Americas Roundup: Canadian Dollar Gains, As Oil Prices Surges on Lower U.s. Output, Opec Talk &#150september 1st, 2015

Market Roundup

  • Oil surges (+7.75%) on lower U.S. output, OPEC talk, biggest bounce since 1990.
  •  Stocks ease on China, Fed concerns.
  • Low inflation in Europe puts spotlight on ECB.
  •  China cuts down payment level for most 2nd home buyers to 20% from 30%.
  •  Brazil 2016 budget gap forecast is “worrisome” (vice president).
  • Brazil’s ’15 inflation forecast at 9.28% from 9.29%, GDP growth -2.26% from -2.06%.
  • US Chicago PMI Aug 54.4, forecast 54.7, 54.7-previous.
  • US Dallas Fed Manufacturing Business index Aug -15.8, -4.6-previous.
  •  So African mines minister to negotiate BRICs Bank SARB to promote platinum as reserve asset.
  •  Chile’s copper output falls 2.5 percent in July.

Looking Ahead – Economic Data (GMT)

  • 22:45 New Zealand Terms of Trade QQ* Q2 forecast -1.90%, 1.5%-previous
  • 22:45 New Zealand Terms of Trade – Exports Volume* Q2 forecast- 0.30%, 1.4%-previous
  • 22:45 New Zealand Terms of Trade – Imports* Q2 forecast- 1.30%, -5.1%-previous
  •  22:45 New Zealand Terms of Trade – Exports* Q2 0.00%, -3.7%-previous
  •  23:30 Australia AIG Manufacturing Index Aug 50.4-previous
  •  23:50 Japan Business Capex (MOF) YY* Q2 7.3%-previous
  • 01:00 China NBS Non-Manufacturing PMI* Aug 53.9-previous
  • 01:00 China NBS Manufacturing PMI* Aug forecast- 49.7, 0-previous
  • 01:30 Australia Building Approvals* Jul forecast- 2.50%, -8.2%-previous
  •  01:30 Australia Private House Approvals* Jul 4.3%-previous
  • 01:30 Australia Current Account Deficit* Q2 forecast-15.80b, 10.70b-previous
  •  01:30 Australia Net Exports Contribution* Q2 forecast- -0.30%, 0.5%-previous
  • 01:35 Japan Nikkei Manufacturing PMI Aug 51.9-previous
  • 01:45 China Caixin Manufacturing PMI Final Aug 47.1-previous
  •  01:45 China Caixin Services PMI Aug 53.8-previous

Looking Ahead – Events, Other Releases (GMT)

  • 04:30 Australia RBA Cash Rate Sep forecast- 2.00%, 2%-previous

Currency Summaries

EUR/USD is likely to find support at 1.1140 levels and currently trading at 1.1226 levels. The pair has made session high at 1.1239 and hit lows at 1.1178 levels. The dollar eased against the low-yielding euro on Monday as investors around the world knocked down equities and trimmed bets against currencies popularly used to fund risky carry trades. Under carry trades, investors sell a low-yielding currency to buy riskier, higher-yielding ones for better returns. When volatility rises in global financial markets and stocks fall, they tend to take these positions off the table. The euro rose 0.5 percent to $1.1236, below last week’s high of $1.1715 but still up 2.4 percent for the month. Investors will be keeping a sharp eye on economic data again this week, especially the monthly jobs report on Friday, the last one before the Fed meets on Sept. 16-17. To the upside, immediate resistance can be seen at 1.1260. To the downside, immediate support level is located at 1.1177 levels.

GBP/USD is supported in the range of 1.5333 levels and currently trading at 1.5348 levels. It reached session high at 1.5358 and dropped to session low at 1.5338 levels. The Sterling slipped against US dollar on Monday, after senior Federal Reserve official heightened fears among investors of a potential U.S. interest hike in September. The No. 2 Fed official said U.S. inflation would likely rebound as pressure from the dollar fades, allowing the Fed to raise interest rates gradually. Volumes were relatively low on Monday, as London was shut for a holiday, and traders were awaiting Friday’s key U.S. employment report for August, that may hint at whether the Federal Reserve will lift interest rates in September or not. The cable moved between 1.5420 to 1.5342 during US session by declining almost 90pips in a single session. To the upside, immediate resistance can be seen at 1.5415. To the downside, immediate support level is located at 1.5332 levels.

