Market Roundup
- BOJ DepGov Nakaso: Will pursue current easy policy till CPI target met
- Prices recently weak but turnaround soon, weak JPY helps, mantra unchanged
- Japan June corp service prices +0.8% y/y, +0.8% y/y last four months
- China says to steadily expand opening of capital markets
- Australia's c. bank Gov defends low policy rates, says won't move in lock step
- Australia Q2 CPI, 0.2% q/q, 1.9% y/y vs 0.5%, 2.1%; forecast 0.4%, 2.2%
- New Zealand June trade surplus NZ$242 mln vs $103 mln
- Wall Street regulator sets sights on digital coin offerings
- U.S. House approves new Russia sanctions, defying Trump
Economic Data Ahead
- (0245 ET/0645 GMT) France Jul Consumer Confidence, 108.00 eyed, last 108.00
- (0400 ET/0800 GMT) Italy Jul Consumer Confidence, 106.20 eyed, last 106.40
- (0400 ET/0800 GMT) Italy Jul Mfg Business Confidence, 107.00 eyed, last 107.30
- (0430 ET/0830 GMT) Great Britain Q2 GDP Prelim, 0.30% q/q, 1.70% y/y eyed; last 0.20%, 2.00%
Key Events Ahead
- (1130 ET/1530 GMT) ECB's Lautenschlager speaks in Berlin
- (1200 ET/1600 GMT) Austrian National Bank Gov Ewald Nowotny to speak in Vienna
- (1400 ET/1800 GMT) Federal Open Market Committee announces its decision on interest rate
FX Beat
DXY: The dollar steadied across the board as investors awaited the Federal Reserve's policy decision later in the day for more clues on its tightening plans. The greenback against a basket of currencies traded 0.1 percent up at 94.15, having touched a low of 93.64 the prior day, it’s lowest since Jun. 24. FxWirePro's Hourly Dollar Strength Index stood at 29.48 (Neutral) by 0500 GMT.
EUR/USD: The euro consolidated within a narrow range as investors refrained from taking big positions ahead of the U.S. Federal Reserve's policy meeting statement due later in the day. On Tuesday, the major rose to a 2-year high above the 1.1700 handle, boosted by a stronger-than-expected German business survey. The European currency traded flat at 1.1647, having touched a high of 1.1712 the prior day, its highest since Aug 20, 2015. FxWirePro's Hourly Euro Strength Index stood at -20.08 (Neutral) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone, ahead of the U.S. new home sales and Fed's monetary policy statement. Immediate resistance is located at 1.1700, a break above targets 1.1730. On the downside, support is seen at 1.1619 (July 21 Low), a break below could drag it near 1.1561 (78.6% retracement 1.1370 and 1.1712).
USD/JPY: The dollar steadied against the yen as investors awaited the U.S. Federal Reserve's policy statement for clues on the timing of its next monetary tightening. The Fed is widely expected to keep interest rates unchanged, however, markets will watch for any clues on the next rate hike this year and when it will begin paring its massive bond portfolio. The major was little changed at 111.90, having hit a low of 110.62 on Monday, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at -47.11 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. new home sales and Fed's monetary policy statement for further momentum. Immediate resistance is located at 112.11 (78.6% retracement of 114.49 and 110.62), a break above targets 112.65 (21-DMA). On the downside, support is seen at 111.58 (-DMA), a break below could take it near 111.01 (July 21 Low).
GBP/USD: Sterling eased, extending losses for the third straight session as uncertainty surrounding the Brexit deal and worries over the pace of UK economic growth continued to weigh on market sentiment. Moreover, investors now await the UK Q2 prelim GDP figures, which are expected to have accelerated to 0.3 percent q/q versus 0.2 percent seen last, while on annualized basis, the pace of expansion is likely to have eased to 1.7 percent versus 2.0 percent. Sterling traded down at 1.3016, having hit a high of 1.3057 on Monday, its highest since Jul. 18. FxWirePro's Hourly Sterling Strength Index stood at 37.06 (Neutral) 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 1.3053 (July 19 High), a break above could take it near 1.3100. On the downside, support is seen at 1.2988 (July 24 Low), a break below targets 1.2953 (July 21 Low). Against the euro, the pound traded flat at 89.41 pence, having hit an 8-month low of 89.94 last week.
