- EUR/USD back above 1.1300 as market awaits Fed decision.
- USD/JPY hits 1 week high from 120.35 to 120.98 levels.
- DXY down 0.1% but off Monday’s 94.913 base. 95.387/95.106 range.
- CHF inches higher after SNB holds fire. EUR/CHF down to 1.0948 from 1.0977.
- Sterling steadies around 1.5500 as UK retail sales edge up.
- EM mixed ahead of Fed but generally steady to firm, CEE3 up vs the EUR.
- UK August Retail sales 0.2% m/m, 3.7% y/y vs previous 0.0%/4.1% revised. 0.2%/3.8% expected.
- SNB keeps rates negative, says franc too strong.
- Swiss govt ups 2015 growth forecast to 0.9% from previous 0.8%, recovery in EZ crucial.
- Swedish CB Floden- Still has ammunition to ease policy, can lower repo rate more.
- Floden- Intervention far down list of tools but could be used if SEK strengthens a lot.
- BOJ Kuroda- BOJ will make necessary policy adjustment by scrutinizing upside, downside risks for economy.
- BOJ Gov Kuroda sticks mostgly to script, accepts realities.
- China FX regulator- Fluctuation in foreign exchange flows in Aug within acceptable range.
- (0830 ET/1230 GMT) US August housing starts, 1.17 mln AR eyed; last 1.21 mln, +0.2% m/m.
- (0830 ET/1230 GMT) US August building permits, 1.16 mln AR eyed; last 1.13 mln, -15.5% m/m.
- (0830 ET/1230 GMT) US Q2 current account balance, $111.3 bln deficit eyed; last $113.3 bln deficit.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 275k eyed; last 275k.
- (1000 ET/1400 GMT) US September Philly Fed business sentiment index, 6.0 eyed; last 8.3.
- (1400 ET/1800 GMT) FOMC policy announcement, 50-50 on 25 bp Fed funds rate hike.
Key Events Ahead
- (1430 ET/1830 GMT) FOMC Chair Yellen press conference.
USD: The dollar was trading at 120.94 yen, up around a third of a percent from late U.S. trade. Against a basket of currencies, it was down just over 0.1 pct at 95.267, well above a three-week low of 94.913 plumbed on Monday.EURUSD: The pair was seen jumping above $1.13 on Thursday in what appears to be nervous trading as the FOMC meeting concludes today. From the macro point of view, Wednesday brought inflation figures from both the US and the euro zone. CPI from the euro zone for August posted a sharp rise to 0.0% from -0.6% month-on-month, while the yearly change decreased from 0.2% to 0.1%. The core gauge on a yearly basis also shed 0.1%, to 0.9%. CPI in the US for August decreased from 0.1% to -0.1% month-on-month and the yearly print was unchanged at 0.2%.Looking ahead, markets now gear up for the US macroeconomic data along with the Fed rate decision due later today. It made intraday high at 1.1337 and low at 1.1284. Initial support is seen around at 1.1015 and resistance at 1.1363 levels. Option expiries are at 1.1300 (361M), 1.1100 (465M).USDJPY: The dollar was seen stronger versus the yen, but the ¥121 resistance holds for now. Japan’s trade deficit hit an eight-month high in August, despite continuous declines in imports, as exports growth was the weakest since May. The trade gap expanded from ¥268.1 billion in July to ¥569.7 billion last month, according to new customs data on Thursday, coming in slightly weaker than the forecast deficit of ¥540 billion. On Tuesday, with the release of the Bank of Japan’s Statement on Monetary Policy, central bankers assessed that exports had recently been “more or less flat, due to the effects of the slowdown in emerging economies.” Currently pair is trading at 120.81 levels. It made intraday high at 120.97 and made intraday low at 120.34 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (500M), 120.25 (500M), 121.00 (2.8BLN), 121.10-15 (800M).GBPUSD: The UK’s pound edged somewhat lower, leaving fresh intraday highs after UK retail sales posted just slightly worse figure than expected. August retail sales rose 0.1%, down from the 0.4% seen in July, and in line with expectations, but there were downward revisions to the previous month. Moreover, markets remain wary ahead of today’s Fed decision, on increased speculations that the Fed rate hike could be pushed back to early 2016, thus reducing the demand for the US currency. It made intraday high at $1.5525 and low at $1.5486 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.NZDUSD: The New Zealand economy expanded 0.4% in the June quarter, according to Statistics New Zealand data released on Thursday, missing the market forecast of 0.6% growth, which was also the Reserve Bank of New Zealand’s (RBNZ) estimate. The New Zealand dollar fell 0.30% to $0.6345 on Thursday afternoon in Wellington, from $0.6363 at the close of trade in New York on Wednesday, hitting an intraday low of $0.6337 after the GDP figures were released. Pair made an intraday high at 0.6377 and low at 0.6332 levels. Pair is currently trading at 0.6339 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels. Option expiry is at 0.6275 (301M).AUDUSD: Pair halted its long run of gains and turned in the red during the European session, as the Aussie suffered heavily from the persisting risk-off environment with traders now awaiting the Fed outcome. Markets are likely to ignore a batch of US economic releases due to be reported before the Fed decision, as the main highlight remains the Fed verdict. Today’s Federal Open Market Committee decision is seen as the most closely watched event in years. It made intraday high at 0.7207 and low at 0.7161 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels. Option expiry is at 0.7195-0.7200 (1.9BLN).
