Market Roundup
- BOJ July 19-20 minutes – Concerns over credibility, ETF buys
- Achieving inflation target later, FY ’19 eyed, as already communicated
- Japan June core CPI +0.4% y/y, as eyed, Tokyo July core +0.2%, +0.1% eyed
- Tokyo July core CPI rise fastest since May ’15
- Japan June household spending +1.5% m/m, +2.3% y/y, -0.1% and +0.6% eyed
- Spending rise best since August ’15, sign of sustainable growth
- Japan June retail sales +2.1% y/y, +2.3% eyed
- Japan June jobless 2.8%, jobs-applicants 1.51, May 3.0%, 1.49, 3%, 1.50 eyed
- Japan June crude oil imports -12.5% y/y, LNG -1.2%, thermal coal +20.2%
- China Urban jobless rate 3.95% end-Jun vs 3.97% end-March
- Ryan assures Republican senators House will not pass "skinny" Obamacare repeal
- U.S. Senate slaps new sanctions on Russia, putting Trump in corner
- Foreign CB US debt holdings $6.0 bln to $3.3 tln for July 19 week
- Treasuries $5.4 bln to $3.0 tln, agencies +$1.1 bln to $261.8 bln
- U.S. fund investors shun stocks during Q2 earnings, buy bonds: Lipper
Economic Data Ahead
- (0245 ET/0645 GMT) France Jun Consumer Spending, -0.20% eyed, last 1.00%
- (0245 ET/0645 GMT) France Jul CPI (EU Norm) Prelim, 0.80% eyed, last 0.80
- (0300 ET/0700 GMT) Switzerland Jul KOF Indicator, 106.00 eyed, last 105.50
- (0300 ET/0700 GMT) Spain Q2 Estimated GDP, 0.90% q/q, 3.10% y/y eyed; last 0.80%, 3%
- (0500 ET/0900 GMT) Eurozone Jul Consumer Confid. Final, -1.70 eyed, last -1.70
- (0500 ET/0900 GMT) Eurozone Jul Economic Sentiment, 110.80 eyed, last 111.10
- (0500 ET/0900 GMT) Eurozone Jul Business Climate, 1.12 eyed, last 1.15
- (0800 ET/1200 GMT) Germany Jul HICP Prelim, 1.40% y/y eyed, last 1.50%
Key Events Ahead
- (0500 ET/0900 GMT) Italy E4.00/2.250 bln for 5/10 yr auctions
- (0605 ET/1005 GMT) UK Stg0.5/0.5/1.0 bln for 1/3/6 month auctions
FX Beat
DXY: The greenback held firm above a 13-month low as the Treasury yields rebounded on the back of solid U.S. durable goods data, which raised expectations of a strong Q2 advance GDP print. The dollar against a basket of currencies traded 0.1 percent down at 93.81, having touched a low of 93.15 the day before, it’s lowest since Jun. 23 2016. FxWirePro's Hourly Dollar Strength Index stood at -37.65 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after retreating from a 2-1/2 year peak in the previous session, as the greenback staged a solid recovery and reversed most of its Fed outcome induced losses. The European currency traded 0.1 percent up at 1.1686, having touched a high of 1.1776 on Thursday, its highest since Jan 14, 2015. FxWirePro's Hourly Euro Strength Index stood at -29.03 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone's economic sentiment indicator, ahead of the U.S. gross domestic product and personal consumption expenditure prices. Immediate resistance is located at 1.17500, a break above targets 1.1830. On the downside, support is seen at 1.1620 (61.8% retracement 1.1370 and 1.1776), a break below could drag it near 1.1572 (50.0% retracement 1.1370 and 1.1712).
USD/JPY: The dollar eased towards the 111.00 handle, as investors remained cautious ahead of the second quarter U.S. economic growth data due later in the session. The U.S. economy is expected to have grown around 2.6 percent in Q2 versus 1.4 percent growth seen in the first quarter. However, the downside was capped as fresh political concerns in Japan and mixed Japanese economic data dented the sentiment around the yen. The major was trading 0.2 percent down at 111.06, having hit a low of 110.62 on Monday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 111.92 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. gross domestic product, personal consumption expenditure prices and FOMC member Kashkari's speech for further momentum. Immediate resistance is located at 111.47 (78.6% retracement of 114.49 and 110.62), a break above targets 111.75 (10-DMA). On the downside, support is seen at 110.62 (July 24 Low), a break below could take it near 110.30 (June 5 Low).