AUD/USD: The Australian dollar declined below the 0.7900 handle after domestic consumer prices rose less than expected at 0.2 percent q/q against 0.4 percent forecast, while the annualized figure also came-in lower-than-estimates at 1.9 percent. The Aussie trades 0.5 percent lower at 0.7897, having hit a high of 0.7987 on Thursday, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at -147.70 (Neutral) by 0500 GMT. Investors will continue to digest domestic CPI figures, ahead of U.S. economic releases. Immediate support is seen at 0.7862 (10-DMA), a break below targets 0.7829 (61.8% retracement of 0.7571 and 0.7987). On the upside, resistance is located at 0.7959 (July 21 High), a break above could take it near 0.8000.
NZD/USD: The New Zealand dollar tumbled, extending losses for the third consecutive session, as the crude oil prices declined after rising to an eight-week high on data showing a sharp fall in U.S. crude stocks last week. The Kiwi trades 0.02 percent down at 0.7415, having touched a high of 0.7458 on Friday, its highest level since Sept. 8. FxWirePro's Hourly Kiwi Strength Index was at -7.33 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7485 (Sept 7 High), a break above could take it near 0.7500. On the downside, support is seen at 0.7404 (78.6% retracement of 0.7201 and 0.7458), a break below could drag it till 0.7365 (10-DMA).
Equities Recap
Asian shares steadied, while the dollar held firm as investors awaited the Federal Reserve's policy decision later in the day, where it is widely expected to keep interest rates unchanged.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed.
Tokyo's Nikkei rallied 0.4 percent to 20,044.27 points, Australia's S&P/ASX 200 index gained 0.9 percent to 5,780.60 points and South Korea's KOSPI declined 0.4 percent to 2,430.61 points.
Shanghai composite index rose 0.03 percent to 3,244.50 points, while CSI300 index was trading 0.4 percent down at 3,705.34 points.
Hong Kong’s Hang Seng was trading 0.2 percent higher at 26,898.50 points. Taiwan shares shed 0.4 percent to 10,419.11 points.
Commodities Recap
Crude oil prices eased after rising to an eight-week high in the previous session on expectations of a drawdown in U.S. stocks and slowing signs of shale oil production. International benchmark Brent crude was trading 0.3 percent down at $50.55 per barrel by 0420 GMT, having hit a high of $50.89 on Tuesday, its strongest since Jun. 1. U.S. West Texas Intermediate traded 0.4 percent down at $48.33 a barrel, after rising as high as $48.64 the prior day, its strongest since Jun 1.
Gold prices declined, extending losses for the third consecutive session, as investors waited for a statement from the Federal Reserve later in the day for clues on the outlook for U.S. monetary policy. Spot gold dropped 0.2 percent to $1,247.27 per ounce by 0430 GMT, having hit a high of $1,258.76 an ounce on Monday, it highest since June 15. U.S. gold futures for August delivery fell 0.4 percent to $1,246.70 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.321 percent lower by 0.005 bps, while 5-year yield was 0.003 down at 1.881 percent.
The Japanese bonds plunged as investors moved to riskier assets including crude oil and stocks. Energy prices rallied on Saudi Arabia's pledge to limit crude exports to help curb global oversupply. The yield on the benchmark 10-year Treasury note rose 1 basis point to 0.77 percent, the yield on 20-year note also jumped more than 1/2 basis point to 0.591 percent and the yield on short-term 3-year traded nearly 1 basis point higher at -0.072 percent.
The Australian bonds slumped despite consumer prices were surprisingly soft last quarter and core inflation rate stayed below target for a sixth straight quarter. The yield on the benchmark 10-year Treasury note rose more than 4 basis points to 2.74 percent, the yield on 15-year note also jumped nearly 5 basis points to 3.04 percent and the yield on short-term 3-year traded 1/2 basis point higher at 2.03 percent.
The Canadian government bond prices were lower across the maturity curve, with the two-year down 8.5 Canadian cents to yield 1.322 percent and the benchmark 10-year down 80 Canadian cents to yield 2.018 percent. The two-year bond yield was at its highest in more than five years, while the 10-year bond yield was at its highest since Nov. 2014.
