60% - previous • 1:30 Australia ANZ Internet Job Ads Aug -0.70% - previous • 1:45 China Caixin Services PMI Aug 51.7 - previous
Currency Summaries
EUR/USD is likely to find support at 1.1124 levels and currently trading at 1.1155 levels. The pair has made session high at 1.1252 and hit lows at 1.1148 levels. Euro rose sharply against the greenback initially in US session as buyers stepped in following U.S. jobs report which came in below expectations, but reversed course as investors viewed that Federal Reserve will still likely to raise interest rates in the coming months, despite disappointing jobs data in August. Nonfarm payrolls rose by 151,000 jobs last month, the Labor Department said on Friday, below the 180,000 jobs that economists had expected. Hawkish statements from Fed Chair Janet Yellen and Vice Chair Stanley Fischer last week increased expectations before the jobs data that the U.S. central bank is closer to raising rates. Most investors see a rate increase at the Fed's policy meeting later this month as a long shot, with the December meeting seen as the most likely time for a hike this year. GBP/USD is supported in the range of 1.3223 currently trading at 1.3292 levels. It reached session high at 1.3351 and hit low at 1.3290 levels. British pound rallied against the dollar on Friday as the slightly weak monthly U.S. employment report led investors to bets in favour of the pound, but pound pared gains after the dollar turned positive. Despite the soft report, Richmond Federal Reserve Bank President Jeffrey Lacker on Friday said the U.S. economy appears strong enough to warrant significantly higher interest rates. Lacker argued that a range of economic analysis suggests the Fed's benchmark overnight interest rate is too low. Sterling rose to $1.3351, its highest level since Aug. 3 before declining to trade at 1.3292 level in the late US session. Sterling has performed reasonably well in the past few weeks, holding above a 30-year low of $1.2798 struck on July 8, helped by better-than-expected data that has taken the edge off concerns about a sharp decline in economic activity following British voters' decision in a June 23 referendum to back leaving the European Union. USD/CAD is supported at 1.2923 levels and is trading at 1.2985 levels. It has made session high at 1.3097 and lows at 1.2980 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as domestic data showed a jump in exports and oil rose, while a slowdown in U.S. employment growth weighed on the greenback. Canada’s trade deficit in July unexpectedly shrank to C$2.49 billion from a record C$3.97 billion in June as exports jumped by 3.4 percent and imports stagnated, Statistics Canada data indicated. The Bank of Canada has been counting on an uptick in non-energy exports for the economy to meet its growth projections. However, non-energy exports have been hampered this year by weak U.S. business investment, while a weaker Canadian dollar has not helped exports as much as expected. The U.S. dollar dipped against a basket of major currencies as U.S. employment growth slowed more than expected in August after two straight months of robust gains and wage growth moderated. The data could effectively rule out a rate increase from the Federal Reserve this month. AUD/USD is supported around 0.7500 levels and currently trading at 0.7569 levels. It hit session high at 0.7615 and made session lows at 0.7540 levels. The Australian dollar inched higher against U.S. dollar on Friday after a surprisingly weak jobs report prompted doubts about the U.S. economy and its ability to sustain a near-term interest rate hike. Traders significantly cut bets that the Federal Reserve will raise rates at its meetings later in the month. U.S. dollar took a knock after report showed U.S. employers added 151,000 jobs in August, missing the 180,000 mark expected by economists. That took a Fed rate hike in September off the table, but kept the door open for an increase this year at the U.S. central bank's meeting in November or December. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.28 percent to 95.904, after earlier falling to 95.189, the lowest level since last Friday. Equities Recap European shares rose on Friday, with a leading regional equity index reaching its highest level since late May, as weaker-than-expected U.S jobs data led investors to pare back bets on an imminent U.S. interest rate hike. UK's benchmark FTSE 100 up 2.6 percent, the pan-European FTSEurofirst 300 ended the day up by 2.17 percent, Germany's Dax ended up by 1.4, France’s CAC finished the day up by 2.4 percent. U.S. stocks advanced on Friday as a weaker-than-expected payrolls report tamped down expectations for a September rate hike from the U.S. Federal Reserve, although hawkish comments from another Fed official kept expectations