HomeContributorsFundamental AnalysisEuro Strengthens As Market Digests Recent ECB Action

Euro Strengthens As Market Digests Recent ECB Action

Notes/Observations

  • European markets broadly higher following gains in Asia.
  • Hang Seng Index outperforms as internet and gaming stock rebound.

Asia

  • (JP) Japan Minister Kono officially declares candidacy for LDP Leadership (as expected).
  • Toyota Cuts FY21 Production guidance to 9.0M units (prior 9.3M) citing coronavirus impact in Southeast Asia and parts shortages.
  • (CN) China Aug Wholesale vehicle sales -17.8% y/y – CAAM.
  • (AU) Australia Aug Port Hedland Iron Ore Exports 44.4Mt v 44.3Mt prior.
  • (CN) China said to have issued a draft ruling that would limit taller building in small cities.
  • (JP) Japan Minister Kono: confirms run for the LDP leadership race; Not considering raising sales tax, but not cutting it, either.
  • (HK) Hong Kong Monetary Authority (HKMA): Confirms launch of Wealth Connect, to conduct exams on northbound business.
  • (CN) China Foreign Ministry spokesperson: President Xi and US Pres Biden agreed to maintain frequent contact by various means.
  • (CN) China regulators reportedly met several platform companies, including Meituan, Didi, Tencent over labor issues – press.
  • (KR) Japan, US and South Korea said to hold North Korea talks on Sept 14th in Tokyo – press.

Coronavirus

  • (SG) Singapore Health Ministry: to start COVID booster shots from Sept 14th; Not reversing restrictions for now.

Europe

  • (FR) CAC 40 index to include Eurofins Scientific; Atos to be excluded; effective Sept 17th.
  • (NO) Norway’s OBX index to include Frontline, Golden Ocean, Kahoot! and MPC – press.
  • (IT) Italy said to sell off Alitalia assets to avoid potential sanctions – Press.
  • (DE) German ZDF Poll on Sept elections: SPD: 25% (no change); Merkel CDU/CSU bloc: 22% (no change).
  • (IE) Ireland PM Martin: Sees potential to solve NI protocol; window in the next month to solve Brexit.
  • (UA) Ukraine President Zelensky: there is a possibility of a war with Russia; Interested in a substantive meeting with Russian Pres Putin.

Americas

  • (US) NHC: Hurricane Larry heading towards Newfoundland.
  • (CN) China Commerce Ministry (MOFCOM): to collect deposits on certain chemicals (monoalkyl ethers of ethylene glycol and propylene glycol) imported from the US.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

  • Indices [Stoxx600 +0.31% at 469.04, FTSE +0.39% at 7,051.91, DAX +0.43% at 15,690.95, CAC-40 +0.54% at 6,721.03, IBEX-35 -0.13% at 8,789.50, FTSE MIB +0.29% at 25,986.00, SMI +0.21% at 12,141.58 , S&P 500 Futures +0.45%].
  • Market Focal Points/Key Themes: European indices open generally higher but divided as the session wore on with periphery indices underperforming; general improvement in risk sentiment attributed to call between Biden and Xi; sectors leading to the upside include consumer discretionary and technology; lagging sectors include real estate and telecom; automotive subsector under pressure following outlook cut by Toyota; Atos to be replaced by Eurofins on CAC40; reportedly Icade looking to spin off it’s healthcare real estate unit; Holcim to divest Brazil unit; Sampo divests a portion of it’s Nordea holdings; focus on continuing Eurogroup meeting through the day; earnings expected in the upcoming US session include Oracle and Kroger.

Equities

  • Consumer discretionary: LVMH [MC.FR] +2% (analyst action), Cineworld Group [CINE.UK] -1% (to pay $170M to holders).
  • Consumer staples: Nestle [NESN.CH] -1% (sees higher input cost inflation next year).
  • Technology: Atos [ATO.FR] -2% (CAC 40 exclusion).
  • Materials: FLSmidth [FLS.DK] +4% (completes placing).

