Sample Category Title

US retail sales rose 0.7% mom to USD 618.7B in August, much better than expectation of -0.7% decline. Ex-auto sales rose 1.80% mom, versus expectation of -0.1% decline. Ex-gasoline sales rose 0.8% mom. Ex-auto, ex-gasoline sales rose 2.0% mom. Total sales for the June 2021 through August 2021 period were up 16.3% from the same period a year ago

Full release here.

US initial jobless claims rose 20k to 332k in the week ending September 11, above expectation of 316k. Four-week moving average of initial claims dropped -4k to 336k, lowest since March 14, 2020.

Continuing claims dropped -187k to 2665k in the week ending September 4, lowest since March 14, 2020. Four-week moving average of initial claims dropped -50k to 2808k, lowest since March 21, 2020.

Full release here.

Notes/Observations

• Rallying energy prices are stoking concerns about a challenging stagflation-like environment for markets (elevated price pressures and a slowing economic recovery).
• China Evergrande Group curbed risk appetite in Asian trading.

Asia

• New Zealand Q2 GDP Q/Q: 2.8% v 1.1%e; Y/Y: 17.4% v 16.1%e.
• Japan Aug Trade Balance: -¥635.4B v +¥6.5Be; Exports Y/Y: 26.2% v 34.1%e; Imports Y/Y: 44.7% v 40.0%e.
• Australia Aug Employment Change: -146.3K v -80.0Ke; Unemployment Rate: 4.5% v 5.0%e.
• China State Planner (NDRC) stated that it would continue to release Copper. Aluminium and Zinc from reserves.
• US, UK and Australia to establish a security partnership for the Indo-Pacific that would involve helping Australia acquire nuclear-powered submarines, as Chinese influence over the region grows.

Europe

• ECB’s Lane (Ireland, chief economist) stated that PEPP volume was not an indicator of ECB policy stance.

Americas

• House Of Representatives Ways & Means Committee voted to advance higher corporate rate tax plans to the House for a vote.
• President Biden to announce a new working group with Britain and Australia to share advanced technologies in a thinly veiled bid to counter China.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.67% at 467.02, FTSE +0.55% at 7,054.85, DAX +0.64% at 15,715.25, CAC-40 +0.89% at 6,642.04, IBEX-35 +0.82% at 8,706.50, FTSE MIB +1.19% at 26,069.00, SMI +0.46% at 12,039.90, S&P 500 Futures -0.05%].
• Market Focal Points/Key Themes: European indices open higher across the board and advanced further into the green as the session progressed; improved risk sentiment follows comments from ECB’s Lane that yield curve remains low; among the stectors leading to the upside are materials and industrials; while underperformers include utilities and telecom; travel and leisure subsector supported after Ryanair raises outlook; Continental spins off Vitesco; Thyssenkrupp sells AST to Arvedino; Siemens looking to sell logistics unit; Vivendi to raise stake in Lagardere; major earnings expected in the upcoming US session.

Equities

• Consumer discretionary: Ryanair [RYA.UK] +6% (raises traffic targets), Lagardere [MMB.FR] +16% (earnings), Superdry [SDRY.UK] +15% (earnings), Ashtead Group [AHT.UK] +2% (earnings), Eco Animal Health [EAH.UK] -14% (AGM update).
• Industrials: Thales [HO.FR] +1% (affirms outlook following Australia's contract cancellation), Continetal [CON.DE] -12% (Vitesco spin-off).
• Utilities: Veolia Environment [VIE.FR] +2% (capital increase).

Speakers

• ECB’s Rehn (Finland) reiterated Council view that EU area growth was robust, but still needed policy support. EU region outlook weighed down by production bottlenecks. Reiterated that pickup in inflation seen as transitory as medium term outlook was dampened by slack and muted wage pressures. Rate hike was not in sight but would happen one day.
• Swiss SECO (Govt) Sept Economic Forecasts cut its 2021 GDP growth from 3.6% to 3.4% while raising the 2022 GDP growth from 3.3% to 3.6%. Raised 2021 CPI from 0.4% to 0.5% and also raised the 2022 CPI from 0.5% to 0.8%.
• Finland Central Bank raised 2021 GDP growth forecast from 2.9% to 3.5% while cutting the 2022 growth outlook from 3.0% to 2.8%.
• German DIW Institute cut the 2021 German GDP forecast from 3.2% to 2.1% and saw 2022 GDP growth at 4.9%.
• Poland Central Bank's Kropiwnicki: Nov policy meeting will be important for rate outlook and added that his support for raising interest rates to depend on its potential impact on economic growth.
• Czech Central Bank Vice Gov Mora stated that saw the possibility of a 50bps hike at the Sept policy meeting.
• India Central Bank (RBI) Dep Gov Patra stated that inflation was moderating from its short spike back in May while core inflation remained sticky. Recent inflation data vindicated MPC stance with inflation was back within target band.
• China PBoC and Russia Central Bank said to be discussing deepening of bank cooperation and promote local-currency settlement.
• China Commerce Ministry (MOFCOM) stated that economic teams from both US-China have maintained communications.
• China Vice Premier Liu He: China to boost EVs consumption.
• Japan Cabinet Office (Govt) Sept Economic Report: cut overall economic assessment fir 1st time in 4 months to recovery continuing to improve from an extremely low base but pace was weakening (**Note: Prior overall view of assessment of seeing further weakness in parts of the economy).

