Tuesday 23rd August: European Open Briefing

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Global Markets:

  • Asian stock markets: Nikkei up 0.20 %, Shanghai Composite gained 0.25 %, Hang Seng fell 0.25 %, ASX 200 rallied 0.95 %
  • Commodities: Gold at $1340 (-0.20 %), Silver at $18.95 (+0.50 %), WTI Oil at $46.80 (-1.30 %), Brent Oil at $48.65 (-1.00 %)
  • Rates: US 10 year yield at 1.55, UK 10 year yield at 0.57, German 10 year yield at -0.08

News & Data:

  • Japan Nikkei Manufacturing PMI Aug: 49.6 (prev 49.3)
  • Japan Average Wages 1.4 (prev 1.3 %)
  • Japan Average Real Wages 2.0 % (prev 1.8 %)
  • Japan Average Base Wages 0.0 % (prev 0.1 %)
  • Australian ANZ Roy Morgan Consumer Confidence (Weekly) Aug 21: 121.8 (prev 117.6)
  • China MNI Business Sentiment Indicator Aug: 54.3 (prev 55.5)
  • PBOC Fixes Yuan Reference Rate at 6.6586 (prev 6.6652)
  • RBNZ Governor Wheeler: Monetary policy faces challenges in turbulent times
  • Wheeler: The output and inflation projections assume 35 basis points of further OCR cuts
  • Goldman Sachs: We reiterate our $45-50 Brent forecast through next summer

Markets Update:

The US Dollar weakened overnight, while the New Zealand Dollar rose against most other major currencies following comments from RBNZ Governor Wheeler, who said that there is no need for rapid easing. NZD/USD rose from 0.7260 to a high of 0.7325 during his speech. AUD/USD followed it higher, rising from 0.7615 in the early Asian session to a high of 0.7645.

EUR/USD rose from 1.1315 to 1.1335 in Asia, with flows light as usual. Similar price action was seen in GBP/USD, which consolidated in a 1.3130-50 range overnight. The EUR/USD uptrend looks stable and if it can clear 1.1425 resistance, a test of 1.16 seems likely. Techs look less good for GBP/USD, but the risks of a short squeeze are high, given that short positioning is at extreme levels could.

USD/JPY remains under pressure and it almost fell below 100 again. The market does not seem to think that the BoJ will intervene soon, so the pair will likely remain offered in the near-term, unless Fed Chair Yellen surprises the market with some hawkish comments. Key support is now seen at 99.60, followed by 99.00.

Upcoming Events:

  • 08:00 BST – French Manufacturing PMI
  • 08:00 BST – French Services PMI
  • 08:30 BST – German Manufacturing PMI
  • 08:30 BST – German Services PMI
  • 09:00 BST – Euro Zone Manufacturing PMI
  • 09:00 BST – Euro Zone Services PMI
  • 11:00 BST – UK CBI Industrial Trends Orders
  • 14:45 BST – US Markit Manufacturing PMI
  • 15:00 BST – US New Home Sales
  • 15:00 BST – US Richmond Manufacturing Index
  • 15:00 BST – Euro Zone Consumer Confidence
  • 23:45 BST – New Zealand Trade Balance

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