Market Roundup
- Trump demands Fed help on economy, complains about interest rate rises
- Trump doesn't expect much from China trade talks this week
- Trump vows 'no concessions' with Turkey over detained U.S. pastor
- Trump accuses China, Europe of manipulating their currencies
- China local govt debt issuance at 757 bln yuan in July
- China defies U.S. pressure as EU parts ways with Iranian oil
- Australia's central bank a "source of stability" amid political turmoil
- Australian prime minister clings to power but more challenges loom
- UK government aims to boost exports to 35 percent of GDP
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jul PSNB Ex Banks GBP, -1.100 bln f'cast, 5.394 bln prev
- (0430 ET/0830 GMT) Great Britain Jul PSNB, GBP, -2.300 bln f'cast, 4.530 bln prev
- (0500 ET/1000 GMT) Great Britain Aug CBI Trends - Orders, 9 f'cast, 11 prev
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index fell to a near 2-week low after U.S. President Donald Trump complaint about the Fed’s rate hike policy and stated that the U.S. central bank should do more to help him to boost the economy. The greenback against a basket of currencies trades 0.2 percent down at 95.54, having touched a low of 95.44 earlier, its lowest since August 9. FxWirePro's Hourly Dollar Strength Index stood at -146.99 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to an over 1-week peak, as the greenback declined after Trump stated that he was not thrilled with Federal Reserve Chairman Jerome Powell raising of interest rates. The European currency traded 0.4 percent up at 1.1527, having touched a high of 1.1542 earlier, its highest since August 9. FxWirePro's Hourly Euro Strength Index stood at 116.29 (Highly Bullish) by 0500 GMT. Immediate resistance is located at 1.1558 (78.6% retracement of 1.1628 and 1.1301), a break above targets 1.1628 (August 8 High). On the downside, support is seen at 1.1454 (10-DMA), a break below could drag it till 1.1397 (5-DMA).
USD/JPY: The dollar steadied after failing to an 8-week low earlier in the day, as anticipated talks between China and the United States this week, boosted optimism over a reduction in their escalating trade dispute. However, U.S. President Donald Trump criticism on Fed interest rates hikes weakened investor sentiment. The major was trading 0.05 percent up at 110.09, having hit a low of 109.77, its lowest since June 27. FxWirePro's Hourly Yen Strength Index stood at -26.17 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, amid a lack of significant economic data from the U.S. docket. Immediate resistance is located at 110.42 (38.2% retracement of 111.43 and 109.77), a break above targets 110.80 (61.8% retracement). On the downside, support is seen at 109.68 (June 27 Low)., a break below could take it lower 109.36 (June 26 Low).
GBP/USD: Sterling surged to a near 2-week peak as the greenback eased after Trump said that he was not thrilled with Powell's raising of interest rates. However, the upside appears limited amid concerns about forthcoming talks that may decide whether Britain gets a trade deal with the EU before it leaves the bloc. The major traded 0.3 percent up at 1.2837, having hit a high of 1.2843; it’s highest since August 6. FxWirePro's Hourly Sterling Strength Index stood at -8.74 (Neutral) 0500 GMT. Immediate resistance is located at 1.2857 (38.2% retracement of 1.3173 and 1.2661), a break above could take it near 1.2917 (50.0% retracement). On the downside, support is seen at 1.2733 (5-DMA), a break below targets 1.2660. Against the euro, the pound was trading 0.1 percent up at 89.79 pence, having hit a low of 90.02, it’s lowest since August 9.
AUD/USD: The Australian dollar advanced, extending gains for the fourth straight session after the Reserve Bank of Australia's minutes of its Aug. 7 policy meeting showed the board agreed the next move in the cash rate would more likely be an increase. The Aussie trades 0.2 percent up at 0.7355, having hit a high of 0.7362; it’s highest since August 10. FxWirePro's Hourly Aussie Strength Index stood at 121.82 (Highly Bullish) by 0500 GMT. Immediate support is seen at 0.7318 (5-DMA), a break below targets 0.7252 (August 17 Low). On the upside, resistance is located at 0.7399 (78.6% retracement of 0.7453 and 0.7202), a break above could take it near 0.7439 (August 8 High).