USD/JPY is supported around 120.60 levels and currently trading at 121.15 levels. It peaked to hit session high at 121.41 and made session lows at 120.90 levels. The dollar eased against the safe-haven yen on Monday, as it was on track for monthly losses but off recent lows as investors kept alive hope that U.S. jobs data later this week would give the U.S. Federal Reserve reason to raise interest rates as early as next month. The dollar shed 0.4 percent to 121.19 against yen, down about 2.2 percent for August but well above a seven-month low of 116.15 touched a week ago. The dollar index, which tracks the greenback against a basket of six major currencies, was flat on the day and more than 1 percent lower for the month. It was well above a seven-month low of 92.621 reached a week ago as the prospect of a slowdown in China sent global stocks plunging. Investors awaited the key nonfarm payrolls data on Friday for clues as the whether the Fed would take its long-awaited step to raise interest rates. U.S. business surveys, factory orders and trade data will also be released this week. To the upside, immediate resistance can be seen at 121.41. To the downside, immediate support level is located at 120.80 levels.  

USD/CAD is supported at 1.3140 levels and is trading at 1.3170 levels. It has made session high at 1.3327 and lows at 1.3156 levels. The Canadian dollar surged against the U.S. dollar on Monday, as U.S. oil prices  skyrocketed for third consecutive day, giving a boost to Canadian dollar for which oil is the trump card . Brent crude rose more than 8 percent, as a downward revision of U.S. output data and OPEC’s readiness to talk with other producers helped extend the biggest price surge in 25 years. The currency’s strongest level of the session was C$1.32, while its weakest level was C$1.3303. The pair started to decline in mid new york session from 1.3302 to hit session lows at 1.3114 levels during late US session, losing almost 170 pips . On the data front, Canada’s current account deficit narrowed slightly in the second quarter of 2015 to C$17.40 billion, but was slightly higher than the C$16.90 billion  predicted by analysts. To the upside, immediate resistance can be seen at 1.3143. To the downside, immediate support level is located at 1.3112 levels.

Equities Recap

European shares suffered their worst monthly performance in four years on Monday, as concerns over a Chinese economic slowdown and a possible U.S. interest rate rise hit the region’s stock markets.

The pan-European FTSEurofirst 300 ended the day down by 0.3 percent, Germany’s Dax ended down by 0.4 percent, France’s CAC finished the day down by 0.5 percent.

Wall Street ended lower on Monday and wrapped up its worst month since 2012 after senior Federal Reserve official heightened fears among investors of a potential U.S. interest hike in September. Dow Jones closed down by 0.69 percent, S&P 500 ended down by 0.85 percent, Nasdaq finished the day down by 1.09  percent.

Treasuries Recap

Longer-dated U.S. Treasuries prices fell on Monday after lower U.S. oil production and OPEC’s readiness to talk with other producers heightened inflation fears, while weekend comments from the Federal Reserve vice chair hurt shorter-dated prices.

U.S. 30-year Treasury bonds were last down 31/32 in price to yield 2.96 percent, from a yield of 2.91 percent late Friday. Benchmark 10-year Treasuries prices were last down 8/32 with a yield of 2.21 percent, from a yield of 2.18 percent late Friday. Yields move inversely to prices. Two-year notes were last down slightly in price to yield 0.74 percent, from a yield of 0.73 percent.

Commodities Recap

Gold steadied on Monday, bouncing up from session lows as oil prices rallied and the U.S. dollar fell, after bullion felt earlier pressure on indications the Federal Reserve may still raise interest rates this year, despite recent market turmoil.

Spot gold was up 0.04 percent to $1,134 an ounce at 3:20 p.m. EDT (1920 GMT), and was on track to close August up 3.5 percent, the strongest monthly gain since January after worries over a slowing Chinese economy sparked a wave of short-covering earlier this month. This lifted prices above 5-1/2-year lows reached in July, U.S. gold futures for December delivery settled down 0.1 percent at $1,132.50.

Oil soared on Monday for a third consecutive day, with Brent crude rising more than 8 percent, as a downward revision of U.S. output data and OPEC’s readiness to talk with other producers helped extend the biggest price surge in 25 years.

Brent October futures rose $4.10, or 8.2 percent, to settle at $54.15 a barrel, with volumes relatively muted by a UK public holiday.

U.S. crude gained $3.98, or 8.8 percent, to settle at $49.20 a barrel, taking three-day gains to 27.5 percent, the most over three days since August 1990. In dollar terms, it is the biggest three-day gain since February 2011.

The material has been provided by InstaForex Company – www.instaforex.com

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