DAILY US OPENING NEWS: Soft German ZEW data sees EUR trend lower, whilst improving risk tone has seen EU Bourses higher

22nd August 2017


Asian equity markets were mostly higher although news flow was remarkably light amid a lack of central bank speakers and macroeconomic data. Focus was on a speech from US President Trump where he highlighted US plans to continue sending troops to Afghanistan to fight the terror threat emanating from the country. The Nikkei 225 fell -0.05% while the ASX 200 was up 0.42% after numerous earnings, including from BHP Billiton.


10y JGBs were lower despite a strong 20y JGB auction as participants move into the long-end following the well-received issuance, leading to curve flattening. The line was sold with the lowest tail of 2017 and highest cover since January 2014.



European equities have kicked off the session on the front-foot (Eurostoxx 50 +0.5%) with all ten sectors in the green. In terms of sector specifics, material names lead the way higher amid positive earnings updates for Antofagasta (+4%) and BHP Billiton (+3.2%) amid positive pre-market earnings updates, subsequently dragging the sector higher. Elsewhere, Provident Financial (-50%) are the notable underperformer amid their CEO resigning, second profit warning and scrapping of dividend. Finally, Fiat (+1.2%) remain supported by ongoing interest from Great Wall Motor.



Fixed income markets trade lower amid the apparent return of risk-sentiment to the market with today’s sovereign bond-slate once again void of supply. Bunds have somewhat ran out of steam after yesterday failing to target the Aug 11 high with fixed income markets not showing much reaction amid the soft ZEW data release this morning, now awaiting the GE 10yr supply tomorrow. Additionally, some are attributing the pressure on peripheral markets to ongoing speculation about a potential parallel currency in Italy but details are yet to emerge on this front.



JPY and CHF: Overnight the Asian trading session saw a somewhat risk on tone, which saw JPY and CHF ease off against the greenback with the JPY also consolidating above 109. Of note, large expiries in USD/JPY are set to roll off at the NY cut with 1bln at 108.50 and 798mln at 109.00.

EUR: Move above 1.18 had been brief after the currency ran into resistance at 1.1825. Again, it has been a relatively quiet morning with participants eagerly awaiting President Draghi’s speech in Frankfurt. Although EUR has extended on losses following the release of soft ZEW data from Germany, with the currency approaching 1.1750.

Antipodeans (AUD,NZD) slightly offered this morning, with AUD approaching 0.7900, while NZD has tripped through 0.7300. Precious metals slipping with gold prices lower by 0.5%. Later this week, we will see the latest NZ trade data


German ZEW Current Conditions (Aug) 86.7 vs. Exp. 85.5 (Prev. 86.4)

German ZEW Economic Sentiment (Aug) 10.0 vs. Exp. 15.0 (Prev. 17.5)



The risk-appetite has taken the shine modestly off gold prices while Chinese iron ore futures were seen higher by over 5% during Asia-Pac hours.

22 Aug 2017 - 10:54- Fixed IncomeBank Speaker- Source: RANsquawk

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