GBP/USD: Sterling steadied after falling from a 10-month high in the previous session as the greenback rebounded following solid U.S. durable goods data. The major was supported by yesterday's better-than expected UK CBI retail sales data, which showed retail sales balance rose to 22 in July from 12 in June, its highest since April. Sterling traded 0.1 percent up at 1.3075, having hit a high of 1.3158 on Thursday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at 55.13 (Bullish) by 0400 GMT. Investors’ focus will remain on the developments surrounding the Brexit negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3130, a break above could take it near 1.3180. On the downside, support is seen at 1.3027 (61.8% 1.2816 and 1.3158), a break below targets 1.3001 (July 26 Low). Against the euro, the pound traded flat at 89.37 pence, having hit a 1-week high of 88.91 the day before.
AUD/USD: The Australian dollar consolidated below the 0.8000 handle, supported by higher copper prices and a broadly subdued U.S. dollar. The major was also underpinned by slightly upbeat Australian PPI release, which rose at an annualized rate of 1.3 percent in the second quarter from previous 1.7 percent. The Aussie trades flat at 0.7967, having hit a high of 0.8065 the prior day, it’s highest since May 15, 2015. FxWirePro's Hourly Aussie Strength Index stood at 66.60 (Bullish) by 0500 GMT. Investors will continue to digest domestic producer price index figures, ahead of U.S. economic releases. Immediate support is seen at 0.7919 (10-DMA), a break below targets 0.7877 (61.8% retracement of 0.7571 and 0.8065). On the upside, resistance is located at 0.8000, a break above could take it near 0.8050.
NZD/USD: The New Zealand dollar eased, extending previous session losses, as the greenback attempted a minor recovery against its major peers. The Kiwi trades 0.1 percent down at 0.7475, having touched a high of 0.7558 the day before, its highest level since May 14 2015. FxWirePro's Hourly Kiwi Strength Index was at 131.27 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7580, a break above could take it near 0.7620. On the downside, support is seen at 0.7422 (61.8% retracement of 0.7201 and 0.7558), a break below could drag it till 0.7408 (10-DMA).
Equities Recap
Asian shares tumbled following a retreat in U.S. tech shares from recent rallies, while the greenback stood near 13-month lows ahead of U.S. Q2 GDP figures.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.8 percent but was still on track for a 0.4 percent weekly gain.
Tokyo's Nikkei eased 0.6 percent to 19,953.39 points, Australia's S&P/ASX 200 index declined 1.5 percent to 5,697.50 points and South Korea's KOSPI lost 1.5 percent to 2,404.45 points.
Shanghai composite index fell 0.04 percent to 3,248.43 points, while CSI300 index was trading 0.1 percent up at 3,717.94 points.
Hong Kong’s Hang Seng was trading 0.7 percent lower at 26,955.83 points. Taiwan shares shed 0.9 percent to 10,413.32 points.
Commodities Recap
Crude oil prices edged lower, after rising to an 8-week high in the previous session on the back of a decline in U.S. inventories and OPEC's ongoing efforts to curb production. International benchmark Brent crude was trading 0.5 percent down at $51.33 per barrel by 0424 GMT, having hit a high of $51.61 on Thursday, its strongest since May 31. U.S. West Texas Intermediate was trading 0.4 percent lower at $48.89 a barrel, after rising as high as $49.21 the prior day, its strongest since May 31.
Gold prices steadied after retreating from over six-week highs touched in the previous session, and were poised for a third week of gains. Spot gold traded flat at $1,258.09 per ounce at 0428 GMT, having hit a high of $1,265.16 an ounce on Thursday, it highest since June 15. U.S. gold futures for August delivery held steady at $1,259.90 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.303 percent higher by 0.007 bps, while 5-year yield was 0.003 up at 1.842 percent.
The Japanese bonds climbed after the country’s consumer price-led inflation index (CPI) for the month of June, matched market expectations. At the same time, the country’s jobless rate also trended lower, adding to further sluggishness in the debt market. The yield on the benchmark 10-year Treasury note rose nearly 1 basis point to 0.08 percent, the yield on 30-year note also climbed nearly 1 basis point to 0.87 percent and the yield on short-term 2-year hovered around -0.11 percent.
The Australian bonds traded lower on the last trading day of the week, tracking similar movement in the U.S. counterpart, weighed down by the government and corporate debt supply, and as investors evaluated the Federal Reserve's statement that it is closer to paring its balance sheet. The yield on the benchmark 10-year Treasury note rose nearly 1 basis point to 2.70 percent, the yield on 15-year note hovered around 3.00 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.82 percent.
The Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 1.3 percent and the benchmark 10-year falling 26 Canadian cents to yield 1.999 percent. The Canada-U.S. two-year bond spread stood at -6.7 basis points, while the 10-year spread was at -31.9 basis points.
