Market Roundup
- Japan July Reuters Tankan Manufacturing index +26, non-Manufacturing +33, both unch m/m
- Manufacturing index eyed at +28 in October, non-Manufacturing index at +31, mood steady at highs
- China c. bank to coordinate work of new financial oversight body
- U.S. officials will look for steps by China to open markets
- Big Australian banks told to hold more capital, on notice over mortgages
- Australia's economy to regain altitude after weather trouble -Poll
- Republican push to end Obamacare collapses in U.S. Senate
- U.S. puts new sanctions on Iran over ballistic missile program
- British firms raise marketing budgets despite Brexit uncertainty -survey
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- N/A Slovenian Finmin will meet European Competition Commissioner
- N/A BOJ holds Monetary Policy Meeting
- (0530 ET/0930 GMT) Germany 30Y 1.0 bln auction
- (0530 ET/0930 GMT) Great Britain 6Y 2.750 bln auction
FX Beat
DXY: The dollar rebounded versus most of its major peers following a modest pickup in the U.S. Treasury bond yields. The greenback against a basket of currencies traded 0.1 percent up at 94.79, having touched a low of 94.48 the day before, it’s lowest since Sept. 08. FxWirePro's Hourly Dollar Strength Index stood at -92.00 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro declined after rising to 14-month highs in the previous session as the dollar recovered across the board following a rebound in the U.S. Treasury yields. Investors will remain cautious ahead of the European Central Bank policy meeting on Thursday, where it is expected to keep interest rates on hold. The European currency traded 0.1 percent up at 1.1537, having touched a high of 1.1583 on Tuesday, its highest since May 3, 2016. FxWirePro's Hourly Euro Strength Index stood at 52.71 (Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone construction output, ahead of the U.S. housing starts and building permits. Immediate resistance is located at 1.1580, a break above targets 1.1600. On the downside, support is seen at 1.1525 (78.6% retracement 1.1377 and 1.1583), a break below could drag it near 1.1480 (61.8% retrace).
USD/JPY: The dollar consolidated near 3-week lows as the Republican failure to push through a stalled U.S. healthcare bill spurred fears about the rest of President Donald's Trump reform agenda. The major traded flat at 112.04, having hit a low of 111.68 the day before, its lowest since Jun 27. FxWirePro's Hourly Yen Strength Index stood at 17.16 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. housing starts and building permits figures. Immediate resistance is located at 112.30 (78.6% retracement of 114.49 and 111.68), a break above targets 112.75 (5-DMA). On the downside, support is seen at 111.46 (June 27 Low), a break below could take it near 111.00.
GBP/USD: Sterling slumped, extending losses for the third straight session as Tuesday's soft British inflation data lowered expectations of a BoE interest rate increase this year. The major traded 0.05 percent down at 1.3034, having hit a high of 1.3125 the prior day, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -70.55 (Slightly Bearish) by 0400 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3120 (Sept. 22 High), a break above could take it near 1.3200. On the downside, support is seen at 1.3007 (61.8% retrace of 1.2816 and 1.3125), a break below targets 1.2970 (50.0% retrace). Against the euro, the pound traded 0.1 percent up at 88.49 pence, having hit a 3-week high of 87.42 on Friday.
AUD/USD: The Australian dollar rose, extending gains towards two-year peaks touched the prior day as the greenback eased on worries about the prospects for the Trump administration's economic agenda. Investors seem to have ignored downbeat Australia Westpac Leading Index which came in at -0.1 percent in June after staying flat in the previous month. The Aussie trades 0.1 percent up at 0.7929, having hit a high of 0.7942 on Tuesday, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 84.95 (Slightly Bullish) by 0500 GMT. Investors will continue to track broad based market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7864 (78.6% retracement of 0.7571 and 0.7942), a break below targets 0.7802 (61.8% retrace). On the upside, resistance is located at 0.7950, a break above could take it near 0.8000.
NZD/USD: The New Zealand dollar held near a five-month peak, having recovered all the ground lost to an unexpectedly soft second-quarter inflation reading. On Tuesday, the major tumbled as low as 0.7261 as traders pushed back expectations of a possible rate hike by the Reserve Bank of New Zealand. The Kiwi trades 0.2 percent up at 0.7365, having touched a high of 0.7372 the day before, its highest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at 0.95 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7372 (Previous Session High), a break above could take it near 0.7390. On the downside, support is seen at 0.7336, a break below could drag it till 0.7260 (June 30 Low).
Equities Recap
Asian shares rose as optimism on China's economy supported investor risk sentiment, while the dollar steadied near multi-month lows on diminishing prospects of an imminent increase in U.S. interest rates.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent to its highest since April 2015.
Tokyo's Nikkei advanced 0.1 percent to 20,020.23 points, Australia's S&P/ASX 200 index rallied 0.9 percent to 5,738.60 points and South Korea's KOSPI dropped 0.05 percent to 2,425.95 points.
Shanghai composite index rose 0.8 percent to 3,214.92 points, while CSI300 index was trading 1.01 percent up at 3,704.51 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 26,639.69 points. Taiwan shares added 0.2 percent to 10,506.10 points.
Commodities Recap
Crude oil prices steadied after rising to a 2-week peak in the previous session despite a rise in U.S. crude inventories and ongoing high output from OPEC producers. International benchmark Brent crude was trading 0.05 percent up at $48.70 per barrel by 0431 GMT, having hit a high of $49.38 the day before, its strongest since Jul. 5. U.S. West Texas Intermediate traded 0.2 percent up at $46.25 a barrel, after rising as high as $46.89 on Tuesday, its strongest since Jul 5.
Gold prices consolidated near a more than two-week high touched in the previous session, supported by expectations of stronger demand from the physical market and weakness in the dollar on fading prospects of an imminent increase in U.S. interest rates. Spot gold traded flat at $1,241.34 an ounce by 0434 GMT, having touched a high of $1,244.44 on Tuesday, its highest since June 30. U.S. gold futures settled 0.7 percent to $1,241.90.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.273 percent higher by 0.01 bps, while 5-year yield was 0.012 up at 1.829 percent.
The Japanese government bonds slid as investors remained cautious ahead of the Bank of Japan’s (BoJ) two-day monetary policy decision, scheduled to be unveiled on July 20.The benchmark 10-year bond yield rose 1/2 basis point to 0.08 percent, the long-term 30-year bond yields hovered around 0.86 percent and the yield on the short-term 2-year note traded flat at -0.10 percent.
The Australian bonds sharply rebounded on expectations of a rise in the country’s unemployment rate and ahead of the country’s labor market report for the month of June, scheduled to be released on July 20. The yield on the benchmark 10-year Treasury note slumped 3 basis points to 2.72 percent, the yield on 15-year note plunged nearly 4 basis points to 3.03 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.91 percent.
The New Zealand bonds jumped at the time of closing as investors have largely shrugged-off the rise in dairy prices at the latest GlobaldairyTrade (GDT) price auction, held late Tuesday. At the time of closing, the yield on the benchmark 10-year bond remained flat at 2.99 percent, the yield on 7-year note slipped 1/2 basis point to 2.87 percent while the yield on short-term 2-year note ended 2-1/2 basis points lower at 1.95 percent.
The Canadian government bond prices were higher across the maturity curve, with the two-year price up 1.5 Canadian cents to yield 1.191 percent and the benchmark 10-year rising 30 Canadian cents to yield 1.86 percent.
