Market Roundup
- China Jun new home prices +0.7% m/m vs +0.7% in May
- Yearly growth in Jun +10.2% vs May's +10.4%
- China bank watchdog to tighten risk control amid regulatory shake-up
- China FX regulator says will fend off risks of cross-border capital flows
- Global funds scramble to be early birds in China's MSCI entry
- Australia's C. bank sees more "positives" in domestic, world economy
- New Zealand CPI, 0.0% m/m, 1.7% y/y vs forecast 0.2%, 1.9% in Q2
- U.S. Republicans divided after second healthcare bill collapses
- U.S. makes lower trade deficit top priority in NAFTA talks
- BOJ likely to push back timeframe for inflation target again -Poll
- London economy suffering "wobble" over Brexit worries - think tank
Economic Data Ahead
- (0430 ET/0830 GMT) Great Britain Jun CPI, 0.2% m/m/, 2.9% y/y eyed; last 0.3%, 2.9%
- (0430 ET/0830 GMT) Great Britain Jun RPI, 0.3% m/m, 3.6% y/y eyed; last 0.4%, 3.7%
- (0430 ET/0830 GMT) Great Britain Jun Core CPI, 0.2% m/m, 2.6% y/y eyed; last 0.3%, 2.6%
Key Events Ahead
- (0330 ET/0730 GMT) Swedish C. bank to publish the minutes of its July policy meeting
- (0930 ET/1330 GMT) BOE's Carney speaks at the unveiling of the new £10 note
- N/A EU General Affairs Council meeting in Brussels
FX Beat
DXY: The dollar slumped across the board after the U.S. Senate Republicans rejected the Obamacare repeal bill yet another time and on easing expectations of another Federal Reserve interest rate hike this year. The greenback against a basket of currencies traded 0.4 percent down at 94.77, having touched a low of 94.71 earlier, it’s lowest since Sept. 08. FxWirePro's Hourly Dollar Strength Index stood at -130.51 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rallied to 15-month highs above the 1.1500 handle as the greenback slumped on uncertainty over the pace of the Federal Reserve's policy tightening and worries that President Donald Trump will fail to deliver healthcare reforms. The European currency traded 0.4 percent up at 1.1525, having touched a high of 1.1537 earlier, its highest since May 3, 2016. FxWirePro's Hourly Euro Strength Index stood at 38.93 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone ZEW Survey - Economic Sentix ahead of the U.S. export/import price index and NAHB housing market index. Immediate resistance is located at 1.1550, a break above targets 1.1580. On the downside, support is seen at 1.1443 (5-DMA), a break below could drag it near 1.1413 (10-DMA).
USD/JPY: The dollar tumbled to an over 2-week low against the Japanese yen as investors bet the Federal Reserve will be more cautious about hiking interest rates. Moreover, fading support for U.S. President Donald Trump's administration to pass the healthcare reform bill renewed risk-off market sentiment, providing an additional boost to the safe-haven yen. The major traded 0.5 percent down at 112.04, having hit a low of 111.98, its lowest since Jun 30. FxWirePro's Hourly Yen Strength Index stood at -1.70 (Neutral) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. export/import price index and NAHB housing market index. Immediate resistance is located at 112.54 (78.6% retracement of 114.49 and 111.98), a break above targets 113.10 (5-DMA). On the downside, support is seen at 111.72 (June 30 Low), a break below could take it near 111.50.
GBP/USD: Sterling gained, reversing most of its previous session losses, as the greenback tumbled to ten-month lows on the Trumpcare bill uncertainty. Markets attention will also remain on Bank of England Governor Mark Carney's speech for fresh insights on the BoE’s rate hike prospects this year. Sterling traded 0.3 percent up at 1.3090, having hit a high of 1.3113 on Friday, its highest since Sept. 22. FxWirePro's Hourly Sterling Strength Index stood at 98.21 (Slightly Bullish) by 0400 GMT. Investors’ focus will remain on the UK retail sales, producer price index, consumer price index and BoE Governor Speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3120 (Sept. 22 High), a break above could take it near 1.3200. On the downside, support is seen at 1.3052 (78.6% retrace of 1.2816 and 1.3113), a break below targets 1.3001 (61.8% retrace). Against the euro, the pound traded 0.1 percent down at 88.03 pence, having hit a 3-week high of 87.42 on Friday.