Currencies/Fixed Income

• USD and JPY currencies were firmer on safe-haven flows. China Evergrande Group curbed risk appetite during the Asian trading following recent weak economic data out of China.
• EUR/USD back below the 1.18 level. Dealers noted that rallying energy prices were stoking concerns about a challenging stagflation-like environment in the region.
• GBP steady ahead of next week’s BOE meeting. Recent UK inflation data has been hot. Dealers believe that MPC would hold off ramping up the hawkish rhetoric in September citing considerable uncertainty about the outlook.

Economic data

• (NL) Netherlands Aug Unemployment Rate: 3.2% v 3.1% prior.
• (EU) EU27 Aug New Car Registrations: -19.1% v -23.2% prior.
• (DK) Denmark Aug PPI M/M: 1.7% v 1.6% prior; Y/Y: 12.8% v 11.8% prior.
• (ES) Spain Q2 Labour Costs Y/Y: 13.2% v 1.4% prior.
• (CZ) Czech Aug PPI Industrial M/M: 1.2% v 0.6%e; Y/Y: 9.3% v 8.7%e.
• (IT) Italy July Total Trade Balance: €8.8B v €5.7B prior; Trade Balance EU: €1.9B v €0.9B prior.
• (HK) Hong Kong Aug Unemployment Rate: 4.7% v 4.9%e.

Fixed income issuanc

• (ES) Spain Debt Agency (Tesoro) sold total €5.19B vs. €4.5-5.5B indicated range in 2024, 2026 and 2031 bonds.
• Sold €1.39B in 0.0% May 2024 SPGB bonds; Avg yield: -0.513% v -0.547% prior; Bid-to-cover: 1.91x v 2.27x prior (Aug 5th 2021).
• Sold €1.75B in 0.0% Jan 2026 SPGB bonds; Avg Yield: -0.371% v -0.441% prior; bid-to-cover: 2.55x v 1.57x prior (Aug 5th 2021).
• Sold €2.05B in 0.50% Oct 2031 SPGB bonds; Avg Yield: 0.326% v 0.309% prior; bid-to-cover: 1.41x v 1.69x prior (Sept 2nd 2021).
• (FR) France Debt Agency (AFT) sold total €8.998B vs. €8.0-9.0B indicated range in 2024, 2026, 2027 Bonds.
• Sold €3.138B in 2.25% May 2024 Oat; Avg Yield: -0.66% v +0.23% prior; Bid-to-cover: 3.21x v 2.48x prior (Jan 18th 2018).
• Sold €2.652B in 0.25% Nov 2026 Oat; Avg Yield: -0.48% v -0.40% prior; Bid-to-cover: 2.27x v 1.52x prior (Feb 20th 2021 with b/c lowest since 2008).
• Sold €3.208B in 0.00% Feb 2027 Oat; Avg Yield: -0.42% v -0.30% prior; bid-to-cover: 2.51x v 2.27x prior (Jun 17th 2021).
• (SE) Sweden sold total SEK1.25B vs. SEK1.25B indicated in 2027 and 2039 inflation-linked bonds.
• (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month bills; Avg Yield: -0.640% v -0.636% prior; Bid-to-cover: 2.40x v 2.40x prior.

