Market Roundup
- Australia c. bank: no automatic reason to follow global rate hikes
- Discussion on RBA neutral rates had no policy implications -Debelle
- NZD reflects strong NZ economy-Finmin Joyce - Bloomberg interview
- U.S. toughens stance on foreign deals in blow to China's buying spree
- Japan to keep primary surplus target despite shortfall outlook -Aso
- IMF approves in principle $1.8 bln loan arrangement for Greece
- No. Korea 2016 economic growth at 17-yr high despite sanctions-S.Korea
- No. Korean military talks after North snubs South's call
- Foreign CB US debt holdings +$3.3 bln to $3.3 tln July 12 week
- Treasuries $2.8 bln to $3.0 tln, agencies +$114 mln to $260.7 bln
- U.S. taxable bond funds gather most cash since March -Lipper
Economic Data Ahead
- No major economic releases
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar consolidated near multi-month lows versus it major peers after U.S. President Donald Trump's failed to get enough support for his healthcare bills in the Senate. The greenback against a basket of currencies traded 0.1 percent down at 94.19, having touched a low of 94.09 the prior day, it’s lowest since Aug. 18. FxWirePro's Hourly Dollar Strength Index stood at -67.91 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro steadied after rising to a 2-year high above the 1.1600 handle in the prior session following European Central Bank chief Mario Draghi comments, citing that the policymakers would discuss changing its bond-buying programme in the autumn. The European currency traded flat at 1.1628, having touched a high of 1.1656 on Thursday, its highest since Aug 21, 2015. FxWirePro's Hourly Euro Strength Index stood at 125.82 (Highly Bullish) by 0400 GMT. Investors will remain on the sidelines, amid a lack of economic data from both the continents. Immediate resistance is located at 1.1680, a break above targets 1.1700. On the downside, support is seen at 1.1585 (78.6% retracement 1.1377 and 1.1659), a break below could drag it near 1.1527 (61.8% retrace).
USD/JPY: The dollar rose after tumbling to an over 3-week low in the previous session on the back of a mixed bag of data from the U.S. docket and a drop in the U.S. Treasury yields. The major was little changed at 111.95, having hit a low of 111.48 the day before, its lowest since Jun 27. FxWirePro's Hourly Yen Strength Index stood at -75.48 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, in absence of U.S. economic data. Immediate resistance is located at 112.19 (5-DMA), a break above targets 112.63 (61.8% retracement of 114.49 and 111.48). On the downside, support is seen at 111.14 (June 26 Low), a break below could take it near 110.64 (June 16 Low).
GBP/USD: Sterling declined, extending losses for the fifth consecutive session amid a minor-recovery staged by U.S. dollar across the board. Moreover, lingering uncertainty over the Brexit deal, as the UK and EU still remain at odds over citizens' rights and the amount the UK will pay to leave the bloc, undermined the bid tone around the major. Sterling traded down at 1.2970, having hit a low of 1.2932 on Thursday, its lowest since Jul. 14. FxWirePro's Hourly Sterling Strength Index stood at -83.89 (Slightly Bearish) by 0400 GMT. Investors’ focus will remain on the developments surrounding the Brexit deal, amid a lack of fresh U.S. fundamental drivers. Immediate resistance is located at 1.3032 (Previous Session High), a break above could take it near 1.3100. On the downside, support is seen at 1.2934 (38.2% retrace of 1.2816 and 1.3125), a break below targets 1.2900. Against the euro, the pound traded down at 89.63 pence, having hit an 8-month low of 89.77 the day before.
AUD/USD: The Australian dollar eased from a 2-year high after the RBA Deputy Governor delivered dovish comments, citing that the discussion around the neutral rate of interest at its July meeting had no implications for monetary policy. The Aussie trades 0.6 percent lower at 0.7902, having hit a high of 0.7987 the day before, it’s highest since May 19, 2015. FxWirePro's Hourly Aussie Strength Index stood at 0.54 (Neutral) by 0500 GMT. Investors will continue to digest dovish RBA comments, ahead of Australia's CPI figures due next week. Immediate support is seen at 0.7829 (61.8% retracement of 0.7571 and 0.7987), a break below targets 0.7780 (50.0% retrace). On the upside, resistance is located at 0.8000, a break above could take it near 0.8050.
NZD/USD: The New Zealand dollar rallied to a fresh 10-month high in response to upbeat comments from New Zealand’s Finance Minister Joyce. FinMin Joyce stated that he is not worried about the strength of the NZD, as its current levels reflected a strong economy. The Kiwi trades 0.3 percent up at 0.7424, having touched a high of 0.7428 earlier, its highest level since Sept. 8. FxWirePro's Hourly Kiwi Strength Index was at 151.80 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of New Zealand's trade balance report due next week. Immediate resistance is located at 0.7450, a break above could take it near 0.7485 (Sept 7 High). On the downside, support is seen at 0.7380 (78.6% retracement of 0.7201 and 0.7428), a break below could drag it till 0.7354 (5-DMA).
Equities Recap
Asian shares traded within a narrow range, while the euro held near 2-year highs against the dollar after the European Central Bank President said tapering of its stimulus will be on the table this autumn.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed after rising for a 10th straight session on Thursday,
Tokyo's Nikkei declined 0.2 percent to 20,095.20 points, Australia's S&P/ASX 200 index lost 0.6 percent to 5,726.50 points and South Korea's KOSPI gained 0.1 percent to 2,445.78 points.
Shanghai composite index fell 0.05 percent to 3,243.08 points, while CSI300 index was trading 0.2 percent down at 3,740.55 points.
Hong Kong’s Hang Seng was trading 0.03 percent higher at 26,747.13 points. Taiwan shares shed 0.6 percent to 10,436.70 points.
Commodities Recap
Crude oil prices steadied after rising to multi-week highs ahead of a key meeting of major oil producing nations next week. International benchmark Brent crude was trading 0.1 percent up at $49.29 per barrel by 0441 GMT, having hit a high of $50.16 the day before, its strongest since Jun. 7. U.S. West Texas Intermediate traded down at $46.90 a barrel, after rising as high as $47.71 on Thursday, its strongest since Jun 7.
Gold prices rose after hitting a 3-week high in the previous session and was on track for a second consecutive weekly gain. Spot gold edged up 0.1 percent to $1,244.60 per ounce at 0449 GMT after touching a high of $1,247.44 an ounce on Thursday, its highest since Jun 30 and has risen about 1.3 percent for the week so far. U.S. gold futures for August delivery fell 0.15 percent to $1,243.60 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.255 percent lower by 0.011 bps, while 5-year yield was 0.007 down at 1.816 percent.
The Australian bonds jumped on the last trading day of the week, tracking similar movement in the U.S. Treasuries and as investors covered previous short positions. The yield on the benchmark 10-year Treasury note slumped 4 basis points to 2.71 percent, the yield on 15-year note also plunged nearly 4 basis points to 3.01 percent and the yield on short-term 2-year traded 7 basis points lower at 1.85 percent.
The New Zealand bonds ended on the upside as investors remain sidelined in any major trading activity due to lack of any economically significant data and tracking some strength in the U.S. Treasuries. At the time of closing, the yield on the benchmark 10-year bond slumped 3-1/2 basis points to 2.95 percent, the yield on 7-year note plunged 4 basis points to 2.82 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 1.96 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 2.4 Canadian cents to yield 1.242 percent and the 10-year rising 14 Canadian cents to yield 1.882 percent. Last week, the 10-year yield touched its highest since December 2014 at 1.948 percent.
