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THE EUROPE FX/RATES DAYBOOK: FX/RATES DAYBOOK EUROPE: AUD Jumps; BOE Meeting, France CPI Eyed

(Bloomberg) — The Australian dollar surged on strong August employment data, before paring some of the advance as China reported a set of weak economic numbers. The U.S. dollar held on to Wednesday’s gains after Republican leaders said a tax plan from the Trump administration is coming soon. TODAY

  • BOE rate decision
  • France CPI

OVERNIGHT TRADING SESSIONS

  • U.S.
    • Bloomberg dollar index rose 0.4% for a third day of gains; EUR/USD fell 0.7% to ~1.1885; USTs slipped; curve was mixed, steepening out to 10Y, while long end marginally outperformed
  • EUROPEAN BONDS
    • Core bonds are a touch lower heading into the close, while curves have flattened back after sharp pressure from Austria syndication on Tuesday. Gilts unable to hold brief outperformance after soft wage data
  • ASIA TODAY
    • BBDXY Index holds on to Wednesday’s gain as hopes for U.S. tax reform revived
    • AUD/USD up 0.2% to 0.8002 after jumping to as high as 0.8016 from 0.7974 before the employment data

TOP OVERNIGHT NEWS

  • European Commission President Jean-Claude Juncker warned that foreign firms should face tougher scrutiny if they seek to snap up companies or technologies deemed key to the EU’s security, in a thinly veiled message to China’s state-owned giants looking to invest in the bloc
  • President Donald Trump blocked a Chinese- backed investor from buying Lattice Semiconductor Corp., a personal rebuke that bodes poorly for several other Chinese buyers seeking U.S. security clearance for their acquisitions
  • After years of maintaining that inflation expectations were stable and solidly grounded, Fed policy makers are starting to recognize a small but worrying softening in the outlook that consumers, businesses and investors have for prices
  • The pace of China’s economic expansion unexpectedly cooled further last month after a lackluster July, as factory output, investment and retail sales all slowed
  • Andre Flotron, who worked at the UBS Group AG in Switzerland and Stamford, Connecticut, is the second person publicly charged in the U.S. probe into the fixing of gold, silver, platinum and palladium prices
  • Secretary of State Rex Tillerson is consulting U.S. allies in Europe as he seeks a way to toughen restrictions on Iran’s nuclear program a month before President Donald Trump faces a deadline to decide whether to walk away from what he’s called “the worst deal ever.”
  • Central London property prices continued to slump in August, contrasting with “resilient” performances elsewhere in the U.K., according to the Royal Institution of Chartered Surveyors

KEY VIEWS

  • The yen may advance to 100 against the dollar by the year end as investors conclude that Japan is still failing to sustain inflation gains five years after Abenomics was introduced, according to HSBC Holdings Plc

ECONOMIC DATA RELEASED

  • Australian employment rose 54,200 in August; est. 20,000 gain
  • U.K. Aug. RICS House Price balance at 6% versus 1% in July
  • China Aug. industrial output rises 6.0% Y/y; est. 6.6%

ECONOMIC DATA (All times CET):

  • 8am: (FI) Aug. CPI YoY, prior 0.5%
  • 8:45am: (FR) Aug. CPI EU Harmonized YoY, est. 1.0%, prior 1.0%
  • 9:30am: (SW) Aug. Unemployment Rate, est. 6.4%, prior 6.6%
  • 10am: (IT) Aug. CPI EU Harmonized YoY, est. 1.4%, prior 1.4%

GOVERNMENT (All times CET):

  • Sept. 11-Sept. 14: (SZ) Swiss Parliament Holds Autumn Session in Bern
  • (UK) Last Day of Commons Session Before Conference Recess
  • 7:30am: (SW) Swedish FSA Head Speech
  • 10:30am: (GE) Merkel Gives Opening Speech at Frankfurt Auto Show
  • 11:30am: (IT) Finance Minister Padoan Speaks at Confindustria Event
  • 3:50pm: (HU) U.K. Chancellor of the Exchequer Hammond Speaks in Budapest
  • 8:15pm: (GE) Merkel Speaks at Televised Town Hall Event

CENTRAL BANKS (All times CET):

  • 9:05am: (SW) Riksbank’s Jansson Speaks in Stockholm
  • 9:30am: (SZ) SNB Sight Deposit Interest Rate, est. -0.75%, prior -0.75%
  • 9:30am: (SZ) SNB 3-Month Libor Lower Target Range, est. -1.25%, prior -1.25%
  • 9:30am: (SZ) SNB 3-Month Libor Upper Target Range, est. -0.25%, prior -0.25%
  • 10:07am: (SW) Riksbank Bond Purchase Results
  • 1pm: (UK) Bank of England Bank Rate, est. 0.25%, prior 0.25%
  • 5:30pm: (EC) Bundesbank’s Weidmann speaks in Frankfurt
  • 6pm: (ES) ECB Board Member Mersch Speaks in Tallinn

BOND SALES/PURCHASES (All times CET)

  • For corporate bonds, see New Issue Monitor
  • 11am: Ireland to Sell 1% 2026 Bonds
  • 11am: Ireland to Sell 1.7% 2037 Bonds
  • 11:03am: Sweden to Sell SK250.0m 0.125% I/L 2026 Bonds
  • 11:03am: Sweden to Sell SK500.0m 0.125% I/L 2027 Bonds

MARKETS:

  • USD/JPY steady at 110.51 (range 110.41-110.73)
  • EUR/USD -0.1% to 1.1878 (range 1.1871-1.1894)
  • AUD/USD +0.3% to 0.8006 (range 0.7974-0.8016)
  • NZD/USD +0.2% to 0.7256 (range 0.7239-0.7263)
  • GBP/USD -0.1% to 1.3204 (range 1.3200-1.3217)
  • USD/CAD steady at 1.2177 (range 1.2161-1.2180)
  • USD/CHF steady at 0.9645 (range 0.9629-0.9653)

TECHNICAL OUTLOOK by Bloomberg strategist Michael G Wilson

  • USD/JPY – Bullish after strong close
  • Resistance: 110.95, Aug. 16 high; 111.16 100-DMA; 112.20 July 26 high
  • Support: 109.51 Sept. 11 high; 109.27 Sept. 7 high; 107.32 Sept. 8 low
  • EUR/USD – May not find support until 1.1757 50-DMA
  • Resistance: 1.2015 Sept. 8 low; 1.2036 Sept. 11 high; 1.2092 Sept. 8 high
  • Support: 1.1885 2nd upper band; 1.1850/52 Sept. 1/4 lows
  • EUR/JPY — Consolidating short-term upward momentum
  • Resistance: 132.32 Jan. 29, 2016 high; 132.47 Dec. 28, 2015
  • Support: 131.09 Sept. 7 high; 130.91 Sept. 11 high

–With assistance from Michael G. Wilson. To contact the reporter on this story: Subhadip Sircar in Mumbai at ssircar3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Shikhar Balwani

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