for one this year intact. Dow Jones closed up by 0.39 percent, S&P 500 ended up by 0.42 percent, Nasdaq finished the day up by 0.43 percent. Treasuries Recap U.S. Treasury yields on longer-dated maturities rose on Friday, with shorter-dated yields flat, after a weaker-than-expected U.S. non-farm payrolls report that suggested the Federal Reserve was unlikely to raise U.S. short-term interest rates this month. Two-year notes were last little changed in price to yield 0.797 percent. The two-year yield fell to 0.746 percent after the data, the lowest since Aug. 23. Ten-year Treasury notes fell 10/32 in price to yield 1.604 percent. After the data, yields on the 10-year note fell to 1.543 percent, the lowest since Aug. 26. The 30-year Treasury bond rose to a one-week high of 2.29 percent during the day. It was last down 1-2/32 in price to yield 2.278 percent. Commodities Recap Gold rose more than 1 percent on Friday after U.S. jobs growth came in below expectations, dampening the likelihood of an interest rate hike from the Federal Reserve this month, but bullion pared gains after the dollar turned positive. Spot gold jumped to a session high of $1,328.73 an ounce after the non-farm payrolls data, and was up 0.7 percent at $1,322.36 by 2:20 p.m. EDT (1820 GMT). It was on track to close the week up 0.15 percent. U.S. gold futures settled up 0.7 percent at $1,326.70. Oil settled up nearly 3 percent on Friday after a weak U.S. jobs report hurt the dollar and boosted commodities, but crude prices still ended the week sharply lower on concerns about oversupply. Brent crude futures settled up $1.38, or 3 percent, at $46.83 a barrel. For the week, Brent was down 6 percent, its biggest drop in five weeks. U.S. West Texas Intermediate futures rose $1.28, also 3 percent, to settle at $44.44. WTI fell nearly 7 percent on the week, its largest decline in eight weeks.
• U.S. nonfarm payrolls miss expectations: +151k vs forecast 180k. • Traders trim bets on Fed rate hike as U.S. job gains slow. • Jobs report gives ammo to Fed skeptics on September rate hike. • Fed's Lacker: Aug payroll report suggests U.S. labor market still tightening. • Goldman Sachs ups probability of Fed rate hike in September to 55%-research note. • Goldman's Hatzius: August payrolls not great but 'just enough'-CNBC • U.S. trade gap -39.47 billion dollar vs forecast -42.7 billion and June's -44.66 billion. • U.S. July factory orders +1.9% vs forecast +2.0%, June -1.8%. • Brazil industrial output 0.1% m/m in July vs forecast -0.2%. • Canada trade deficit shrinks to CAD 2.49 billion in July vs forecast 3.25 billion.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Services Index Aug 53.9 -previous • 1:30 Australia Business Inventories* Q2 forecast 0.40% 0.40% - previous • 1:30 Australia Gross Company Profits Q2 forecast 2.00% -4.70% - previous • 1:30 Australia Company Profits Pre-Tax Q2 -15.10% - previous • 1:30 Australia ANZ Newspaper Job Ads Aug -12.60% - previous • 1:30 Australia ANZ Internet Job Ads Aug -0.70% - previous • 1:45 China Caixin Services PMI Aug 51.7 - previous
Currency Summaries
EUR/USD is likely to find support at 1.1124 levels and currently trading at 1.1155 levels. The pair has made session high at 1.1252 and hit lows at 1.1148 levels. Euro rose sharply against the greenback initially in US session as buyers stepped in following U.S. jobs report which came in below expectations, but reversed course as investors viewed that Federal Reserve will still likely to raise interest rates in the coming months, despite disappointing jobs data in August. Nonfarm payrolls rose by 151,000 jobs last month, the Labor Department said on Friday, below the 180,000 jobs that economists had expected. Hawkish statements from Fed Chair Janet Yellen and Vice Chair Stanley Fischer last week increased expectations before the jobs data that the U.S. central bank is closer to raising rates. Most investors see a rate increase at the Fed's policy meeting later this month as a long shot, with the December meeting seen as the most likely time for a hike this year. GBP/USD is supported in the range of 1.3223 currently trading at 1.3292 levels. It reached session high at 1.3351 and hit low at 1.3290 levels. British pound rallied against the dollar on Friday as the slightly weak monthly U.S. employment report led investors to bets in favour of the pound, but pound pared gains after the dollar turned positive. Despite the soft report, Richmond Federal Reserve Bank President Jeffrey Lacker on Friday said the U.S. economy appears strong enough to warrant significantly higher interest rates. Lacker argued that a range of economic analysis suggests the Fed's benchmark overnight interest rate is too low. Sterling rose to $1.3351, its highest level since Aug. 3 before declining to trade at 1.3292 level in the late US