5 Sept: Stocks, Commodities up; US$ mostly weaker after a busy news day. ADP Jobs, ISM Non-Mfg PMI in focus today.

By | September 5, 2019

A more positive risk outlook has seen stocks bounce by around 1%, while the US$ has generally been under pressure for much of the session, with the DXY finishing near the day’s lows at 98.45 (-0.5%) although US$Jpy is firm, with the dollar underpinned by Jpy weakness as risk sentiment improved. Otherwise, the dollar was not helped on Thursday by comments from New York Fed President John Williams, who said that the economy looks “weaker than previously thought”, adding that the central bank needs to stay flexible, and adding to the prospect of another Fed rate cut at next month’s FOMC Meeting. The major currency movement came in Sterling, which bounced strongly on hopes of a Brexit delay after UK MPs voted to take control of Parliament and introduce legislation intended to stop a no-deal Brexit on Oct. 31. In early NZ trade, the UK parliament has voted to reject the chance of an early election and so the chaos continues, and we now face the prospect of yet another extension to the divorce date.

The other major move in the FX markets was seen in the Cad$, which surged after the BOC left rates on hold. This was expected, but the statement was not as dovish as traders thought it would be, and while the market expects a rate cut at the October meeting, the statement did not allude to the fact that the BOC will do so and caused some sharp covering of short Cad$ positions.

Risk positions were also helped today as tensions eased a little after Hong Kong leaders withdrew the extradition bill that have ignited mass protests. Although the HK Chief executive did not concede to other demands, including an inquiry into police violence, the withdrawal of the contentious bill did ease concerns over what China might do to stop the rioting, and underpinned a more positive tone through the session.

In the commodity markets, oil continued its highly volatile conditions, rallying by 4% on Thursday as traders anticipated another large weekly crude draw – although that did not come about and the weekly figure shows a build of 0.4 million barrels. That saw WTI give up a little ground although the price remains underpinned by Wednesday’s positive Chinese economic data, which saw the services sector expand in August at the fastest pace in three months. Gold and Silver also made further gains, with Gold reaching a new 6 year high (Silver; 3 years), being assisted by a fresh dive in US Treasury yields, which briefly fell to  new 3 year lows (US10Y: 1.437%) and sent investors scrambling for a safe haven.

Looking ahead, Thursday will see the Australian Trade Balance (exp +$7.4 bio) and the German Factory Orders (exp -1.1% mm) but that is it until the US session. Once that starts, we have the ADP Jobs data (exp 148K), ISM Non-Mfg PMI (exp 53.9), the Markit Services PMI (exp 50.9%), Factory Orders (exp +1.0%mm), and the weekly Initial/Continuing Jobless Claims (exp 215K/1,685K). Overall it may be a fairly steady session as traders await tomorrow’s EU GDP, the US Jobs/NFP/Average Hourly Earnings data – and Fed Chair Powell who will be speaking ahead of the weekly close. Have a good day.

Economic data highlights will include:

Thur: Australian Trade Balance, German Factory Orders, UK Court Hearing on No-Deal Brexit, ADP Jobs data, ISM Non-Mfg PMI, Services PMI,  Jobless Claims,

Market moves, in brief:                                                                   

FX: DXY 98.42 (-0.55%)

Bonds: US10Y; 1.470% (+0.38%), German 10Y; -0.676% (+5.33%), UK 10Y; +0.428% (+25.10%), Australian 10Y; 0.947% (+0.16%), NZ 10Y; 1.035% (-1.43 %), China 10Y; 3.074% (+0.14%)

Stock Indices: DJI; +0.91%, S+P; +1.08%, NASDAQ; +1.30%, EUStoxx50; +0.88%, FTSE100; +0.59%, Shanghai Composite; +0.93%,

Metals: Gold $1552 oz (+0.33%), Silver $19.58 oz (+1.68%), Copper $2.594 lb (+2.61%), Iron Ore $91.57 per tonne (NYMEX) (2.26%),

Oil: WTI $56.01 pb (+3.91%)

EURUSD: 1.1029
Res  1.1060  1.1095  1.1130
Sup  1.0960  1.0995  1.0925
USDJPY: 106.35
Res  106.45  106.65  106.85
Sup  106.20  106.00  105.80
GBPUSD: 1.2224
Res  1.2250  1.2280  1.2310
Sup  1.2195  1.2160  1.2125
USDCHF: 0.9808
Res  0.9825  0.9845  0.9865
Sup  0.9795  0.9775  0.9750
AUDUSD: 0.6795
Res  0.6800  0.6820  0.6840
Sup  0.6780  0.6760  0.6740
NZDUSD: 0.6358
Res  0.6365  0.6385  0.6405
Sup  0.6345  0.6325  0.6305
S&P.fs: 2938.53
Res  2945.00  2960.00  2975.00
Sup  2925.00  2905.00  2885.00
DJ30.fs: 26375.00
Res  26400.00  26475.00  26555.00
Sup  26315.00  26240.00  26160.00
SPI200.fs: 6551
Res  6565  6580  6595
Sup  6535  6515  6495
XAUUSD: 1554.21
Res  1560.00  1580.00  1570.00
Sup  1545.00  1535.00  1525.00
XAGUSD: 19.61
Res  19.70  19.85  20.05
Sup  19.45  19.25  19.05
WTI.fs: 56.35
Res  57.00  57.90  58.80
Sup  55.80  54.85  53.85