Market Roundup
- Trump downbeat ahead of trade talks with EU
- Trump calls for quick NAFTA deal in letter to Mexico president-elect
- Australia's Q2 inflation stays low, keeps rate hike prospects distant
- Australia's Q2 RBA Trimmed CPI YY, 1.9%. 1.9% f'cast, 1.9% prev
- New Zealand Jun Trade Balance, -4.03 bln, -3.60 bln prev
Economic Data Ahead
- (0400 ET/0800 GMT) Germany Jul Ifo Business Climate New, 101.5 f'cast, 101.8 prev
Key Events Ahead
- (0400 ET/0800 GMT) ECB releases monthly data on lending and money supply
FX Beat
DXY: The dollar index declined as investors focus sifted on talks between U.S. President Donald Trump and European Commission President Jean-Claude Juncker, at which trade issues are likely to dominate. The greenback against a basket of currencies trades 0.05 percent down at 94.57, having touched a low of 94.21 on Monday, its lowest since July 11. FxWirePro's Hourly Dollar Strength Index stood at -43.28 (Neutral) by 0500 GMT.
EUR/USD: The euro declined, extending losses for the third straight session, ahead of a meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker as investor focus shifted to the trade tensions between the two economies. The European currency traded 0.05 percent down at 1.1678, having touched a high of 1.1750 on Monday, its highest since July 11. FxWirePro's Hourly Euro Strength Index stood at -138.78 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on the Eurozone M3 money supply, ahead of the U.S. new home sales figures. Immediate resistance is located at 1.1762 (June 10 High), a break above targets 1.1801 (June 13 High). On the downside, support is seen at 1.1649 (July 12 Low), a break below could drag it till 1.1600.
USD/JPY: The dollar gained, halting a five-day losing streak, ahead of the trade talks between the European Union President Juncker and the US President Trump, after the U.S. imposed tariffs on EU steel and aluminum and threatened to extend those measures to European cars. The major was trading flat at 111.21, having hit a low of 110.75 on Monday, its lowest since July 9. FxWirePro's Hourly Yen Strength Index stood at 121.62 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. new home sales figures. Immediate resistance is located at 111.84 (5-DMA), a break above targets 112.12 (10-DMA). On the downside, support is seen at 110.75 (July 24 low), a break below could take it lower 110.27 (July 4 Low).
GBP/USD: Sterling steadied after rising to a 1-week peak in the previous session after British Prime Minister Theresa May said she would now lead negotiations with the European Union and Brexit minister David Raab urged the EU to respond to a policy document in order to reach a deal on Britain's departure by October. The major traded 0.1 percent up at 1.3154, having hit a low of 1.2957 on Thursday; it’s lowest since Sept. 2017. FxWirePro's Hourly Sterling Strength Index stood at 100.78 (Highly Bullish) 0500 GMT. Immediate resistance is located at 1.3180, a break above could take it near 1.3244 (July 12 High). On the downside, support is seen at 1.3090 (5-DMA), a break below targets 1.3010 (July 18 Low). Against the euro, the pound was trading 0.1 percent up at 88.84 pence, having hit a low of 89.57 on Friday, it’s lowest since March 7.
AUD/USD: The Australian dollar tumbled after rising to a 2-week peak earlier in the day as data showed domestic inflation remained stubbornly low last quarter despite relatively rapid economic growth, dampening the prospects of interest rates hike in coming months. The Aussie trades 0.2 percent down at 0.7404, having hit a high of 0.7448 earlier; it’s highest since July 11. FxWirePro's Hourly Aussie Strength Index stood at -39.97 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7335 (June 29 Low), a break below targets 0.7300. On the upside, resistance is located at 0.7458 (July 11 High), a break above could take it near 0.7483 (July 10 High).
NZD/USD: The New Zealand dollar slumped below the 0.6800 handle after the NZ report delivered a negative surprise; the economy posted a monthly trade deficit of NZ$113.00 million in June, while the annual deficit came in at NZ$4.03 billion. The Kiwi trades 0.05 percent down at 0.6795, having touched a high of 0.6824 on Monday, its highest level since July 17. FxWirePro's Hourly Kiwi Strength Index was at -2.01 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6860, a break above could take it near 0.6900. On the downside, support is seen at 0.6736 (June 29 Low), a break below could drag it below 0.6700.
Equities Recap
Asian shares surged, supported by strong Wall Street earnings, while the greenback consolidated within narrow ranges ahead of a meeting between the U.S. and European Commission presidents.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.
Tokyo's Nikkei rallied 0.5 percent to 22,614.25 points, Australia's S&P/ASX 200 index plunged 0.3 percent to 6,247.60 points, and South Korea's KOSPI tumbled 0.3 percent to 2,273.27 points.
Shanghai composite index fell 0.5 percent to 2,903.31 points, while CSI300 index was trading 0.2 percent down at 3,577.53 points.
Hong Kong’s Hang Seng was trading 0.8 percent higher at 28,869.15 points. Taiwan shares shed 0.3 percent to 10,965.79 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, after industry group data showed U.S. crude inventories fell more than expected last week, easing worries about oversupply that weighed on market sentiments. International benchmark Brent crude was trading 0.4 percent up at $73.90 per barrel by 0459 GMT, having hit a high of $74.47 on Monday, its highest since July 16. U.S. West Texas Intermediate was trading 0.1 percent lower at $68.69 a barrel, after falling as low as $67.08 last week, its lowest since June 22.
Gold prices consolidated within narrow ranges, as the dollar steadied ahead of a meeting between the U.S. and European Commission presidents to discuss trade-related issues. Spot gold was nearly unchanged at $1,224.55 an ounce at 0504 GMT, having hit a low of $1,211.26 on Thursday, its lowest since early July 2017. U.S. gold futures for August delivery were 0.1 percent lower at $1,223.90 an ounce.
Treasuries Recap
The Japanese government bonds surged, tracking the unlimited debt-buying by the Bank of Japan (BoJ) earlier this week amid market speculation over a possible change in the monetary policy stance by the central bank ahead of the two-day meeting on July 30-31. The yield on Japan’s benchmark 10-year bond, which moves inversely to its price, fell 1-1/2 basis points to 0.07 percent, the yield on the long-term 30-year also slumped nearly 1-1/2 basis points to 0.78 percent and the yield on short-term 2-year too remained close to 1-1/2 basis point lower at -0.12 percent.
The Australian government bonds gained after lower-than-expected Q2 headline consumer inflation data erased market expectations of the Reserve bank of Australia (RBA) near-term interest rate hike hopes.The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3 basis points to 2.691 percent, the yield on the long-term 30-year Note dipped 3-1/2 basis points to 3.166 percent and the yield on short-term 2-year down 2 basis points to 2.054 percent.
The Canadian bond yields rose, with the yield on 10-year Canadian government debt higher half a basis point at 2.227 percent after touching 2.250 percent earlier Tuesday, itshighest since June 15.