session. Sterling has performed reasonably well in the past few weeks, holding above a 30-year low of $1.2798 struck on July 8, helped by better-than-expected data that has taken the edge off concerns about a sharp decline in economic activity following British voters' decision in a June 23 referendum to back leaving the European Union. USD/CAD is supported at 1.2923 levels and is trading at 1.2985 levels. It has made session high at 1.3097 and lows at 1.2980 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as domestic data showed a jump in exports and oil rose, while a slowdown in U.S. employment growth weighed on the greenback. Canada’s trade deficit in July unexpectedly shrank to C$2.49 billion from a record C$3.97 billion in June as exports jumped by 3.4 percent and imports stagnated, Statistics Canada data indicated. The Bank of Canada has been counting on an uptick in non-energy exports for the economy to meet its growth projections. However, non-energy exports have been hampered this year by weak U.S. business investment, while a weaker Canadian dollar has not helped exports as much as expected. The U.S. dollar dipped against a basket of major currencies as U.S. employment growth slowed more than expected in August after two straight months of robust gains and wage growth moderated. The data could effectively rule out a rate increase from the Federal Reserve this month. AUD/USD is supported around 0.7500 levels and currently trading at 0.7569 levels. It hit session high at 0.7615 and made session lows at 0.7540 levels. The Australian dollar inched higher against U.S. dollar on Friday after a surprisingly weak jobs report prompted doubts about the U.S. economy and its ability to sustain a near-term interest rate hike. Traders significantly cut bets that the Federal Reserve will raise rates at its meetings later in the month. U.S. dollar took a knock after report showed U.S. employers added 151,000 jobs in August, missing the 180,000 mark expected by economists. That took a Fed rate hike in September off the table, but kept the door open for an increase this year at the U.S. central bank's meeting in November or December. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.28 percent to 95.904, after earlier falling to 95.189, the lowest level since last Friday. Equities Recap European shares rose on Friday, with a leading regional equity index reaching its highest level since late May, as weaker-than-expected U.S jobs data led investors to pare back bets on an imminent U.S. interest rate hike. UK's benchmark FTSE 100 up 2.6 percent, the pan-European FTSEurofirst 300 ended the day up by 2.17 percent, Germany's Dax ended up by 1.4, France’s CAC finished the day up by 2.4 percent. U.S. stocks advanced on Friday as a weaker-than-expected payrolls report tamped down expectations for a September rate hike from the U.S. Federal Reserve, although hawkish comments from another Fed official kept expectations for one this year intact. Dow Jones closed up by 0.39 percent, S&P 500 ended up by 0.42 percent, Nasdaq finished the day up by 0.43 percent. Treasuries Recap U.S. Treasury yields on longer-dated maturities rose on Friday, with shorter-dated yields flat, after a weaker-than-expected U.S. non-farm payrolls report that suggested the Federal Reserve was unlikely to raise U.S. short-term interest rates this month. Two-year notes were last little changed in price to yield 0.797 percent. The two-year yield fell to 0.746 percent after the data, the lowest since Aug. 23. Ten-year Treasury notes fell 10/32 in price to yield 1.604 percent. After the data, yields on the 10-year note fell to 1.543 percent, the lowest since Aug. 26. The 30-year Treasury bond rose to a one-week high of 2.29 percent during the day. It was last down 1-2/32 in price to yield 2.278 percent. Commodities Recap Gold rose more than 1 percent on Friday after U.S. jobs growth came in below expectations, dampening the likelihood of an interest rate hike from the Federal Reserve this month, but bullion pared gains after the dollar turned positive. Spot gold jumped to a session high of $1,328.73 an ounce after the non-farm payrolls data, and was up 0.7 percent at $1,322.36 by 2:20 p.m. EDT (1820 GMT). It was on track to close the week up 0.15 percent. U.S. gold futures settled up 0.7 percent at $1,326.70. Oil settled up nearly 3 percent on Friday after a weak U.S. jobs report hurt the dollar and boosted commodities, but crude prices still ended the week sharply lower on concerns about oversupply. Brent crude futures settled up $1.38, or 3 percent, at $46.83 a barrel. For the week, Brent was down 6 percent, its biggest drop in five weeks. U.S. West Texas Intermediate futures rose $1.28, also 3 percent, to settle at $44.44. WTI fell nearly 7 percent on the week, its largest decline in eight weeks.
