Market Brief
After a very volatile session on Monday, crude oil prices stabilized during the Asian session as Saudi Arabia and Russia said they would not commit to an output freeze but pledged to pull in the same direction to stabilize crude oil markets. After surging 8.20% since last Thursday, the West Texas Intermediate eased slightly to $45.30 barrel. The international gauge, the Brent crude, moved in a similar fashion, as it eased to $48 a barrel after hitting $49.35 yesterday in London. The market is now awaiting the International Energy Forum (IEF) in Algiers on September 26-28 where OPEC members are expected to hold informal talks. However, investors do not expect much from these talks as both OPEC and non-OPEC members seem ready to limit their own production.
In Switzerland, GDP grew 2% y/y in the second quarter, wildly beating the median forecast of 0.8%, while the previous reading was upwardly revised to 1.1%. The upward surprise was mostly due to a sharp increase in government spending (+1.8% q/q versus +0.4% in the first quarter) and a boost in foreign trade with exports rising 6.5%q/q and imports falling 2%. CHF crosses did not react to the release with EUR/CHF trading sideways at around 1.0930 and USD/CHF holding ground at around 0.98.
Overnight, the Australian dollar was the best performer amongst the G10 complex as it rose 0.63% against the USD, 0.89% against the EUR and 0.44% against the pound sterling as the chase for yields continues and the central bank decided to leave rate unchanged after a cut in early August. AUD/USD hit 0.7637 in Sydney, rising 1.95% over the last week, as expectations for a September tightening move from the Federal Reserve fade away.
Asian regional markets were trading in positive territory across the board with the exception of Australian shares which fell 0.30%. In Japan, the Nikkei and Topix indices were up 0.26% and 0.65% respectively. In mainland China, the Shanghai Composite and Shenzhen Composites rose 0.42% and 1.18% respectively, while offshore, Hong Kong’s Hang Seng surged 0.39%. Finally, in Europe, equity futures followed the positive lead from Asia and extended gains in the pre-session, pointing to a higher open.
Today traders will be watching CPI from Switzerland; retail PMIs from the euro zone and Germany; GDP from the euro zone; COPOM monetary policy minutes from Brazil; ISM non-manufacturing from the US.
Currency Tech
EUR/USD
R 2: 1.1616
R 1: 1.1428
CURRENT: 1.1155
S 1: 1.1046
S 2: 1.0913
GBP/USD
R 2: 1.3534
R 1: 1.3372
CURRENT: 1.3341
S 1: 1.2851
S 2: 1.2798
USD/JPY
R 2: 107.90
R 1: 105.63
CURRENT: 103.45
S 1: 99.02
S 2: 96.57
USD/CHF
R 2: 1.0328
R 1: 0.9956
CURRENT: 0.9793
S 1: 0.9522
S 2: 0.9444