Market Roundup
- U.S.-China trade row supports safe-havens
- Gold eyes best week in over three years
- Oil dips amid trade worries
- RBA: Australia economy seen turning up
- RBA: Zero rates, QE unlikely but possible
Economic Data Ahead
- (0400 ET/0800 GMT) Italy Global trade balance June
- (0400 ET/0800 GMT) Italy trade balance EU June
- (0430 ET/0830 GMT) UK prelim gross domestic product YoY Q2
- (0430 ET/0830 GMT) UK prelim gross domestic product MoM Q2
- (0430 ET/0830 GMT) UK manufacturing production MM June
- (0430 ET/0830 GMT) UK manufacturing production YY June
- (0430 ET/0830 GMT) UK industrial production MM June
- (0430 ET/0830 GMT) UK industrial production YY June
- (0430 ET/0830 GMT) UK Trade Balance June
- (0430 ET/0830 GMT) UK Trade Balance non-EU June
- (0430 ET/0830 GMT) UK Goods Trade Balance June
- (0430 ET/0830 GMT) UK gross domestic product MoM June
- (0500 ET/0900 GMT) Italy Consumer price index EU MoM June
- (0500 ET/0900 GMT) Italy Consumer price index MoM June
- (0500 ET/0900 GMT) Italy Consumer price index EU YoY June
- (0500 ET/0900 GMT) Italy Consumer price index YoY June
Key Events Ahead
- No Significant Event Scheduled
FX Beat
DXY: The dollar index steadied as the benchmark 10-year Treasury yield closed 2.4 basis points higher at 1.715 percent after hitting 1.595 percent on Wednesday, its lowest level since October 2016. The greenback against a basket of currencies traded flat at 97.59, having touched a low of 97.21 on Tuesday, its lowest since July 22.
EUR/USD: The euro rose, reversing previous session losses after Reuters reported that Germany is considering ending its long-cherished balanced budget goal by issuing new debt to finance a costly climate protection package. The European currency traded 0.2 percent up at 1.1197, having touched a high of 1.1249 on Tuesday, its highest since July 19. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. producer price index data. Immediate resistance is located at 1.1233 (July 17 High), a break above targets 1.1282 (July 19 High). On the downside, support is seen at 1.1164 (38.2% retracement of 1.1026 and 1.1249), a break below could drag it below 1.1138 (50% retracement).
USD/JPY: The dollar declined, extending losses for the third straight session, as U.S. President Donald Trump again expressed dissatisfaction with the strength of the greenback, saying the Federal Reserve’s interest rates were harming American manufacturers. The major was trading 0.2 percent down at 105.91, having hit a low of 105.49 on Wednesday, its lowest since Jan 3. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index data. Immediate resistance is located at 106.39 (23.6% retracement of 109.31 and 105.49), a break above targets 106.95 (38.2% retracement). On the downside, support is seen at 105.52 (Aug. 6 Low), a break below could take it lower at 104.65 (Jan. 3 Low).
GBP/USD: Sterling continued to trade within narrow ranges above the 1.2100 handle, as investors remained on the sidelines amid prospect of a no-deal Brexit and news that Prime Minister Boris Johnson would hold an election in the days following Brexit if lawmakers sunk his government with a vote of no-confidence. The major traded 0.1 percent up at 1.2147, having hit a low of 1.2079 last week, it’s lowest since Jan. 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2188 (23.6% retracement of 1.2522 and 1.2079), a break above could take it near 1.2253 (38.2% retracement). On the downside, support is seen at 1.2079 (Aug. 1 Low), a break below targets 1.2017 (Jan 17, 2017, Low). Against the euro, the pound was trading flat at 92.16 pence, having hit a low of 92.65 on Thursday, it’s lowest since August 2017.
AUD/USD: The Australian dollar rose, extending previous session gains after the Reserve Bank of Australia stated that zero interest rates and quantitative easing are unlikely to be needed. RBA Governor Philip Lowe emphasized the central bank’s base case was for the economy to improve and that it may now be at a turning point with growth expected to pick up next year. The Aussie trades 0.2 percent up at 0.6812, having hit a low of 0.6677 on Wednesday, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6774 (5-DMA), a break below targets 0.6700. On the upside, resistance is located at 6831 (38.2% retracement of 0.7082 and 0.6677), a break above could take it near 0.6879 (50% retracement).
NZD/USD: The New Zealand dollar gained but on course for its third weekly decline. The major slumped to its lowest in more than three years earlier in the week after the Reserve Bank of New Zealand stunned markets by cutting interest rates more than expected and hinting at taking rates into negative territory. The Kiwi trades 0.2 percent up at 0.6493, having touched a low of 0.6376 on Wednesday, its lowest level Jan 2016. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6534 (38.2% retracement of 0.6790 and 0.6376), a break above could take it near 0.6583 (50% retracement). On the downside, support is seen at 0.6400, a break below could drag it below 0.6365.
Equities Recap
Asian shares steadied as China’s solid export figures and a stabilization in the yuan boosted investor risk appetite, although concerns about U.S.-China trade ties limited gains.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.
Tokyo's Nikkei rallied 0.5 percent to 20,684.82 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,584.40 points and South Korea's KOSPI surged 1.1 percent to 1,942.02 points.
Shanghai composite index eased 0.8 percent to 2,771.94 points, while CSI 300 index traded 1.1 percent down at 3,630.25 points. Hong Kong’s Hang Seng traded 0.3 percent lower at 26,039.66 points.
Commodities Recap
Crude oil prices declined amid fears over demand as the U.S-China trade dispute casts its shadow over markets, although expectations of more OPEC production cuts limited downside. International benchmark Brent crude was trading 0.8 percent lower at $57.78 per barrel by 0531 GMT, having hit a low of $55.86 on Wednesday, its lowest since January. U.S. West Texas Intermediate was trading 0.7 percent down at $52.53 a barrel, after falling as low as $50.51 on Wednesday, its lowest since the January.
Gold prices steadied above the $1,500 mark as an escalation in the U.S.-China trade dispute and fears of a global economic slowdown triggered fresh interest for safe-haven assets. Spot gold was trading 0.3 percent up at $1,505.04 per ounce by 0535 GMT, having touched a high of $1,510.29 on Wednesday, its highest since April 2013. U.S. gold futures settled down 0.7 percent at $1,509.50 per ounce.
Treasuries Recap
The Japanese government bond prices held firm, with their yields hitting three-year lows, amid broad concerns about the U.S.-China trade war. The 10-year JGB yield fell 1 basis point to minus 0.205 percent, not far from three-year low of minus 0.215 percent hit on Tuesday. The 20-year JGB yield fell 1.5 basis points to a three-year low of 0.115 percent and the 30-year JGB yield fell 1 basis point to 0.250 percent, the lowest since July 2016. At the shorter end of the market, the five-year JGB yield fell 1.5 basis points to a three-year low of minus 0.300% while the two-year JGB yield fell 2 basis points to 2 1/2-year lows of minus 0.265 percent.
