Market Roundup
- China Jun trade surplus $42.77 bln vs $40.8 bln in May
- Exports +11.3% y/y vs forecast +8.7%; imports +17.2% vs forecast +13.1%
- Jan-Jun non-financial ODI dives 45.8% y/y to $48.19 bln
- H1 trade with sanctions-struck No Korea up 10.5%
- PBOC makes mid-term loan injection seen as 'neutral'
- MoF flow data w/e Jul 8 – Japanese moving back into foreign bonds, stocks
- Net Y324.9 bln stocks, Y839.5 bln bonds bought, June Y1.137 tln, 1.434 tln
- Foreign investors ambivalent on Japan assets, net Y898.6 bln bills bought
- Stocks see net Y35.0 bln sales, volume heavy, JGBs Y408.5 bln net sales
- Global policy shift exposes BOJ yield curve control flaw
- New Zealand Jun consumer conf. index fell to 125.4 from 127.8 -ANZ Survey
Economic Data Ahead
- (0245 ET/0645 GMT) France Jun CPI (EU Norm) Final, 0.0% m/m, 0.8 y/y eyed; last 0.0%, 0.8%
- (0300 ET/0700 GMT) Spain Jun HICP, 0.0% m/m, 1.60% y/y eyed; last 0.0%, 1.60%
- (0300 ET/0700 GMT) Spain Jun CPI, 0.0% m/m, 1.50% eyed; last -0.10%, 1.90%
Key Events Ahead
- (0500 ET/0900 GMT) Italy E2.75/2.50/1.0/1.0 bln, 3/7/16/20 yr auctions
- (1000 ET/1400 GMT) Fed's Yellen delivers semiannual monetary policy testimony
- (1130 ET/1530 GMT) Fed's Evans speaks at Economic Summit in Idaho
- (1300 ET/1700 GMT) Fed's Brainard speaks on monetary policy in Cambridge, Mass.
- N/A Franco-German summit in Paris
FX Beat
DXY: The dollar eased across the board as Federal Reserve Chair Janet Yellen did not sound as hawkish as markets had anticipated. The greenback against a basket of currencies traded 0.2 percent down at 95.57, having touched a low of 95.51 the day before, it’s lowest since Jun. 30. FxWirePro's Hourly Dollar Strength Index stood at -100.59 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose after declining from a 14-month high in the previous session, as the greenback eased following U.S. Federal Reserve Chair Janet Yellen's dovish message, curbing speculation that interest rates would rise more than once this year. The European currency traded 0.2 percent up at 1.1435, having touched a high of 1.1489 the day before, its highest since May 5, 2016. FxWirePro's Hourly Euro Strength Index stood at -25.45 (Neutral) by 0400 GMT. Investors’ attention will remain series of Eurozone economies data, ahead of U.S. Producer prices, unemployment data and the Round 2 of Yellen’s testimony on the Semiannual Monetary Policy Report before the Senate Banking Committee. Immediate resistance is located at 1.1445, a break above targets 1.1500. On the downside, support is seen at 1.1401 (10-DMA), a break below could drag it near 1.1381.
USD/JPY: The dollar declined to a 1-week low below the 112.00 handle as the spread between the U.S. 10-year yield and 10-year JGB yield narrowed to 2.227; the lowest since June 30. On Wednesday, Federal Reserve Chair Janet Yellen said the central bank would only gradually tighten monetary policy and indicated its readiness to adjust policy if inflation remained weak. The major traded 0.1 percent down at 113.05, having hit a high of 114.49 on Tuesday, its highest since Mar 15. FxWirePro's Hourly Yen Strength Index stood at 119.09 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of Day 2 of Fed Yellen's testimony. Immediate resistance is located at 113.53 (Session High), a break above targets 114.00. On the downside, support is seen at 112.73 (July 4 low), a break below could take it near 112.00.
