30 Aug: Easing trade tensions underpin both the US$/stocks. EU CPI in focus today

By | August 30, 2019

Both the US$ and stocks rallied on Thursday, underpinned by indications that China has expressed hope on trade negotiations, easing concerns that rising tensions could stoke a recession after a Chinese official confirmed that China is working with the US to schedule talks in September. A Chinese ministry spokesperson said that the discussions should focus on preventing an escalation in the tensions and should focus on resolving the trade issues calmly, which reassured traders and helped both the dollar and stockmarkets.

Commodities had a mixed day, with WTI up by 1.3% as hopes increased that the trade tensions would continue to ease, while the metals fell by around 0.7% as safe haven demand diminished.

In terms of data, the second estimate of the US GDP grew 2.0% annualised in Q2, as expected, and unrevised from the first estimate but down from Q1’s 3.1% while the US initial jobless claims rose 4k to 215k in the week ending August 24, also in line with expectations. Earlier in the session, the German CPI dropped by -0.2% mm in August, worse than the expectation of -0.1% mm. The annualised figure slowed to 1.4% yy, down from 1.7% yy and also missed expectation of 1.5% yy.

Looking ahead, Friday will be another busy day, beginning in Asia with the Australian Private Sector Credit, Building Permits and New Home Sales, and a large dump Japanese data including the Unemployment, Industrial Production, Retail Trade, Housing Starts, Construction Orders and Tokyo CPI figures. Europe will look to the German Retail Sales (exp -1.0%mm) and the EU CPI (Aug -exp 1.0%yy) and Unemployment (July  exp 7.5%) ahead of the US Personal Consumption Expenditure Index for August (exp 0.2%mm/1.6%yy), the Chicago Purchasing Managers Index (exp 47.5), Michigan Consumer Sentiment Index (exp 92.1) and the Baker Hughes Oil Rig Count. Have a good weekend.

Economic data highlights will include:

Fri: Australian Private Sector Credit, Building Permits, New Home Sales, Japan Unemployment, Industrial Production, Retail Trade, Housing Starts, Construction Orders, Tokyo CPI,  German Retail Sales, EU CPI, Unemployment, US Personal Consumption/Expenditure Index, Chicago Purchasing Managers Index, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig Count

Market moves, in brief:

FX: DXY 98.46 (+0.26%)

Bonds: US10Y; 1.497% (+1.28%), German 10Y; -0.693% (+3.25%), UK 10Y; +0.363% (-1.39%), Australian 10Y; +0.884% (-1.43%), NZ 10Y; 1.065% (-1.84 %), China 10Y; 3.035% (-1.16%)

Stock Indices: DJI; 1.25%, S+P; 1.27%, NASDAQ; 1.48%, EUStoxx50; 1.37%, FTSE100; 0.98%, Shanghai Composite; -0.10%,

Metals: Gold $1527 oz (-0.79%), Silver $18.26 oz (-0.56%), Copper $2.555 lb (+0.04%), Iron Ore $81.54 per tonne (NYMEX) (0.06%),

Oil: WTI $56.60 pb (1.29%)

CURRENCIES
EURUSD: 1.1055
Res  1.1070  1.1095  1.1115
Sup  1.1025  1.1040  1.1000
USDJPY: 106.53
Res  106.70  106.85  107.00
Sup  106.35  106.15  105.95
GBPUSD: 1.2181
Res  1.2210  1.2235  1.2260
Sup  1.2155  1.2125  1.2095
USDCHF: 0.9867
Res  0.9875  0.9890  0.9910
Sup  0.9850  0.9830  0.9810
AUDUSD: 0.6729
Res  0.6740  0.6755  0.6770
Sup  0.6715  0.6700  0.6685
NZDUSD: 0.6311
Res  0.6325  0.6350  0.6375
Sup  0.6300  0.6280  0.6260
INDICES / COMMODITIES
S&P.fs: 2924.03
Res  2930.00  2945.00  2965.00
Sup  2910.00  2890.00  2870.00
DJ30.fs: 26362.00
Res  26430.00  26555.00  26685.00
Sup  26260.00  26160.00  26035.00
SPI200.fs: 6526
Res  6535  6550  6565
Sup  6510  6495  6480
XAUUSD: 1526.98
Res  1535.00  1555.00  1545.00
Sup  1520.00  1510.00  1500.00
XAGUSD: 18.25
Res  18.40  18.65  18.90
Sup  18.00  17.75  17.45
WTI.fs: 56.58
Res  56.85  57.40  58.00
Sup  56.15  55.55  54.95

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