Looking ahead

• (EG) Egypt Central Bank Interest Rate Decision.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.
• 05:50 (FR) France Debt Agency (AFT) to sell €1.5-2.0B in inflation-linked 2026, 2031 and 2040 bonds (Oatei).
• 06:00 (PT) Portugal Aug PPI M/M: No est v 1.5% prior; Y/Y: No est v 10.2% prior.
• 06:00 (RO Romania to sell RON500M in 4.15% 2030 Bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Sept FGV Inflation IGP-10 M/M: -0.6%e v +1.2% prior.
• 08:00 (PL) Poland Aug CPI Core M/M: 0.2%e v 0.4% prior; Y/Y: 3.9%e v 3.7% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (EU) ECB chief Lagarde.
• 08:15 (CA) Canada Aug Annualized Housing Starts: 266.5Ke v 272.2K prior.
• 08:30 (US) Sept Philadelphia Fed Business Outlook: 19.0e v 19.4 prior.
• 08:30 (US) Aug Advance Retail Sales M/M: -0.7%e v -1.1% prior; Retail Sales (ex-auto) M/M: -0.1%e v -0.4% prior; Retail Sales (ex-auto/gas): 0.0%e v -0.7% prior; Retail Sales (control group): 0.0%e v -1.0% prior.
• 08:30 (US) Initial Jobless Claims: 323Ke v 310K prior; Continuing Claims: 2.74Me v 2.783M prior.
• 08:30 (CA) Canada July Wholesale Trade Sales M/M: -2.0%e v -0.8% prior.
• 08:30 (CA) Canada July Int'l Securities Transactions (CAD): No est v 19.7B prior.
• 08:30 (US) Weekly USDA Net Export Sales.
• 09:00 (RU) Russia Gold and Forex Reserve w/e Sept 10th: No est v $620.8B prior.
• 10:00 (US) July Business Inventories: 0.5%e v 0.8% prior.
• 10:30 (US) Weekly EIA Natural Gas Inventories.
• 12:00 (CA) Canada to sell 30-year bonds.
• 15:00 (AR) Argentina Q2 Current Account Balance: $2.0Be v $0.7B prior.
• 16:00 (US) July Total Net TIC Flows: No est v $31.5B prior; Net Long-term TIC Flows: No est v $110.9B prior.
• 18:30 (NZ) New Zealand Aug Manufacturing PMI: No est v 62.6 prior.
• 20:30 (SG) Singapore Aug Non-oil Domestic Exports M/M: +2.4%e v -0.9% prior; Y/Y: 8.5%e v 12.7% prior; Electronic Exports Y/Y: 8.0%e v 15.0% prior.
• 23:00 (CN) China to sell 30-year Upsize Bonds.
• 22:30 (JP) Japan to sell 3-Month Bills.

ECB Governing Council member Olli Rehn said while growth in Eurozone is robust, supported is still needed. The outlook is clouded by bottlenecks as well as coronavirus variants.

The central bank is expected to debate in December on timing and the way to wind down the PEPP purchases. Rehn said he's confident to find a " viable and meaningful way of ensuring favorable financing conditions when we start our very gradual transition from the crisis measures to the next normal."

He also urged governments to prepare for the eventual rise in borrowing cost even though a rate hike is "not yet within sight". "It will nevertheless one day take place," Rehn said. "This should be taken into account in budgetary planning in all the euro area countries."

The EUR/CAD could make a move from point A to point B.

1.5020 is the rejection level. The market looks bearish but watch for a possible bounce at the point B. Point B is M L3 and trend line confluence. 1.4770. If the price gets to the zone, we might see a move up. As long as the range 1.5020-1.4770 holds, the market is not having any trend. Trades might be placed around those levels until the breakout happens.

Oil prices leap higher.

Oil prices staged an impressive rally overnight having spent the week ignoring the gloom sweeping other asset classes. Official US Crude Inventories surprised by falling by a much higher than expected 6.40 million barrels. The slow return of production and refining post-Hurricane-Ida being the main culprit. The relentless rise in natural gas prices, now starting to cause nerves to fray in Europe, is also helping to elevate oil prices and is a situation that I believe will get much worse before it gets better.

Brent crude carved through $74.00 a barrel on its way to an impressive gain to $75.50 overnight, rising slightly to $75.60 in Asia. $74.00 now becomes a support/pivot point. China’s announcement that it is selling some of its strategic reserves to the domestic market has had zero impact on prices and dips to the $74.00 region should find keen buyers. Brent crude has resistance near by at $76.00 and if that gives way, Brent crude should target the $78.00 a barrel area.

WTI leapt 2.65% higher overnight, climbing to $72.60 a barrel, advancing to $72.70 in Asia. Any dips to $71.00 a barrel should be well supported, at least until we see concrete recovery progress from the Gulf of Mexico hub. A rise through the overnight high at $73.10 suggests a test of $74.00 a barrel, which could extend to $76.00 next week.

Gold flashes more danger signals.