AUD/USD: The Australian dollar surged to two-year peaks above the 0.7900 handle after the release of hawkish RBA minutes portrayed an upbeat economic outlook, which led investors to narrow the odds on a hike in interest rates. The major was also supported by broad based U.S. dollar weakness after the Senate Republicans rejected Trump’s Healthcare bill. The Aussie trades 1.3 percent higher at 0.7897, having hit a high of 0.7905 earlier, it’s highest since May 22, 2015. FxWirePro's Hourly Aussie Strength Index stood at 171.67 (Highly Bullish) by 0500 GMT. Investors will continue to digest hawkish RBA minutes, ahead of U.S. economic releases. Immediate support is seen at 0.7834 (78.6% retracement of 0.7571 and 0.7905), a break below targets 0.7778 (61.8% retrace). On the upside, resistance is located at 0.7930, a break above could take it near 0.7960.
NZD/USD: The New Zealand dollar rebounded after falling as low as 0.7261 earlier in the session following the release of lower than expected inflation figures in the second quarter. The economy's consumer price index was unchanged in the quarter, compared to estimates of a 0.2 percent increase, while the annual pace of inflation slowed to 1.7 percent, below forecasts of 1.9 percent and down from 2.2 percent in the first quarter. The major recovered as the greenback tumbled after the U.S. Senate Republicans rejected the Obamacare repeal bill yet another time. The Kiwi trades 0.4 percent up at 0.7349, having touched a high of 0.7368 last week, its highest level since Feb. 2. FxWirePro's Hourly Kiwi Strength Index was at -6.22 (Neutral) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7360 (Previous Session High), a break above could take it near 0.7390. On the downside, support is seen at 0.7300, a break below could drag it lower 0.7260 (June 30 Low).
Equities Recap
Asian shares eased from over two-year peaks, as concerns over Trump's healthcare bill failure and uncertainty over the pace of the Federal Reserve's policy tightening triggered a fresh bout of risk aversion.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent.
Tokyo's Nikkei declined 0.6 percent to 19,993.55 points, Australia's S&P/ASX 200 index eased 1.2 percent to 5,689.50 points and South Korea's KOSPI dropped 0.1 percent to 2,422.94 points.
Shanghai composite index lost 0.4 percent to 3,1653.59 points, while CSI300 index was trading 0.6 percent down at 3,642.51 points.
Hong Kong’s Hang Seng was trading 0.2 percent lower at 26,426.53 points. Taiwan shares added 0.2 percent to 10,481.26 points.
Commodities Recap
Crude oil prices steadied after falling from 2-week highs hit in the previous session, supported by strong consumption, however, ongoing high supplies from producer cartel OPEC and the United States weighed on prices. International benchmark Brent crude was trading 0.3 percent up at $48.50 per barrel by 0431 GMT, having hit a high of $49.21, its strongest since Jul. 5. U.S. West Texas Intermediate traded 0.2 percent up at $46.07 a barrel, after rising as high as $46.85, its strongest since Jul 5.
Gold prices rallied to a fresh 2-week high as the dollar slumped to multi-month lows on the back of data that indicated weak U.S. inflation and dampened prospects for rate hikes. Spot gold gained 0.3 percent at $1,237.39 an ounce by 0434 GMT, having hit a high of $1,238.17, its highest since July 3. U.S. gold futures for August delivery settled up 0.5 percent at $1,233.70.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.303 percent lower by 0.006 bps, while 5-year yield was 0.004 down at 1.849 percent.
The Australian bonds plunged after the Reserve Bank of Australia (RBA) maintained a hawkish tone in its July monetary policy meeting minutes, released earlier today. The yield on the benchmark 10-year Treasury note jumped 4 basis points to 2.77 percent, the yield on 15-year note also surged 4 basis points to 3.07 percent while the yield on short-term 2-year climbed 8-1/2 basis points to 1.94 percent.
The New Zealand bonds ended the session on a slightly higher note after the country’s consumer price-led inflation for the second-quarter of this year disappointed markets, coming in flat for the quarter. At the time of closing, the yield on the benchmark 10-year bond remained flat at 2.99 percent, the yield on 7-year note slipped 1/2 basis point to 2.87 percent while the yield on short-term 2-year note ended 2-1/2 basis points lower at 1.95 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year down 1.5 Canadian cents to yield 1.198 percent and the 10-year up 1 Canadian cent to yield 1.894 percent. On Thursday, the 10-year yield touched its highest since December 2014 at 1.948 percent.
