Forex Afternoon Wrap – 28/09

Yen firm on risk aversion as AUD and NZD take a hit on weak commodity prices

Today’s Economic Data:

• MPC Member Cunliffe speech
• FOMC Member Tarullo speech
• FOMC Member Dudley speech
• US Core PCE Price index m/m 0.1% vs. 0.1%
• Personal spending m/m 0.4% vs. 0.3%
• Personal income 0.3% vs. 0.4%

Later:

• Pending home sales
• FOMC Member Evans speech

The markets opened today on a quiet note in the Asian trading session. There were no economic releases scheduled during the session as the Asian equity markets trading mixed. The Nikkei 225 index was down -1.32% while the Shanghai and the Hang Seng Index closed with modest gains of 0.28% and 0.43% respectively.  The Aussie and the Kiwi were the weakest currencies of the day losing -0.42% and -0.62% respectively against the US Dollar. Commodities saw another slump today with Crude Oil, Gold, Iron Ore, Copper trading lower for the day. On the other hand, the Japanese Yen was trading stronger today posting gains of 0.24% across the board.

The European session got underway with most of the equities trading lower. The German DAX was down -1.38%, while the FTSE100 was down -1.65%. Volkswagen, which has been plagued by the recent revelations of emissions cheating continued to trade lower alongside shares in Glencore which was down on account of the weak commodity prices. Together, the European equities were dragged lower as well.

The Euro was also weak today, losing -0.30% against the Greenback. Prices are however trading above the 1.11 psychological level and remains range bound within Friday’s high and close. Over the weekend, Spain’s regional elections saw the parties supporting the Pro-Independence for Catalonia claim power with a clear majority. It is likely that further talks of Catalonian independence are likely to dominate the news wires in the coming weeks.

The British Pound was attempting modest recovery today after posting two straight weeks of declines. GBPUSD was trading flat for the day. Lack of any data from Europe saw the markets focus on the main theme.

The US equity markets are pointing to a lower close today, with the Dow Futures and the S&P500 futures all looking to open lower. The risk aversion sentiment which has kept the Yen stronger today is likely to see the US markets under pressure. Speeches from Fed’s Dudley saw the FOMC member reiterate the Fed’s view of rate hikes this year.

Other data from the US included the Core PCE which matched estimates of 0.1%. Personal spending in the US increased 0.4% beating estimates of 0.3% while personal income was lower at 0.3%, after posting a revised increase of 0.5% last month.

The remainder of the evening remains quiet with no major releases due with the exception of the US pending home sales data and the Fed’s Evans speech.