Market Roundup
- Australian business conditions climbed to its highest since early 2008
- NAB's index of business conditions rose 4 points to +15 in June
- Survey's measure of business confidence added 1 point to +9
- Japan June money supply M2 +3.9% y/y, M3 +3.3%, broadest liquidity +3.1%
- Japan sitting on postal shares until price climbs -Nikkei
- UK recession, unusually, to punish Gilts, pension funds
- British banks' optimism slumps on Brexit uncertainty
- S. Korea says North doesn't have ICBM re-entry technology
- Fed's Williams still sees rate hike, asset unwinding this year
- Trump Jr. was told of Russian effort to help father's campaign -NY Times
Economic Data Ahead
- (0400 ET/0800 GMT) Italy May Industrial Output, 0.5% m/m, 2.2% y/y eyed; last -0.4%, 1.4%
Key Events Ahead
- (0400 ET/0800 GMT) Netherlands 30Y E1.0 bln auction
- (0600 ET/1000 GMT) BOE's Andy Haldane will speak at BOE
- (0700 ET/1100 GMT) BOE's Broadbent speaks in Aberdeen
- (0900 ET/1300 GMT) ECB's Coeure speaks at the FX Contact Group meeting in Frankfurt
- (1000 ET/1400 GMT) EU's Elke Konig speaks to EU lawmakers in European Parliament
- N/A EU Economic and Financial Affairs Council meeting in Brussels
- N/A ECB's Constancio to participate in ECOFIN meeting in Brussels
FX Beat
DXY: The dollar rallied across the board as investors awaited comments from Federal Reserve Chair Janet Yellen for further insights on the U.S. monetary policy. The greenback against a basket of currencies traded 0.1 percent up at 96.18, having touched a high of 96.51 last week, it’s highest since Jun. 28. FxWirePro's Hourly Dollar Strength Index stood at 66.62 (Bullish) by 0500 GMT.
EUR/USD: The euro eased, struggling to extend upside above the 1.1400 handle, as the greenback continued to rise on growing expectations of Federal Reserve interest rate hike. The European currency traded down at 1.1392, having touched a low of 1.1312 on Wednesday, its lowest since Jun 28. FxWirePro's Hourly Euro Strength Index stood at 75.41 (Bullish) by 0400 GMT. Investors’ attention will remain the U.S. JOLTS job openings data, wholesale inventory figures, and Fed official speeches, amid a lack of data from the Eurozone docket. Immediate resistance is located at 1.1445 (June 30 High), a break above targets 1.1500. On the downside, support is seen at 1.1379 (July 7 Low), a break below could drag it near 1.1350.
USD/JPY: The dollar rallied to a 4-month high against the yen following a rise in the U.S. Treasury bond yields, while the investors awaited comments from Federal Reserve Chair Janet Yellen for fresh cues on policy direction. The major traded 0.3 percent up at 114.36, having hit a high of 114.39 earlier, its highest since Mar 15. FxWirePro's Hourly Yen Strength Index stood at -75.48 (Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. JOLTS job openings data, wholesale inventory figures and Fed official speeches. Immediate resistance is located at 114.75 (Mar 8 High), a break above targets 115.00. On the downside, support is seen at 113.86 (5-DMA), a break below could take it near 113.02 (10-DMA).
GBP/USD: Sterling declined towards a near 2-week low touched in the previous session as last week’s downbeat data cast doubts over the Bank of England's recent warnings that it is on the verge of raising interest rates. However, the downside was limited as the British Retail Consortium (BRC) showed UK's like-for-like retail sales rose at an annualized rate of 1.2 percent in June. Sterling traded down at 1.2873, having hit a low of 1.2854 on Monday, its lowest since Jun. 28. FxWirePro's Hourly Sterling Strength Index stood at -12.62 (Neutral) by 0400 GMT. Investors’ focus will remain on BoE MPC member Haldnae and Broadbent's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2917 (5-DMA), a break above could take it near 1.3047 (May 18 High). On the downside, support is seen at 1.2854 (June 5 Low), a break below 1.2816 (21-DMA). Against the euro, the pound traded up at 88.45 pence, having hit a 1-week low of 88.60 on Friday.
AUD/USD: The Australian dollar rose, extending gains for the third straight session, after the release of the upbeat NAB business survey. The economy's business conditions index rose 4 points to 15 index points in June, recording its highest since early 2008, while business confidence rose to 9 from 7 in May. The Aussie trades 0.1 percent up at 0.7612, having hit a low of 0.7571 last week, it’s weakest since Jul. 28. FxWirePro's Hourly Aussie Strength Index stood at 45.23 (Neutral) by 0500 GMT. Investors will continue to digest upbeat domestic data, ahead of U.S. economic releases. Immediate support is seen at 0.7596 (5-DMA), a break below targets 0.7550. On the upside, resistance is located at 0.7624 (10-DMA), a break above could take it near 0.7700.
NZD/USD: The New Zealand dollar tumbled to a 3-week low after data reported by Statistics New Zealand showed electronic card retail sales remained flat, against estimates of a 0.8 percent growth. Moreover, a rise in the U.S. dollar following a modest uptick in the U.S. Treasury bond yields also weighed heavily on the major. The Kiwi trades 0.6 percent down at 0.7227, having touched a low of 0.7225 earlier, its weakest level since Jun. 22. FxWirePro's Hourly Kiwi Strength Index was at -128.77 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7250 (78.6% retracement of 0.7346 and 0.7225), a break above could take it near 0.7300. On the downside, support is seen at 0.7214 (June 22 Low), a break below could drag it lower 0.7200.
Equities Recap
Asian shares rallied, extending previous day gains, while the dollar touched a 4-month high against the yen, as investors awaited testimony from Federal Reserve Chair Janet Yellen for clues on when Fed would tighten U.S. monetary policy.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent.
Tokyo's Nikkei edged up 0.6 percent to 20,198.11 points, Australia's S&P/ASX 200 index rose 0.1 percent to 5,729.50 points and South Korea's KOSPI gained 0.5 percent to 2,393.45 points.
Shanghai composite index rose 0.2 percent to 3,220.60 points, while CSI300 index was trading 1.1 percent up at 3,696.15 points.
Hong Kong’s Hang Seng was trading 1.5 percent higher at 25,883.84 points. Taiwan shares added 1.22 percent to 10,415.57 points.
Commodities Recap
Crude oil prices edged up after rebounding from a 1-week low hit in the previous session on the back of strong demand outlook for the coming weeks, however, overall market conditions remain weak due to ample supplies. International benchmark Brent crude was trading 0.1 percent up at $47.04 per barrel by 0427 GMT, having hit a low of $46.09 on Monday, its weakest since Jun. 27. U.S. West Texas Intermediate traded flat at $44.55 a barrel, after falling as low as $43.63 the prior session, its weakest since Jun 27.
Gold prices declined, hovering towards their lowest since mid-March, as traders awaited signals from central banks on interest rate hikes. Spot gold dropped 0.2 percent at $1,211.70 per ounce by 0432 GMT, after hitting a low of $1,204.72 the prior day, the lowest since March 15. U.S. gold futures for August delivery settled up $3.50, or 0.29 percent, at $1,213.20 per ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.383 percent lower by 0.009 bps, while 5-year yield was 0.012 down at 1.945 percent.
The Australian government bond futures were mixed, with the three-year bond contract down 1 tick at 97.970 and the 10-year contract unchanged at 97.2600.
The New Zealand government bond prices were mostly higher, with the 10-year yield down 1 basis point on the day at 3.04 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year up 2 Canadian cents to yield 1.154 percent and the 10-year down 3 Canadian cents to yield 1.888 percent.