Speakers

  • (AT) ECB’s Holzmann (Austria): Reiterates PEPP must expire next year [2022] with recovery.
  • (CN) China Cyberspace official Zeliang: China should better regulate AI industry.
  • (EU) Various EU Ministers commenting at Eurogroup meeting.
  • Belgium Fin Min: debt rate in Belgium is one of the concerns we have.
  • Portuguese Fin Min: we need to focus on recovery from crisis this year and next.
  • Spanish Fin Min: we hope to start reducing Spanish debt already from 2021.
  • EU Economic Commissioner Gentiloni (Italy): we are ending summer with a positive economic outlook.
  • EU’s Dombrovskis (trade chief): we will need a debt reduction path that is realistic for EU countries; intends to restart talks on fiscal rules.
  • France Fin Min Le Maire: need quickest possible recovery plans implementation; need start of tailor made support for hard hit sectors; Will reduce public debt and deficit next year in France.

Currencies/Fixed Income

  • USD weaker amid flows away from safe havens, with risk sentiment getting a boost following Xi-Biden talks; USD/CHY drifting lower.
  • EUR/USD supported following results of ECB meeting, weaker dollar, higher yields.
  • GBP/USD hits weekly high on improved risk outlook.

Economic data

  • (NL) Netherlands July Trade Balance: €5.8B v €6.7B prior.
  • (NL) Netherlands July Manufacturing Production M/M: 1.3% v 4.4% prior; Y/Y: 14.1% v 17.9% prior.
  • (FI) Finland July Industrial Production M/M: +1.0% v -1.8% prior; Y/Y: 5.0% v 4.1% prior.
  • (UK) July Monthly GDP M/M: 0.1% v 0.5%e; GDP 3M/3M: 3.6%e v 3.8%e.
  • (DE) Germany Aug Final CPI M/M: 0.0% v 0.0% prelim; Y/Y: 3.9%e v 3.9% prelim.
  • (UK) July Visible Trade Balance: -ÂŁ12.7B v -ÂŁ11.0Be; Overall Trade Balance: -ÂŁ3.1B v -ÂŁ1.6Be; Trade Balance Non EU: -ÂŁ7.0B v -ÂŁ7.1B prior.
  • (NO) Norway Aug CPI M/M: 0.0% v -0.2%e; Y/Y: 3.4% v 3.2%e.
  • (DK) Denmark Aug CPI M/M: -0.2% v +0.7% prior; Y/Y: 1.8% v 1.9%e.
  • (UK) July Index of Services M/M: 0.0% v 0.6%e; 3M/3M: 4.5% v 4.7%e.
  • (UK) July Industrial Production M/M: +1.2%e v 0.4%e; Y/Y: 3.8%e v 3.0%e.
  • (RO) Romania Aug CPI M/M: 0.2% v 0.3%e; Y/Y: 5.3% v 5.2%e (4th month above target range).
  • (FR) France July Manufacturing Production M/M: 0.3% v 0.4%e; Y/Y: 4.0% est v 4.2%.
  • (ES) Spain July Industrial Production M/M: -1.1% v +0.5%e; Y/Y: 3.4% v 5.9%e.
  • (CZ) Czech Aug CPI M/M: 0.7% v 0.2%e; Y/Y: 4.1% v 3.6%e.
  • (TR) Turkey July Unemployment Rate: 12.0% v 10.6% prior.
  • (AT) Austria July Industrial Production M/M: -0.3% v -1.8% prior; Y/Y: 9.7% v 11.3% prior.
  • (CZ) Czech July Export Price Index Y/Y: 7.7% v 3.4% prior; Import Price Index Y/Y: 7.9% v 5.1% prior.
  • (CN) Weekly Shanghai copper inventories (SHFE): 61.8K v 69.3K tons prior.
  • (RU) Russia Narrow Money Supply w/e Sept 3rd (RUB): 14.35T v 14.24T prior.
  • (IT) Italy July Industrial Production M/M: +0.8% v -0.1%e; Y/Y: 7.0% v 5.2%e.
  • (CN) China Aug Aggregate Financing (CNY): 2.96T v 2.75Te.
  • (CN) China Aug M2 Money Supply Y/Y: 8.2% v 8.4%e.
  • (CN) China Aug New Yuan Loans (CNY): 1.220T v 1.325Te.