Gold’s price action overnight flashed more warning signs to bullish investors as prices fell despite the US Dollar weakening and US yields remaining barely changed. Gold finished the overnight session down 0.60% to $1793.50 an ounce. Gold rally on Tuesday failed at the 200-day moving average (DMA), and the uninspiring price action overnight is a huge warning signal that gold is living on borrowed time at these levels, with the path of least resistance looking more like lower by the day.

Gold has resistance at $1808.50, the 200-DMA which caped gains so well this week, followed by the 100-DMA at $1816.50 and a formidable series of daily highs around $1834.00 an ounce. Support lies initially at $1790.00 followed by the more crucial $1780.00 an ounce zone. Failure there is likely to see gold fall rapidly to $1750.00 an ounce and potentially lower.

China worries and missile tennis weigh on Asian sentiment.

Wall Street powered higher overnight after the Empire Manufacturing Index flushed out dip-buyers from the side-lines. The S&P 500 finished 0.85% higher, with the Nasdaq rallying 0.82%, while the Dow Jones climbed by 0.71%. In Asia, futures on all three have edged 0.05% higher.

However, the strong overnight session on Wall Street has not resulted in a mechanical rally across Asian markets. It is a mixed picture today with mutual missile tests, and the ensuing sabre-rattling, sending Japan and South Korean markets lower. The Nikkei 225 is down 0.33%, while the Kospi has retreated by 0.61%.

In China, markets are also on the back foot as Evergrande concerns rise, with authorities telling China banks not to expect interest on loan repayments next week. Combined with the Macau casino inquiry and poor data yesterday, China markets are struggling today. The Shanghai Composite is 0.30% lower with the CSI 300 down by 0.40%. Hong Kong has slumped once again, falling by 1.60%.

Regional Asia is faring somewhat better, if failing to match the exuberance of the Wall Street session. Singapore has risen by 0.30%, while Kuala Lumpur and Taipei are flat. Jakarta and Bangkok have risen by just 0.10% while Manilla has climbed 0.60%. Australian markets have been boosted by climbing energy prices and a positive overnight session, with the ASX 200 rising by 0.60%, and the All Ordinaries by 0.80%.

The localised issues in Asia will not be enough to knock Europe of course, although rising energy prices, notably natural gas, may be giving markets their food for thought. Nevertheless, I expect European markets to open positively today as we wait to see what sort of mood Wall Street is in this evening. A soft retail sales number could dampen the overnight enthusiasm.

At mid-day on Thursday, the EUR/USD passed the previous September low level at the 1.1770 mark. In addition, note that after failing to pass the resistance of the 1.1820 mark, the rate lost more than 50 base points in just 8 hours. Some attributed the decline to an upcoming speech of ECB President Christine Lagarde, which was scheduled for 12:00 GMT.

If the decline of the EUR/USD would continue, it would most likely look for support in the weekly S2 simple pivot point at 1.1751. Below the pivot point, a 61.80% Fibonacci retracement level at the 1.1707 level could hold out.

On the other hand, a potential recovery would first test the resistance of the previous September low level at 1.1770 before aiming at the weekly S1 simple pivot point at 1.1784.

After finding support in the 1.3800 mark on Wednesday, the GBP/USD currency exchange rate surged to the 1.3850 level. This level provided enough resistance for a decline to begin. By the middle of Thursday's European trading hours, the rate was aiming at the support of the 1.3800 mark.

Meanwhile, the pair mostly ignored the weekly simple pivot point and the 55, 100 and 200-hour SMAs, as round exchange rate levels managed to hold.

In the case that the 1.3800 level's support holds, the GBP/USD could recover and once again test the 1.3850 level's resistance. A passing of the 1.3850 mark might result in the pair reaching the 1.3910 level, where the weekly R1 simple pivot point was located at.

On the other hand, a decline below the 1.3800 mark would highly likely reach the weekly S1 simple pivot point at 1.3748 and the 1.3750 level.

The yellow metal''s price managed to pierce the 1,805.00 level and the resistance zone below it twice. However, the resistance held and a decline started at mid-day on Wednesday. By the middle of Thursday's European trading hours, the price had reached the support of the 1,781.00/1,784.00 zone, which has kept the price up since September 8.

In the case that the metal passes the 1,781.00/1,784.00 support zone, the bullion might look for support in round price levels before reaching the support of the 1,750.00 mark. Namely, the zone above the 1,775.00 level provided support in late August.

On the other hand, a recovery of the metal could once again reach the resistance zone that is located from 1,800.00 to 1,805.00. Meanwhile, some resistance might be found in the 55 and 100-hour simple moving averages. However, the SMAs have been failing to notably impact the price throughout September.