Monday, August 9, 2010
The dollar rebounds ahead of Fed meeting
The green currency rebounded against a basket of major after last week losses ahead of the Fed meeting tomorrow. The dollar index, which tracks the dollar movements against six major currencies, climbed to 80.62 after receiving support at 80.09.
Yet, the dollar remains under pressure and expectations that it will continue its drop are ongoing after a wave of concerning data released recently, especially Friday's non-farm payrolls which showed a drop of 131,000 in July from 71,000 in June.
The fraught outlook is increasing speculations the Fed would keep interest rate at its current low level and continue bond buying.
On the other hand, the euro failed to continue its surge after rebounding more than 11% since touching June's drought of $1.1874, yet it remains near three-month high against the dollar.
Concerning the euro-dollar pair, it reversed down to 1.3244 after hitting a high of 1.3307 where it found strong support at 1.3200 levels, while it recorded a low of 1.3226. For the rest of the day, the pair is expected to move between support and resistance at 1.2195 and 1.3325 respectively.
An upbeat German trade balance report released earlier today failed to boost the euro to continue its rally, yet it confirms the strength of recovery in the euro area following the strong second-quarter data and optimistic announcements by Trichet last week.
Moving to the sterling-dollar pair, it is showing slight decline on the daily and 4- hour basis in the absence of economic data from the UK today ahead of the release of inflation report later on this week. The pair is also predicted to stop its rally after the sterling has surged to above 5-month high against the U.S. dollar to trade in an overbought area as noted by momentum indicators.
Currently, the pair is trading at 1.5935 after recording a high of 1.5993 and a low of 1.5929, while it is expected to move between support at 1.5865 and resistance at 1.6025 for the rest of the day.
With regard to the dollar-yen pair, it is showing incline today as the rally in stocks damped demand on the yen as a refuge, yet the dollar remains hovering near 15-year low against the Japanese currency.
So far, the pair is trading at 85.65, reporting a high of 85.76 and a low of 85.28, whereas support is seen at 85.00 while resistance is at 86.35.
The fraught outlook is increasing speculations the Fed would keep interest rate at its current low level and continue bond buying.
On the other hand, the euro failed to continue its surge after rebounding more than 11% since touching June's drought of $1.1874, yet it remains near three-month high against the dollar.
Concerning the euro-dollar pair, it reversed down to 1.3244 after hitting a high of 1.3307 where it found strong support at 1.3200 levels, while it recorded a low of 1.3226. For the rest of the day, the pair is expected to move between support and resistance at 1.2195 and 1.3325 respectively.
An upbeat German trade balance report released earlier today failed to boost the euro to continue its rally, yet it confirms the strength of recovery in the euro area following the strong second-quarter data and optimistic announcements by Trichet last week.
Moving to the sterling-dollar pair, it is showing slight decline on the daily and 4- hour basis in the absence of economic data from the UK today ahead of the release of inflation report later on this week. The pair is also predicted to stop its rally after the sterling has surged to above 5-month high against the U.S. dollar to trade in an overbought area as noted by momentum indicators.
Currently, the pair is trading at 1.5935 after recording a high of 1.5993 and a low of 1.5929, while it is expected to move between support at 1.5865 and resistance at 1.6025 for the rest of the day.