NZD/USD: The New Zealand dollar rose to an over 1-week peak, benefiting the most from broad-based U.S. dollar weakness, triggered by Trump’s complaint about the Fed’s rate hike policy. The Kiwi trades 0.5 percent up at 0.6672, having touched a high of 0.6675 earlier, its highest level since August 9. FxWirePro's Hourly Kiwi Strength Index was at 147.61 (Highly Bullish) by 0500 GMT. Immediate resistance is located at 0.6680 (61.8% retracement of 0.6763 and 0.6544), a break above could take it near 0.6716 (78.6% retracement). On the downside, support is seen at 0.6599 (5-DMA), a break below could drag it below 0.6544 (August 15 Low)
Equities Recap
Asian shares rallied, underpinned by hopes Beijing and Washington talks would ease trade war fears, while the greenback eased following comments from the U.S. president on the Federal Reserve's policy.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.6 percent.
Tokyo's Nikkei gained 0.1 percent to 22,219.73 points, Australia's S&P/ASX 200 index fell 0.9 percent to 6,284.40 points, and South Korea's KOSPI surged 1.05 percent to 2,271.67 points.
Shanghai composite index rose 1.4 percent to 2,735.74 points, while CSI300 index traded 0.5 percent up at 3,328.61 points.
Hong Kong’s Hang Seng traded 0.5 percent higher at 27,746.45 points. Taiwan shares added 0.9 percent to 10,792.20 points.
Commodities Recap
Crude oil prices rose, extending previous session gains as the U.S. fuel markets seen to be tightening while the U.S.-China trade dispute weighed on international crude contracts. International benchmark Brent crude was trading 0.1 percent up at $72.22 per barrel by 0449 GMT, having hit a low of $70.28 on Wednesday, its lowest since April 10. U.S. West Texas Intermediate was trading 1.6 percent lower at $65.51 a barrel, after falling as low as $64.45 on Thursday, its lowest since June 21.
Gold prices surged to a 1-week peak, as the dollar weakened after U.S. President Donald Trump said he was not thrilled with the Federal Reserve for raising interest rates. Spot gold was 0.4 percent up at $1,194.66 an ounce at 0501 GMT, having hit a high of $1195.26 earlier, its highest since August 14. U.S. gold futures were up 0.5 percent at $1,200.6 an ounce.
Treasuries Recap
The Japanese government bonds remained narrowly mixed amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year JGB note, which moves inversely to its price, hovered around 0.092 percent, the yield on the long-term 30-year note fell 2 basis points to 0.83 percent and the yield on short-term 2-year remained tad higher at -0.123 percent.
The Australian bonds fell across the curve during early Asian session as investors’ risk appetite recovered following the U.S.-China trade talks, lifting the 10-year yield from this year’s low seen yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.536 percent, the yield on the long-term 30-year bond also climbed 1 basis point to 3.039 percent and the yield on short-term 2-year remained 2 basis points higher at 2.013 percent.
The New Zealand bonds closed lower Tuesday as investors are expecting an ease in the global political and trade war fears ahead of the country’s GlobalDairyTrade (GDT) price auction and retail sales for the second quarter of this year, both scheduled to be released later today. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 2 basis points to 2.618 percent, the yield on the long-term 20-year note also surged nearly 2 basis points to 2.938 percent and the yield on short-term 2-year also closed nearly 1-1/2 basis points higher at 1.733 percent.
The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 1.5 Canadian cents to yield 2.103 percent and the 10-year climbed 12 Canadian cents to yield 2.254 percent. The gap between the two-year yield and its U.S. equivalent narrowed by 2.1 basis points to a spread of 48.8 basis points in favor of the U.S. bond, its narrowest since May 30.
