Market Roundup
- Trump criticizes Federal Reserve interest rate policy despite strong economy
- Trump invites Putin to Washington despite U.S. uproar over Helsinki summit
- Bank of Japan's inflation target dims as prices barely budge
- China boosts liquidity, set for more policy easing as trade war threatens economy
- UK's new Brexit envoy optimistic, as EU warns of Brexit crash
- U.S. equity ETFs break six-week streak of outflows -Lipper
- Foreign CB US debt holdings -$3.824 bln to $3.395 tln July 4 week
- Treasuries -$6.143 bln to $3.032 tln, agencies +$2.191 bln to +$291.2 bln
Economic Data Ahead
- No major economic data release
Key Events Ahead
- (0820 ET/1220 GMT) Federal Reserve Bank of St. Louis President James Bullard speaks in Kentucky
FX Beat
DXY: The dollar index edged down after rising to a 1-year high in the previous session as U.S. President Donald Trump stated that a strong dollar put the United States at a disadvantage. The greenback against a basket of currencies trades 0.1 percent down at 95.09, having touched a high of 95.65 on Thursday, its highest since July 2017. FxWirePro's Hourly Dollar Strength Index stood at -9.66 (Neutral) by 0500 GMT.
EUR/USD: The euro rose, rebounding from a 3-week low hit in the previous session, as the greenback eased after U.S. President Donald Trump expressed concern about the U.S. currency's strength. The European currency traded 0.2 percent up at 1.1664, having touched a high of 1.1744 on Tuesday, its highest since July 11. FxWirePro's Hourly Euro Strength Index stood at 14.97 (Neutral) by 0500 GMT. Investors’ attention will remain on the Eurozone current account, amid a lack of economic data from the US docket. Immediate resistance is located at 1.1744 (June 4 High), a break above targets 1.1801 (June 13 High). On the downside, support is seen at 1.1613 (July 13- Low), a break below could drag it till 1.1600.
USD/JPY: The dollar declined, extending losses for the third straight session after Trump showed displeasure about the Fed's monetary tightening, stated that he was concerned about its potential impact on the U.S. economy and American competitiveness. The major was trading 0.2 percent down at 112.28, having hit a high of 113.17 on Wednesday, its highest since Jan 9. FxWirePro's Hourly Yen Strength Index stood at -9.66 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. economic calendar remained absolutely data empty. Immediate resistance is located at 113.38 (Dec 8 High), a break above targets 113.62 (Dec 21 High). On the downside, support is seen at 111.96 (10-DMA), a break below could take it lower 111.50.
GBP/USD: Sterling steadied after falling to a 10-month low below the 1.3000 handle in the previous session, as weaker-than-expected UK retail sales figures slashed expectations of the Bank of England hiking interest rate at August policy meeting. The major traded 0.1 percent up at 1.3031, having hit a low of 1.2957 on Thursday; it’s lowest since Sept. 2017. FxWirePro's Hourly Sterling Strength Index stood at -113.60 (Highly Bearish) 0500 GMT. Immediate resistance is located at 1.3133 (5-DMA), a break above could take it near 1.3189 (10-DMA). On the downside, support is seen at 1.2957 (July 19 Low), a break below targets 1.2910. Against the euro, the pound was trading 0.1 percent down at 89.55 pence, having hit a low of 89.59 earlier, it’s lowest since March 7.
AUD/USD: The Australian dollar rebounded after falling to an over 2-week low on the back of Yuan devaluation and rising worries of a full-blown currency war between the US and China. The Aussie trades 0.3 percent up at 0.7374, having hit a low of 0.7318 earlier; it’s lowest since July 3. FxWirePro's Hourly Aussie Strength Index stood at 14.40 (Neutral) by 0500 GMT. Immediate support is seen at 0.7310, a break below targets 0.7280. On the upside, resistance is located at 0.7411 (10-DMA), a break above could take it near 0.7483 (July 10 High) .
NZD/USD: The New Zealand dollar retreated from a 2-week low hit in the previous session amid worries of an escalation in the ongoing China-U.S. trade war. The Kiwi trades 0.3 percent up at 0.6759, having touched a high of 0.6713 earlier, its lowest level since July 3. FxWirePro's Hourly Kiwi Strength Index was at -6.39 (Neutral) by 0500 GMT. Immediate resistance is located at 0.6800, a break above could take it near 0.6840. On the downside, support is seen at 0.6713 (July 19 Low), a break below could drag it below 0.6687 (July 3 Low).
Equities Recap
Asian shares traded in a volatile market after China allowed its yuan currency to decline further, while the greenback retreated from yearly peaks on U.S. President Donald Trump's concerns over the strength of the currency and Fed rate hikes.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent.
Tokyo's Nikkei declined 0.3 percent to 22,697.88 points, Australia's S&P/ASX 200 index surged 0.4 percent to 6,285.90 points, and South Korea's KOSPI gained 0.4 percent to 2,292.29 points.
Shanghai composite index rose 2.0 percent to 2,828.34 points, while CSI300 index was trading 1.8 percent up at 3,492.18 points.
Hong Kong’s Hang Seng was trading 0.5 percent higher at 28,146.43 points. Taiwan shares added 0.9 percent to 10,932.11 points.
Commodities Recap
Crude prices rose but were set for a weekly decline as concerns about oversupply and lower demand weighed on market sentiment. International benchmark Brent crude was trading 0.2 percent up at $72.69 per barrel by 0452 GMT, having hit a low of $71.19 on Wednesday, its lowest since April 17. U.S. West Texas Intermediate was trading 1.8 percent lower at $68.22 a barrel, after falling as low as $67.08 on Tuesday, its lowest since June 22.
Gold prices eased, having declined to a 1-year low in the previous session, as the U.S. dollar strengthened following Fed Chairman Jerome Powell's testimony. Spot gold was 0.1 percent down at $1,221.70 an ounce at 0507 GMT, after marking the lowest since early July at $1,211.45 on Thursday and was headed for a 2 percent decline for the week. U.S. gold futures for August delivery were down 0.4 percent at $1,219.10 an ounce.
Treasuries Recap
The Japanese government bonds remained tad higher as investors had largely shrugged-off the improvement in the country’s national core consumer price inflation data for the month of June, although the non-core CPI remained unchanged, missing market expectations as well. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, slipped 1 basis point to 0.03 percent, the yield on the long-term 30-year hovered around 0.68 percent and the yield on short-term 2-year remained tad lower at -0.12 percent.
The Australian bonds gained on last trading day of the week along with U.S. Treasuries after President Donald Trump questioned Federal Reserve interest rate hikes and a strong dollar. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 5 basis points to 2.628 percent, the yield on the long-term 30-year Note also dipped 5 basis points to 3.096 percent and the yield on short-term 2-year down 2 basis points to 2.048 percent.
The Canadian government bond prices rose and yields fell, tracking the U.S. Treasury debt market. The two-year yield fell to 1.931 percent, compared with 1.953 percent late on Wednesday, while the 10-year was down at 2.109 percent from Wednesday's 2.149 percent.