GBP/USD: Sterling rose, extending gains for the second consecutive session on the back of stronger UK employment data and hawkish comments from the Bank of England MPC member McCafferty. The major traded 0.1 percent up at 1.2896, having hit a low of 1.2811 on Wednesday, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -32.29 (Neutral) by 0400 GMT. Investors’ focus will remain on the BoE Credit Conditions Survey, ahead of Fed Yellen's testimony. Immediate resistance is located at 1.2983 (July 6 High), a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2831 (21-DMA), a break below targets 1.2800. Against the euro, the pound traded 0.1 percent down at 88.67 pence, having hit an 8-month low of 89.49 the day before.
AUD/USD: The Australian dollar rose to a 2-week high after data showed Chinese imports in USD terms rose at an annualized rate of 17.2 percent in June, surpassing the estimated rise of 14.5 percent. Exports growth came in at 11.3 percent y/y, above the forecast of 8.9 percent, which resulted to a trade surplus of $42.77 billion, slightly above the estimate of $42.60 billion. The Aussie trades 0.3 percent up at 0.7700, having hit a high of 0.7701, it’s highest since Jul. 4. FxWirePro's Hourly Aussie Strength Index stood at 88.12 (Slightly Bullish) by 0500 GMT. Investors will continue to digest upbeat Chinese data, ahead of Fed Chair Yellen's testimony to Banking Committee. Immediate support is seen at 0.7671 (78.6% retracement of 0.7571 and 0.7701), a break below targets 0.7650 (61.8% retrace). On the upside, resistance is located at 0.7712 (June 30 High), a break above could take it near 0.7749 (Mar 31 High).
NZD/USD: The New Zealand Dollar advanced to a 1-week high, amid ongoing broad-based US dollar weakness and following the release of stronger-than-expected Chinese trade figures. The Kiwi trades 0.4 percent up at 0.7290, having touched a low of 0.7201 on Tuesday, its weakest level since Jun. 21. FxWirePro's Hourly Kiwi Strength Index was at -22.39 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed Chair Yellen's testimony. Immediate resistance is located at 0.7313 (23.6% retracement of 0.7346 and 0.7201), a break above could take it near 0.7344. On the downside, support is seen at 0.7240, a break below could drag it lower 0.7201 (July 11 Low).
Equities Recap
Asian shares rallied to 2-year highs, following record peaks on Wall Street, while the dollar tumbled across the board after Yellen sounded less hawkish than anticipated.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent to its highest since May 2015.
Tokyo's Nikkei edged up 0.05 percent to 20,108.34 points, Australia's S&P/ASX 200 index rallied 1.2 percent to 5,640.30 points and South Korea's KOSPI advanced 1.03 percent to 2,416.52 points.
Shanghai composite index rose 0.3 percent to 3,208.56 points, while CSI300 index was trading 0.4 percent up at 3,675.25 points.
Hong Kong’s Hang Seng was trading 0.9 percent higher at 26,293.55 points. Taiwan shares added 0.4 percent to 10,460.15 points.
Commodities Recap
Crude oil prices steadied after falling from a 1-week high in the previous session as strong demand from China eased concerns of an ongoing fuel glut. International benchmark Brent crude was trading 0.1 percent up at $47.74 per barrel by 0423 GMT, having hit a low of $46.09 on Monday, its weakest since Jun. 27. U.S. West Texas Intermediate traded 0.1 percent up at $45.48 a barrel, after falling as low as $43.63 on Monday, its weakest since Jun 27.
Gold prices rose, extending gains for the fourth straight session, after U.S. Federal Reserve Chair said the central bank would only gradually tighten monetary policy, curbing speculation that interest rates would rise more than once this year. Spot gold rallied 0.2 percent to $1,223.02 per ounce at 0426 GMT, having hit a low of $1,204.69 on Monday, the lowest since March 15. U.S. gold futures for August delivery fell 0.06 percent to $1,218.30 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.314 percent lower by 0.013 bps, while 5-year yield was 0.008 down at 1.870 percent.
The Australian government bond futures gained, with both the three-year and the 10-year bond contracts up 3 ticks at 98.010 and 97.3100 respectively.
The New Zealand government bonds rose in line with U.S. Treasuries, sending yields down 3 basis points across the curve.