With regard to the dollar-yen pair, it is showing incline today as the rally in stocks damped demand on the yen as a refuge, yet the dollar remains hovering near 15-year low against the Japanese currency.
So far, the pair is trading at 85.65, reporting a high of 85.76 and a low of 85.28, whereas support is seen at 85.00 while resistance is at 86.35.
Home Sales Miss, Eyes on Jobs
The greenback traded on weaker footing against the major currencies in the Tuesday session, sliding by 0.8% versus the Japanese yen and losing around 0.4% against both the euro and the British pound. Crude oil managed to extend gains further, trading up by 1.3% to settle near $82.40-per barrel – its highest level since May 13th. Meanwhile, the US equity bourses closed marginally lower with the Dow Jones and S&P 500 shedding around 0.4% and the Nasdaq declining by 0.5%. Wall Street stalled on the heels of soft earnings reports from Proctor & Gamble and Dow Chemical.
The US economic reports were largely weaker than expected on the session. Garnering the lion’s share of market attention was the pending home sales report, which was initially estimated to improve by 4.0% in June, reversing the record 30% plunge from May. Instead, the headline figure posted a decline of 2.6% versus a marginal upward revision of 29.9% from the prior month. On a yearly basis, pending home sales fell by 20.1% in June compared with a 15.6% drop from the previous year. Both personal spending and income were softer than forecast and flat for the month of June. Rounding out today’s reports was the June core PCE, which edged up slightly on a yearly basis at 1.4% and flat on a monthly basis.
The disappointing housing report weighed on the markets and shifts the focus to the jobs data due out over the rest of the week. Wednesday will see the July Challenger job cuts report, followed shortly by the ADP private-sector payrolls. The ADP report is expected to reveal jobs creation of 33k in July for the private sector versus 13k jobs added in June. Also to be closely watched will be the non-manufacturing ISM report, forecast to slip to 53.0 in July compared with 53.8 in the previous month. The employment index will also be analyzed following the dip in the previous reading to below the key 50-level.
The US economic reports were largely weaker than expected on the session. Garnering the lion’s share of market attention was the pending home sales report, which was initially estimated to improve by 4.0% in June, reversing the record 30% plunge from May. Instead, the headline figure posted a decline of 2.6% versus a marginal upward revision of 29.9% from the prior month. On a yearly basis, pending home sales fell by 20.1% in June compared with a 15.6% drop from the previous year. Both personal spending and income were softer than forecast and flat for the month of June. Rounding out today’s reports was the June core PCE, which edged up slightly on a yearly basis at 1.4% and flat on a monthly basis.
The disappointing housing report weighed on the markets and shifts the focus to the jobs data due out over the rest of the week. Wednesday will see the July Challenger job cuts report, followed shortly by the ADP private-sector payrolls. The ADP report is expected to reveal jobs creation of 33k in July for the private sector versus 13k jobs added in June. Also to be closely watched will be the non-manufacturing ISM report, forecast to slip to 53.0 in July compared with 53.8 in the previous month. The employment index will also be analyzed following the dip in the previous reading to below the key 50-level.
Markets Softer On Poor Data, Fed- Yen Advances
Asia Pacific markets were mixed after US equities slumped on disappointing economic data and talks of further quantitative easing measures from the Fed. Weaker than expected personal spending, factory orders, pending home sales, and consumer confidence reports, confirmed fears that the pace of the US recovery is slowing. The Hang Seng index and the Shanghai SE composite posted gains of 0.6% and 0.4% respectively, while the S&P/ASX 200 index slid 0.7%. The Nikkei 225 was the worst performer, falling more than 2.1% as concerns regarding the health of the US economy and persistent strength in the yen pressured stocks. Japanese exporters were pummeled as the nation's currency advanced to an eight-month high against the greenback at 85.34. The yen remains in demand amid relatively elevated risk aversion levels, with bond yields softer across the board. Yields on the US 2-year note fell to record lows on mounting speculation that the Federal Reserve may resume treasury purchases in an attempt to revive the faltering recovery. We note a strengthening correlation between the spread on 2-year US and JGB bonds, and the USD/JPY pair. The yen will approach a 15-year low at 84.82, with downside risk increasing below.
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