Global stocks rose to a 3-week high as investors consolidated positions ahead of most awaited U.S. Federal Reserve interest rate decision.
Europe’s FTSEurofirst 300 was up 0.2 pct, UK’s FTSE rose 0.1 pct, France’s CAC40 climbed 0.3 pct and Germany’s DAX inched higher 0.4 pct.Japan’s Nikkei climbed 1.4 percent, while Australian and Malaysian shares rose 1 and 1.8 percent. China’s CSI300 Index closed down 2.2 pct at 3,237.00 points and Shanghai Composite Index ended down 2.1 pct at 3,086.06 points. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 pct to its highest level in three weeks.
Oil prices dropped below $50 a barrel after weak Japanese data sounded alarm bells over the prospects for global growth, outweighing the bullish impact of a bigger-than-expected decline in U.S. crude oil stocks. North Sea Brent crude oil was down 25 cents at $49.50 a barrel by 0830 GMT, after hitting an early high of $50.14. U.S. light crude oil was down 30 cents at $46.85 a barrel.Gold was trading near its highest in a week on Thursday, adding to overnight gains from its biggest jump in nearly a month, as sluggish U.S. inflation data eased fears the Federal Reserve would hike interest rates later this session. Spot gold had ticked up 0.2 percent to $1,120.95 an ounce at 0638 GMT, near a one-week high of $1,124.30 reached in the previous session.
The yield on the U.S. 2-year note held nears a 4 1/2-year high at 0.803 percent.Euro zone bond yields were largely steady, as France and Spain faced the uncomfortable task of selling debt hours ahead of the U.S. rate decision. German 10-year Bund yields were up by less than a basis point at 0.78 percent. The other yields in the region were flat to a touch higher. 10-year Spanish yields were 2.13 percent, while their French equivalent were 1.10 percent.UK Dec Gilts were trading 6 ticks lower at 117.23 than where it closed at 117.29 yesterday. The market has traded a 117.06-117.31 but does not feel that it has the momentum to break sharply either way. The cash 2s/10s curve is 1bp flatter, lead by modest 2yr weakness.JGB prices finished the day slightly firmer, sending yields down 0.5bp from yesterday’s afternoon close in the 5-yr to 20-yr zone. Yields on the current 2-yr, 5-yr, 20-yr and 30-yr JGBs moved in a very narrow range of 0.5bp before ending the day at their intraday lows, while those on the current 10-yr JGBs also moved in a narrow range, even after the BoJ purchased JPY400bn of 5-yr to 10-yr JGBs, JPY240bn of 10-yr to 25-yr JGBs, and JPY140bn of 25-yr to 40-yr JGBs under the program after yesterday’s monthly JPY1.2tn 20-yr JGB auction.New Zealand government bonds eased, sending yields as much as 4 ticks higher on the long end of the curve. Australian government bond futures fell to one-month lows, with the 3-year bond contract off 5 ticks at 98.040. The 10-year contract was down 4.5 ticks to 97.1250.
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