Market Roundup
- U.S. finalizes next China tariff list targeting $16 bln in imports
- Chinese media warns against 'wantonly' rising tariffs in U.S. trade war
- China to make targeted RRR cuts to support debt-to-equity swaps - state planner
- BOJ board disagreed on new tolerance for yield moves at last meeting
- Japanese investors sold US and German bonds in June, bought French debt
- Australia c.bank upbeat on economy but in no hurry for rate hike
- Trump-backed Republican leads close U.S. House race in Ohio
- China Jul Exports YY, 12.2%, 10.0% f'cast, 11.2% prev
- China Jul Imports YY, 27.3%, 16.2% f'cast, 14.1% prev
- China Jul Trade Balance, 28.05 bln, 39.33 bln f'cast, 41.47 bln prev
- Japan Jun Current Account NSA JPY, 1,175.6 bln, 1,195.8 bln f'cast, 1,938.3 bln prev
- Australia Jun Housing Finance, -1.1%, 0.2% f'cast, 1.1% prev
Economic Data Ahead
- No Major Economic Data Releases
Key Events Ahead
- (0830 ET/1230 GMT) Richmond Fed's Barkin speaks before local business and community leaders in Roanoke, Virginia
- (1700 ET/2100 GMT) RBNZ announces Official Cash Rate (OCR) and Monetary Policy Statement in Wellington
FX Beat
DXY: The dollar index tumbled after the Chinese commerce ministry stated that China will impose additional 25 percent tariffs on 659 U.S. goods worth $50 billion in response to the U.S. announcement. The greenback against a basket of currencies trades 0.1 percent down at 95.06, having touched a high of 95.52 on Monday, its highest since July 19. FxWirePro's Hourly Dollar Strength Index stood at -68.94 (Bearish) by 0500 GMT.
EUR/USD: The euro surged to a 6-day peak as the greenback eased amid concerns over escalating trade tensions between U.S. and China. The European currency traded 0.3 percent up at 1.1629, having touched a high of 1.1628, its highest since August 2. FxWirePro's Hourly Euro Strength Index stood at 88.37 (Slightly Bullish) by 0500 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the FOMC member Barkin's speech. Immediate resistance is located at 1.1638 (10-DMA), a break above targets 1.1662 (21-DMA). On the downside, support is seen at 1.1540 (August 6 Low), a break below could drag it till 1.1508 (June 21 Low).
USD/JPY: The dollar eased, extending previous session losses after the U.S. Trade Representative's office said that the U.S. would begin collecting 25 percent tariffs on another $16 billion in Chinese goods later this month. The major was trading 0.1 percent down at 111.27, having hit a low of 110.99 on Tuesday, its lowest since July 31. FxWirePro's Hourly Yen Strength Index stood at 74.96 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. FOMC member Barkin's speech. Immediate resistance is located at 111.70 (21-DMA), a break above targets 112.17 (July 11 High). On the downside, support is seen at 110.96 (July 24 Low), a break below could take it lower 110.59 (July 26 Low).
GBP/USD: Sterling rose, halting a 4-day losing streak as the greenback declined amid simmering worries over the U.S.-China trade conflict. However, concerns the UK could crash out of the European Union without securing a trade deal limited the upside. The major traded 0.1 percent up at 1.2954, having hit a low of 1.2920 on Monday; it’s lowest since Sept. 2017. FxWirePro's Hourly Sterling Strength Index stood at -62.40 (Bearish) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3004 (5-DMA), a break above could take it near 1.3083 (July 19 High). On the downside, support is seen at 1.2920 (Aug. 6 Low), a break below targets 1.2900. Against the euro, the pound was trading 0.1 percent down at 89.71 pence, having hit a low of 89.77, it’s lowest since Nov. 2017.
AUD/USD: The Australian dollar steadied near a 1-week peak touched in the previous session after the Reserve Bank of Australia Governor Philip Lowe said that the central bank will need to see a phase of moderation in the property market even though it does not target home prices as part of its policy mandate. The Aussie trades 0.1 percent up at 0.7427, having hit a high of 0.7439 on Tuesday; it’s highest since July 31. FxWirePro's Hourly Aussie Strength Index stood at 67.36 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7403 (21-DMA), a break below targets 0.7370 (July 27 Low). On the upside, resistance is located at 0.7444 (July 6 High), a break above could take it near 0.7464 (July 6 High).
NZD/USD: The New Zealand dollar surged after the Reserve Bank of New Zealand's survey showed near-term inflation expectations increased in the third quarter, but stayed below the central bank's target midpoint for the next year. The RBNZ's quarterly survey of expectations showed annual inflation to average 1.86 percent over the coming year, from 1.8 percent in the previous survey. The Kiwi trades 0.3 percent up at 0.6750, having touched a low of 0.6720 on Friday, its lowest level since July 20. FxWirePro's Hourly Kiwi Strength Index was at 105.20 (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 0.6797 (July 5 High), a break above could take it near 0.6834 (July 20 High). On the downside, support is seen at 0.6713 (June 19 Low), a break below could drag it below 0.6687 (July 3 Low).
Equities Recap
Asian shares surged, supported by strong U.S. earnings, while the greenback eased on expectations that Beijing will boost its fiscal stimulus to cushion the impact of its worsening trade dispute with Washington.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3 percent.
Tokyo's Nikkei plunged 0.1 percent to 22,644.31 points, Australia's S&P/ASX 200 index rose 0.2 percent to 6,268.50 points, and South Korea's KOSPI surged 0.05 percent to 2,300.99 points.
Shanghai composite index fell 1.2 percent to 2,744.62 points, while CSI300 index traded 1.6 percent down at 3,315.77 points.
Hong Kong’s Hang Seng traded 0.1 percent lower at 28,245.76 points. Taiwan shares added 0.8 percent to 11,075.25 points.
Commodities Recap
Crude oil prices rose, extending gains for the third straight session, supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran. International benchmark Brent crude was trading 0.2 percent up at $74.61 per barrel by 0504 GMT, having hit a high of $74.86 on Tuesday, its highest since July 31. U.S. West Texas Intermediate was trading 0.2 percent higher at $69.19 a barrel, after rising as high as $69.89 on Monday, its highest since July 31.
Gold prices extended previous session gains, as the U.S. dollar softened against China's yuan and the euro. Spot gold was 0.2 percent higher at $1,213.57 an ounce at 0511 GMT, having hit its lowest since July 2017 at $1,204.06 on Friday. U.S. gold futures were up 0.1 pct at $1219.4 an ounce.
Treasuries Recap
The Japanese government bonds traded weaker after the Bank of Japan’s (BoJ) monetary policy board members remained divided over long-term interest rates in its July 30-31 meeting Summary of Opinions, released today amid hopes of an improvement in the country’s second-quarter gross domestic product (GDP), scheduled to be released on August 9 by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.112 percent, the yield on the long-term 30-year note rose 1 basis point to 0.862 percent and the yield on short-term 2-year moved 1/2 basis point higher to -0.103 percent.
The Australian government bonds remained narrowly mixed during Asian session as investors remained side-lined in any major trading activity amid lack of economically significant data. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose nearly 1 basis point to 2.67 percent, the yield on the long-term 30-year Note hovered around 3.15 percent and the yield on short-term 2-year traded 1 basis point lower 2.02 percent.
The Canadian government bond prices were lower across a flatter yield curve. The two-year fell 6 Canadian cents to yield 2.129 percent, its highest since October 2008, and the 10-year declined 18 Canadian cents to yield 2.374 percent.
