Market Roundup
- Yen rallies on global growth fears
- Oil eases nearly 5% to seven-month low on surprise U.S. stock build
- Gold rises on darkening economic outlook
- China's exports rose 3.3% in July from a year earlier
- China's imports decline by less than expected
Economic Data Ahead
- (0300 ET/0700 GMT) Spain industrial output Cal adjusted YoY (June)
Key Events Ahead
- (0400 ET/0800 GMT) EZ Economic Bulletin
FX Beat
DXY: The dollar index eased as investors have increasingly come to fear the trade war will prove protracted enough to drag the world into recession. The greenback against a basket of currencies traded 0.1 percent down at 97.52, having touched a low of 97.21 on Tuesday, its lowest since July 22.
EUR/USD: The euro edged up as the greenback eased on rising expectations of aggressive easing by the U.S. Federal Reserve by the year-end. The European currency traded 0.1 percent up at 1.1209, having touched a high of 1.1249 on Tuesday, its highest since July 19. Investors’ attention will remain on EZ Economic Bulletin, ahead of the U.S. unemployment benefit claims and wholesale inventories. Immediate resistance is located at 1.1263 (July 16 High), a break above targets 1.1322 (July 2 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1133 (5-DMA).
USD/JPY: The dollar declined, extending previous session losses, after global central banks slashed rate cuts and indicated more to come as world economic risks grew, boosting the appeal of the safe-haven Japanese yen. The major was trading 0.1 percent down at 106.16, having hit a low of 105.49 on Wednesday, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer credit speech. Immediate resistance is located at 106.95 (38.2% retracement of 109.31 and 105.49), a break above targets 107.40 (50% retracement). On the downside, support is seen at 105.52 (Aug. 6 Low), a break below could take it lower at 104.65 (Jan. 3 Low).
GBP/USD: Sterling consolidated above 31-month lows, as investors further priced in the probability of Britain leaving the European Union without a deal in place. The major traded 0.2 percent up at 1.2160, having hit a low of 1.2079 last week, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2253 (38.2% retracement of 1.2522 and 1.2079), a break above could take it near 1.2305 (61.8% retracement). On the downside, support is seen at 1.2079 (Aug. 1 Low), a break below targets 1.2017 (Jan 17, 2017, Low). Against the euro, the pound was trading flat at 92.18 pence, having hit a low of 92.49 on Tuesday, it’s lowest since Sept 2017.
AUD/USD: The Australian dollar rebounded from multi-year lows after China reported a bigger-than-expected increase in the trade surplus for July, as exports jumped unexpectedly while imports fell less-than-expected. Chinese exports rose 3.3 percent in July from a year earlier, while imports declined by less than expected, suggesting some resilience to the drawn-out U.S.-China tariff war. The Aussie trades 0.2 percent up at 0.6773, having hit a low of 0.6677 on Wednesday, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6700, a break below targets 0.6650. On the upside, resistance is located at 0.6800 (August 6 High), a break above could take it near 0.6831 (23.6% retracement of 0.7082 and 0.6677).
NZD/USD: The New Zealand dollar retreated from recent lows as the greenback eased across the board. On Wednesday, the major tumbled to a 3-1/2 year low after the Reserve Bank of New Zealand surprised markets with a bigger than expected interest rate cut and flagged the possibility of negative rates. The Kiwi trades 0.2 percent up at 0.6433, having touched a low of 0.6376 the day before, its lowest level Jan 2016. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6474 (23.6% retracement of 0.6790 and 0.6376), a break above could take it near 0.6534 (38.2% retracement). On the downside, support is seen at 0.6350, a break below could drag it below 0.6300.
Equities Recap
Asian shares surged after China reported better trade numbers, offering temporary relief from worries of a global currency war.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent.
Tokyo's Nikkei rallied 0.5 percent to 20,611.88 points, Australia's S&P/ASX 200 index rose 0.6 percent to 6,560.10 points and South Korea's KOSPI surged 1.3 percent to 1,933.99 points.
Shanghai composite index rose 0.9 percent to 2,792.15 points, while CSI 300 index traded 0.1 percent up at 3,664.55 points.
Hong Kong’s Hang Seng traded 0.6 percent higher at 26,153.03 points. Taiwan shares added 1.05 percent to 10,494.19 points.
Commodities Recap
Crude oil prices steadied after falling to multi-month lows in the previous session amid concerns that a global economic slowdown would hurt crude demand. International benchmark Brent crude was trading 0.8 percent higher at $57.78 per barrel by 0427 GMT, having hit a low of $55.86 the day before, its lowest since January. U.S. West Texas Intermediate was trading 0.6 percent up at $52.62 a barrel, after falling as low as $50.51 on Wednesday, its lowest since the January.
Gold prices held firm after surpassing the $1,500 mark in the previous session, as central banks around the world slashed interest rates amidst fears of a global recession. Spot gold was trading flat at $1,500.87 per ounce by 0430 GMT, having touched a high of $1,510.29 on Wednesday, its highest since April 2013. U.S. gold futures were down 0.3 percent at $1,515.30 an ounce.
Treasuries Recap
The yields on U.S. 30-year bonds eased as low as 2.123 percent overnight, not far from an all-time low of 2.089 percent set in 2016. 10-year yields dropped further below three-month rates.