Fixed income Issuance

  • (EU) European Investment Bank (EIB) to sell EUR-denominated Nov 2030 bond; guidance seen -12bps to mid-swaps.
  • ABN.NL To sell EUR-denominated 20-year notes; guidance seen +10bps to mid-swaps.
  • Prices 7-yr $500M Eurobond issue with a 2.6% coupon.

Looking Ahead

  • 06:00 (IE) Ireland July Industrial Production M/M: No est v -4.4% prior; Y/Y: No est v 12.0% prior.
  • 06:00 (PT) Portugal Aug Final CPI M/M: No est v -0.2% prelim; Y/Y: No est v 1.5% prelim.
  • 06:00 (PT) Portugal Aug Final CPI Harmonized M/M: No est v -0.1% prelim; Y/Y: No est v 1.3% prelim.
  • 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to raise Key 1-Week Auction Rate by 50bps to 7.00%.
  • 07:00 (MX) Mexico July Industrial Production M/M: +0.2%e v -0.5% prior; Y/Y: 7.2%e v 13.5% prior; Manufacturing Production Y/Y: 5.4%e v 16.3% prior.
  • 07:30 (CL) Chile Central Bank Economist Survey.
  • 07:30 (IN) India Weekly Forex Reserve w/e Sept 3rd: No est v $633.6B prior.
  • 08:00 (IN) India July Industrial Production Y/Y: 10.0%e v 13.6% prior.
  • 08:00 (IS) Iceland Aug Unemployment Rate: No est v 6.1% prior.
  • 08:00 (BR) Brazil July Retail Sales M/M: +0.5%e v -1.7% prior; Y/Y: 3.0%e v 6.3% prior.
  • 08:00 (BR) Brazil July Broad Retail Sales M/M: -0.6%e v -2.3% prior; Y/Y: 4.0%e v 11.5% prior.
  • 08:00 (UK) Daily Baltic Dry Bulk Index.
  • 08:30 (US) Aug PPI Final Demand M/M: 0.6%e v 1.0% prior; Y/Y: 8.2%e v 7.8% prior.
  • 08:30 (US) Aug PPI (ex-food/energy) M/M: 0.6%e v 1.0% prior; Y/Y: 6.6%e v 6.2% prior.
  • 08:30 (US) Aug PPI (ex-food/energy/trade) M/M: 0.6%e v 0.9% prior; Y/Y: 6.3%e v 6.1% prior.
  • 08:30 (CA) Canada Aug Net Change in Employment: +66.8Ke v +94.0K prior; Unemployment Rate: 7.3%e v 7.5% prior; Full Time Employment Change: No est v.
  • +83.0K prior; Part Time Employment Change: No est v +11.0K prior; Participation Rate: 65.3%e v 65.2% prior; Hourly Wage Rate: No est v 0.6% prior.
  • 08:30 (CA) Canada Q2 Capacity Utilization Rate: 81.3%e v 81.7% prior.
  • 08:30 (US) Weekly USDA Net Export Sales.
  • 09:00 (RU) Russia July Trade Balance: $17.7Be v $18.3B prior; Exports: $45.0Be v $43.9B prior; Imports: $26.5Be v 25.6B prior.
  • 10:00 (US) July Final Wholesale Inventories M/M: 0.6%e v 0.6% prior; Wholesale Trade Sales M/M: No est v 2.0% prior.
  • 12:00 (RU) Russia Q2 Preliminary GDP (2nd reading) Y/Y: 10.3%et v 10.3% advance.
  • 13:00 (US) Weekly Baker Hughes Rig Count.

Speakers/events

  • Eurogroup meeting.
  • 05:30 (EU) ECB chief Lagarde at Eurogroup meeting.
  • 06:10 (NL) ECB’s Elderson (Netherlands, SSM member).
  • 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision.
  • 11:00 (EU) Potential sovereign ratings after European close: S&P on Luxembourg, Norway, Austria, Malta and Portugal.

 

Trade The News
Trade The Newshttp://www.tradethenews.com/
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

Featured Analysis

Learn Forex Trading